We are witnessing worsening momentum in a downswing within a sideways transitional market.
A hard-money environment with stock-specific follow throughs. Conservative swing portfolios should stay in cash.
⦿ Bias: Transitional (bear to bull) market
⦿ Trend: Sideways
⦿ Swing: Downswing
⦿ Momentum: Negative and worsening
Bias → Transitional (Bear-to-Bull)
From a long-term perspective, we are now transitioning from a bear to a bull market.
After staying below the 200-day simple moving average (SMA) for 27 weeks, more than 50% of the stocks moved up the 200 SMA last week, and the market can now be said to have entered the second week of a bear-to-bull transitional phase.
We closed the week again below the 50% mark, with approximately 45% of stocks positioned above their 200-day simple moving average.
When the percentage of stocks above the 200-day SMA remains above 50 for at least a month, we will be in a bull market. If, instead, it stays below 50 for a month, we will return to a bear market.
Trend → Sideways
After staying in an uptrend for the past 10 weeks, the market trend can now be described as sideways.
52-week Net New Highs have remained consistently positive for the past three days. While the new 52-week lows appear to have stalled, the new 52-week highs worsened further this week.
Over the past three days, most major indices have not remained consistently above or below their 50-day moving averages, with approximately only 40% of stocks staying above their 50-day moving averages.
The trend will turn negative again if the 52-week highs go below the 52-week lows and more than 50% of stocks fall below their 50-day moving averages.
Swing → Downswing
After a half-hearted upswing for quite some time, the market is now in a downswing.
The MBI, recovering from last week’s warning day, resumed its tepid bullishness this week and eventually ended the week in the red.
Most broad indices remained consistently below their 10-day moving averages. Less than 50% of stocks are trading above their 10-day moving averages, and, not favoring the bulls, fewer stocks are above their 10-day moving average than their 20-day moving average.
Swing Confidence stays 0, indicating that the portfolio should not take on any open risk.
Momentum → Negative & worsening
The majority of broad indices now have negative and worsening momentum, as the momentum score is below the zero line and its 9-period moving average.
Most sectoral indices also exhibit negative and worsening momentum. Pharma, PSUbank & Consumer durables are the only indices with positive momentum.
Agrochem, AMC, CDMO & Engines are notable custom indices with positive momentum.
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