A hard-money environment with almost no conventional breakout/pullback setups. Many uptrending names from the past weeks are now forming the right side of their respective structures. While some of these might fizzle out, the remaining ones have the potential to give conventional swing traders some solid entry points.
Aggressive swing traders are now better off with intraday trades only, as entering & holding new names in this environment is most likely to give them nothing but choppy action.
⦿ Bias: Bear
⦿ Trend: Uptrend
⦿ Swing: Downswing
⦿ Momentum: Positive but worsening
Bias → Bear
From a long-term perspective, we remain in a bear market.
Over the past month, more than 50% of stocks have remained below their 200-day simple moving average (SMA). Hence, we stay in a bear market.
About 33% of all stocks are positioned above their 200-day simple moving average. This week's numbers are lower than those of last week's, but we remain well below the 50% mark.
When more than 50% of stocks go above their 200-day SMA, we will again enter a transitional market. If this percentage stays above 50 for a month, we will finally enter a bull market.
Indian markets have experienced three distinct bear phases since 2017: the Post-Euphoria Correction (31 months, 2018–2020), the Inflation & Rate Hike Pivot (16 months, 2022–2023), and the current Structural Bear (17+ months, Oct 2024–present). The current phase has already surpassed the 2022-23 correction, with less than 25% of stocks above their 200-day moving average.
Trend → Uptrend
The current market is in an uptrend.
The 52-week Net New Highs have remained consistently positive for the past three days. We are still in single digits, though.
Over the past three days, almost all broad indices (except the Nifty) stayed consistently above their 50-day moving averages. About 70% of all stocks have remained above their 50-day MAs.
The market will stay in an uptrend till the 52-week highs consistently stay above the 52-week lows, PLUS more than 50% of stocks remain consistently above their 50-day moving averages.
Swing → Downswing
The market is in an early downswing.
The MBI turned red during the week and swiftly turned green again, but with subdued 4.5R numbers.
Most broad indices are consistently below their 10-day MAs. About 30% of the stocks are trading above their 10-day moving averages.
Swing Confidence is 0, indicating that the portfolio should not take any open risk.
Momentum → Positive but worsening
The overall market has positive but worsening momentum, as the momentum score is above the zero line but below its 9-period moving average.
Pharma still has positive & improving momentum. All other positive indices (Capital market, Power/Energy, Defence, Chemicals, Metal) are having worsening momentum, indicating that they are in one or the other stage of a pullback.
Indices with negative & worsening momentum include IT, Banks, Auto, Realty, Oil&Gas & Railways.
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entering & holding new names in this environment is most likely to give them nothing but choppy action is a true finding