What is the market going to do next?

Who Dafaq knows!

Strong opinions, weakly held.

Will it still trend higher?

Or,

Will it fall?

Let’s dive right in….

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Nobody knows:

Seriously, No kidding.

But here are some facts about where we are in the market.

1. The market is on an uptrend in the short term:

   See that on a 30-minute timeframe, we are making higher highs and higher lows.

   Will we keep doing that?

   We don’t know.

   

2. This is still a counter-trend rally:

   what?

   Yes, it is.

   We just made a 2nd lower high on the higher timeframe.

   And we already are on a Lower high- Lower low structure.

   LL-LH = Downtrend.

   A short-term uptrend on an intermediate-term downtrend = counter-trend.

   Are we going to make a lower low?

   or a higher low?

   or breakout to new highs?

   “We don’t know yet”

   

3. The market is around a Strong resistance in the intermediate term:

   Hovering around the Flat 50 DMA.

   Below the DTL resistance.

   

   What can we anticipate going forward?

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Innocent until proven guilty:

We had a strong close to the week.

Some indices like PSE and Realty closed really strong and into new high territory.

Therefore, the momentum is still intact.

But, we are also getting extended as we move up and we are moving up onto a strong DTL resistance.

And remember, we are on a counter-trend rally!

There are two likely scenarios. Next week:

1. Momentum continues and we break out of the DTL strongly.

   Happy days. Isn't it?

2. Price rejects the DTL resistance and starts a downtrend on the smaller timeframe.

If the 2nd scenario happens, a higher low will bode well for the bull market to continue.

A lower low will probably spell more bearishness.

What do the Breadth indicators say?

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Breadth indicators are inherently lagging:

But,

1. % stocks above key MAs (20/50/200) have formed lower highs and started to slope down.

2. Advance-decline lines on all 3 major timeframes have also formed a lower high and are sloping down.

3. High low index on all key timeframe topped on 7th November and has been sloping down.

4. No. of up-trending stocks making a lower high and pointing down:

   

5. Buying Strength signified by the Net 4% Up-down bottomed on Thursday and reversed at the end of the week.

So could this buying momentum pick up pace and carry over to the next week?

We don’t know.

Lastly, all Breadth indicators are lagging.

They should only be used as a confirmation of what you are seeing on the price (and volume).

But, what is my personal BIAS?

I have NO bias.

Wait. I am lying.

51-49. Bearish in the short term. The Higher timeframe resistance looks strong.

But, I am also an eternal bull and so Friday’s action on the close and the Net 4% Up-down data gives me hope that we can push through and less gooooo… through that resistance.

But, it doesn’t matter.

the market will do what it has to do.

And I will react.

How have I been reacting?

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I have indeed been reacting.

My plan is to not go aggressive till I see a change of trend on the higher timeframe.

Keep maximum of my gains that I made during the uptrend.

My hit-and-run trades are still on.

With risk on PF is under ~1% at any point in time (during a downtrend).

But that’s just me.

You don’t have to do that.

You just follow your SYSTEM.

What?

Don’t have a system yet?

Sakatas Homma helps you find it methodically.

I do that in 2 ways:

1. The Sakatas Homma TA masterclass for beginners:

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   Please register for the next batch using the link below.

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   Watch my 1st session of the Autumn 2023 batch.

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Yours

Sakatas “Reacting” Homma.

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