Market MATH & Watchlist

12-May-2024: Market nearing a bounce. Wait for confirmation

MATH: Momentum Anticipation and Trend by Homma:

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As technical traders, We

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

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Trend:

We are still trending up on the weekly.

But downtrending in the short-term.

Momentum:

Negative and still decreasing in the short term.

It has also started to trend down on a weekly timeframe as we see the momentum plot crossing below the 5-week MA.

There is a negative divergence clearly visible on the plot, akin to what happened during the post-covid top. This divergence if plays out, markets will be sideways for some time.

Watch my HPA weekly video with my group for a detailed discussion on this further:

N500:

Last week, after its run-up to its ever-respected rising trendline resistance, it was rejected with a bearish engulfing candle.

A trip to the channel midline or support was anticipated (image below).

This week, it is now very near to the Channel support as anticipated. A bounce can be anticipated here.

Anticipation:

In the short term, I anticipate a bounce from the trendline supports.

I would still wait for the early trend and momentum change signals to confirm the bounce first.

A breakdown instead would spell more bearishness.

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Key Indices:

Most indices are at major supports

Nifty Bank:

Private banks:

PSU Banks:

Nifty Financial Services:

Nifty Microcap 250:

Nifty Smallcap 250:

BSE Oil & Gas:

Pharma and Health bases are still intact:

Summary:

Strongest (short term/20 days): Auto, PSE, Oil, FMCG & Consumption, Defence, fin services, Metals.

Stong with Big base breakouts: None

Potential Relative strength candidates for the future: Pharma (health), FMCG, Oil & Gas

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Watchlists: