Market MATH & Watchlist

26-May-2024: Weakness underneath the Indices Strength?

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:

The market is sideways.

The “% of stocks above 20 is flat and has potentially formed a lower high.

This is a bearish divergence.

Both the plots have crossed below the 5DMA too

Momentum:

At the peak and taking a pause.

20 day crossed below the 5DMA while 50 day is at the previous highs.

N500:

Just above the ascending channel top/resistance.

Doji signifying a pause.

Anticipation:

Market structure and the underlying weakness leads me to anticipate a pullback now.

How far? channel mid or channel support or beyond?

We don’t know.

But we also just cannot rule out the bullish breakout of the Asc. channel.

So what do we do?

As usual, react.

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Key Indices:

Midcap 150: This is still the strongest space. But the last 3 candles shows weakness

Nifty Smallcap 250: At their ATH but sideways with a tight action.

Nity Microcap 250: At the mouth of the big iH&S breakout. looks lethargic currently

Summary:

Strongest (short term and medium term):

• PSU (shipbulders, Railways etc)

• Banks- PSUs (look for Big Base Breakout candidates)

• Auto/Anc

• Power

• Metals

If you are too confused then just focusing on PSEs would not be a bad idea

Potential Relative strength candidates for the future: Pharma (health), Oil & Gas and Fertilizers (NFL, Madras Fert, FACT)

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Watchlists: