We are witnessing improving momentum in an upswing within a weakly uptrending bear market.
A hard-money environment with limited stock-specific follow throughs. Swing portfolios can take high-conviction positions with strict stop losses.
⦿ Bias: Bear
⦿ Trend: (Weak) Uptrend
⦿ Swing: Upswing
⦿ Momentum: Negative but improving
Bias → Bear
From a long-term perspective, we have now transitioned back to a bear 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 month for just a week, and the market entered a transitional phase. For the past four weeks, more than 50% of the stocks have stayed below their 200 SMA. Hence, we are back to a bear market.
About 40% of stocks are positioned above their 200-day simple moving average.
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.
Trend → Weak Uptrend
After a confirmed downtrend for two weeks, the market is now in a weak uptrend.
52-week Net New Highs have remained consistently positive for the past three days.
Over the past three days, no major index has remained consistently above its 50-day moving average, with only about 35% of stocks staying above their 50-day moving averages.
The uptrend will be confirmed if the 52-week highs continue to stay above the 52-week lows and more than 50% of stocks move above their 50-day moving averages.
Swing → Upswing
After staying in a downswing for the past three weeks, the market is now in a confirmed upswing.
The MBI stayed green throughout the week. Although we had two strong days, we have yet to see a day with 4.5R over 1000.
Most broad indices remained consistently above their 10-day moving averages. About 60% of stocks are trading above their 10-day moving averages, while about 50% of stocks are trading above their 20-day moving averages. This is a bullish formation (10 > 20) that now needs some momentum to sustain.
Swing Confidence is 75, indicating that the portfolio can take less than the maximum permissible open risk.
Momentum → Negative but improving
All broad indices now have negative but improving momentum, as the momentum score is below the zero line but above its 9-period moving average.
Most sectoral indices also exhibit improving momentum. Auto, Consumption, Tourism, and FMCG have positive & improving momentum.
Ecom, Engines, Plastics, Hotels, and Hospitals are notable custom indices with positive momentum.
That’s all for this week. If you'd like to know when I publish something new, subscribe to my newsletter, and you'll receive the latest directly in your inbox.
Good Read. Please make a youtube video to have deeper understading.