Shakeouts during a Bull Market: A high fidelity indicator of a Short-term Market Bottom?
"Sometimes the probabilities are very close to certainties, but they're never really certainties." ~Murray Gell-Mann
What you cannot measure, you cannot test.
What you cannot test, you can never be sure.
Even when you can test, most outcomes have a probability less than 1, however close.
Today I am going to talk to you about shakeouts. And how they highly correlated with a short-term market bottom.
What is a Shakeout?
Please read the 2 articles below on shakeouts and how to trade them.
Correlation between Shakeout and Market Bottom:
The below images show the Nifty500 chart alongside the number of shakeouts.
A quick eyeballing suggests a 90% correlation between shakeout spike and short-term bottom.
The most notable spike was the 4 June 2024 election result day spike.
The most recent spike occurred on Wednesday, 10 July 2024. It was a minor shakeout and only caught by the minor shakeout scanner.
A shakeout spike and bottom correlation is not 100%, but very high.
This should be taken as such.
More confirmation can be added to increase the probability such as:
The Net 4% Breadth primary data.
ORBs after the Shakeout day.
Volume Confirmations on and after the shakeout day.
More on these soon, I promise. I am currently making more observations.
Lastly,
I am doing my Annual Beginners Trading Masterclass next week.
If you find my articles valuable, you will find the Masterclass 50 times more valuable.
This year it’s all going to be about Trading Systems.
More details here.
To avail of the 50% discount, please join before Sunday Midnight (14 July 2024).
(PS: All scanners and dashboards including the shakeout scanner shown in this article will be provided).
That's all for today.
I also help traders build their own personal trading system and show mine live everyday of the week in HPA.
(PS: 1-month free HPA access complementary with the Masterclass)
Details below:
Homma Private Access membership:
HPA is a subscription-based educational service (on WhatsApp). Benefits include:
Daily Market Breadth, Momentum, Sector Rotation, and Relative Strength Update.
Access to all my scanners including the BBB (buy before breakouts) scanner, and the Homma Khela Hobe 2.0 scanner.
Access to my proprietary Breadth-Momentum-Relative Strength & Sector Rotation dashboards.
Access to my Trading view indicators: Homma Khela Hobe, Buy before Breakouts (BBB), Homma Endgame, etc.
Access to live Telegram alerts to Homma Khela Hobe, Homma Pullback, and TGP scanners.
HPA Weekly: Hourly weekend deep dives and Q&A.
1-year access to The Technical Take premium.
Live alerts to high-risk-reward setups breaking out.
Live updates on my portfolio and the trading setup rationale.
Access to my high probability watchlist.
Yearly membership of 15000/- INR only.
UPI payment & WhatsApp @ 9481506784.
Yours
Sakatas “Shakeout the bottom” Homma.