Market MATH & Watchlist

4-Aug-2024: Fear looms large, possible short term bottom

MATH: Momentum Anticipation and Trend by Homma:

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MATH last week: Click the link

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As technical traders, We

“Anticipate, but confirm. Wish, but only react.”

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Trend:

Positive but declining.

Momentum:

10 day momentum is still rising.

Whereas the 20day momentum is declining.

N50:

At the key short term MA, 10DMA

N500:

same as N50

Net4% Movers:

Breadth underlies bullishness as the Net4% data printed >5% the whole week while grazing the 0 for a day. We had a bullish close to the week which the indices failed to depict.

Anticipation:

The last 3 times net4% has gone past 0, twice we have bounced. The only time we did not bounce, we made a bottom soon. Therefore, my bias is of that of a bounce.

The global markets, mostly the US and Japan have been weak. Most US indices and stronger stocks are now below the 50DMA. But recent price volume action suggests to me that they are finding a near term bottom and are ready for a bounce.

The last point to remember is that Fear (courtesy: Yen Carry Trade) looms large. And that it is one of the strongest emotions that rules our decision making. And that fear might lead to an acute sell off before we actually see the short term bottom.

So whats the plan?

Keep all possibilities open.

Know your trades well.

Respect their Stoplosses.

We cannot control what the markets are going to do, but we can control how much we are willing to lose.

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Summary:

Strongest (short term and medium term):

Pharma and health

Chemicals (speciality, API, CRAMS)

Apart from these,

This week I will be on the lookout for strength from the following sectors:

• Consumer Durables

  Power-Oil&Gas-Energy (look for pullback)

  Water theme

  Recycling

  Aquaculture

PS: do not discard the shipping names from the watchlist

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Watchlists: