Sumit Verma Profile picture
Jun 16, 2020 52 tweets 37 min read Read on X
Lesson from recent past.

BALAKOT Airstrike did not trouble market much, I am confident that Indo-China border tussle may not too.

Note: 20 day Average True Range for #NIFTY is 260pts (CMP 9914)

Hence, will maintain 9600 as trigger level to change stance. #NIFTY
Update on #Nifty chart

4th Higher High formation
No weakness in volume to assist divergence
20Day ATR now 250pts (ATR falling means low volatile zone in an Uptrend which is bread butter for Trend Followers)

My view: Bullish as there is no sign of weakness yet.

TREND is UP Image
Update on #Nifty and #Banknifty chart.

I cannot see any sign of weakness externally or internally anywhere.
Prices are rising hence TREND is up.

It is as simple right now.

Current view: Bullish

(Nifty is UP +557pts since Indo-China tussle) Image
Update on #Nifty and broader market:

When observing Relative Strength if
Smallcap250 > Midcap150 > Largecap 100 =Nifty 50 > Banknifty

This is typical Bull market sign.

Hence, post today's price action we may only see mild correction. Do not have more evidences.
Trend is Up. Image
June Month performance of broad indices.

Smallcap > Midcap > Nifty100 > Banknifty

I have no evidence of any weakness anywhere

Trend is UP Image
#Nifty direction with respect to broad indices breadth signal.

4 or more indices out of 6 indices are above their short term moving average.

Hence, Short Term TREND is Up. Image
#NIFTY - what a shift in sentiment in F&O stocks universe.

From 20 stocks in premium yesterday to 96 stocks today...

Thats a lot of scarecrow short covering...

TREND is UP Image
#Nifty update

Breadth: 6/6 indices are above their moving average

Trader's positioning: Nearly 60% of F&O stocks are in premium

Price: Nifty closed at 3 month high

TREND is UP ImageImage
#Nifty update

Current rally setup is now showing high resemblance with S&P500 of 1987-1988...

Trend is just getting stronger and Stronger.. Image
Something important today hence worth updating

#NIFTY formed two consecutive days of Distribution
#NIFTY100 Equi Weighted Index has broken an important trendline
6/6 Indices showing weak breadth

Question: Is it a TREND Change?
Ans: No but high probability of correction ImageImageImage
Update on #NIFTY:

Distribution signs seen in last update did not play out as anticipated.. but now the momentum divergence has increased.

This is not a level to be aggressive.. rather a level to be defensive.
Equity TREND is still up..

Dollar is making new lower low. ImageImageImage
Update on Long term Chart of #DOLLAR INDEX:

This is an extremely sensitive crucial support level.
While last few days decline has cause havoc rally in Precious metals.. Today is not a price to be extremely bearish dollar anymore. May see a bounce from here. Image
Signs of Exhaustion (short term which are mean reverting in nature) visible in both #NIFTY and #BANKNIFTY.

It is not a price to ADD longs / rather reduce longs.

#Caution - Bumpy road ahead. Image
Update on Breadth signal:

Price is going higher (due to polarization) and breadth is getting bumpier.. big big momentum divergence visible now.

CAUTIOUS view maintained. #NIFTY

Change of view: If breadth signal reverses and makes higher high now (by added margin). Image
Things are not adding up well.
#Banknifty struggling at 38.2% retracement and
#Nifty is comfortably showing momentum > 61.8% retracement.

Financials are still 34% weight.

The scenario is still not giving confidence to pile up longs. ImageImageImage

Big divergence in #BANKNIFTY vs #NIFTY.
Almost all Banking names results are over now. Hence, surprise element over.
Broad market breadth is weakening.
#DOLLAR Index at Crucial level... heavily oversold.

Next month just may not be good for #Gold #Silver #EEM ImageImage
#Dollar reversal failed
#Breadth mean reversion happened but impacted #BANKNIFTY only. Other indices least impacted.

#Momentum has resumed. No reason to stay cautious here.
Smallcaps > Midcaps > Largecaps : Typical Bullish

Crucial support: 11000 ImageImage

Smallcaps > Midcaps > Largecaps

Typical Bull Market sign.

View remains Bullish Image
5/9 top 9 Constituents of NIFTY are above SMA with Infy, Reliance and ITC on the verge of breakout.

In terms of Relative Strength:
Smallcap250 > Midcap150 > Nifty 100 > NIFTY50 > BANKNIFTY

Classical UPTREND. ImageImage
Data is changing for short term period.
Volatility likely to rise going forward.

5 out of Top 9 MCAP companies below Moving average (3 more at the edge), breadth deteriorating.

View: Cautious ImageImageImage
#NIFTY Weekly and Daily Chart...
Things are getting jittery..
Breadth is weak..
few stock holding INDEX for strength.
Momentum signals warning

View: Cautious

*Follow through sell off from tomorrow would change the course of short term trend to down. Image

Direction of major sector indices are important to analyse the TRENDING direction

Looking at major 9 sectors, atleast 6 are looking weak.

#NIFTY Image
Things have changed in BREADTH indicator after 3.5 months.. #Nifty Image
now a lower low confirmation has changed the short term trend to down along with BREADTH which has been weakening since quite sometime.
The current damage will take time to repair.
Exhaustion not yet seen.
%Bearish highest since April bottom. #NIFTY ImageImage
I dont remember the last time I saw so many patterns acting together in most of the sector charts.

The RS Line chart shows only IT and PHARMA are outperforming NIFTY50.

this looks like Distribution. ImageImage

% of stocks below 10 SMA in F&O basket has lowest reading marked since Mar'2020 bottom.

is it oversold? : No
is it a danger sign? : Yes

#NIFTY Image
#Equi Weighted Charts of FINANCIALS as a sector

#Nifty #Banknifty Image
It just took 5 days for FIIs to change the 20 day return of Equities.
Last 5 day return -6.2%
Last 20 day return -6.5%

Current TREND: Down (short term)
Is it oversold? partially only ImageImageImageImage
The Global Picture hasnt changed yet. India reversed today with 2% gain but that has not changed the broader market breadth. 1 positive: VIX cooled off drastically today. Apart from that, all other things r in favour of Cyclical correction.

Will update if data changes. Image
In last few days..
pullback move were sharp but with thin delivery volumes. But the BREAKDOWN in #USDINR is massive. This can trigger sustenance of the Upmove that started this week in Indian Equities.
Also breakdown failure (bullish reversal) in many global charts. ImageImage
Updated Global Indices chart..

Moves are sustaining (rather showing momentum)

View: Bullish Image
There is a significant divergence seen in the current upmove.. Midcap and Smallcap Indices not participating is not a good sign.

Time to be cautious again.

CHOPPY road ahead.

#NIFTY Image
#NIFTY has outperformed GLOBAL Indices in recent rally. The only index to make a higher high ahead of others.
Internals are no comprehensively Bullish..

View: Cautious ImageImage
Update: For the 6th consecutive day , breadth continues to weaken.
Divergence is increasing between largecaps vs Mid-smnallcaps
Only FINANCIALS and IT index are outperforming

Probability of weakness going forward is increasing unless data changes.

View: Neutral / Cautious ImageImageImage
Updated chart:
Breadth just collapsed. #NIFTY Image
DATA changes direction (short term signal comes in line with long term.
- Breadth improvement into bullish zone now
- Tentative H&S of Mid-Smallcap Indices now changing pattern, probably Bullish
- DOLLAR Index breakdown is Bullish for EMs
- STEEL is Bullish as sector ImageImageImageImage
US Index is at crucial short term support
European Indices are under distribution phase
TAIWAN showing strength while Kospi is midway.

Next50, Midcap50 formed Inverse H&S pattern

Smallcap100 near 1 month high and just 7% away from 52 week high

#Bullish trend ImageImage
- Broad based participation
- Improvement in Breadth
- Impressive Sector Charts
- Midcaps & Smallcaps Indices showing fresh breakout after 7 week of consolidation

#Bullish TREND

#NIFTY #Midcaps ImageImageImage
Banknifty has been outperforming NIFTY since 18 days, but today after 15 days Next50, Midcap indices also showed strength in terms of relative outperformance (RS line > 50). Bullish Price pattern is still intact. Sector breadth is 'still' bullish.

IND & TWSE are Bullish ImageImageImageImage

Globally things are deteriorating.
Question is how long can India stay immune?
India (+Taiwan & Korea) did not participate in recent Global selloff due to difference in trend of new COVID cases.
But global breadth as well as Indian internals are now weak.

"CAUTION" ImageImageImageImage
Medium & long term BREADTH INDICATORs are BULLISH. NEW 2020 high for % of stocks > 200 SMA is a sign of STRENGTH.
Volatility has dropped. Time to look for stocks chasing new All Time Highs ahead of others.

SL for Bullish view: Low of current week.

#BULLISH ImageImageImageImage

FIIs knew things which DIIs dint.. massive inflow in Nov 2020 and now an ATH breakout.
#Nifty Image

OUTPERFORMERs are outperforming..

UNDERPERFORMERs are underperforming...

Thats what happen in a 'NORMAL' trending market.

Current TREND: UP Image
Update: Every a new sector strongly outperforms..

Today stocks from Lower quartile outperformed the Top Quartile.. Sign of late short covering.

Top quartile nor performing is also an initial sign of exhaustion. (temporary momentum pause)

TREND is up as of now #NIFTY Image
Sector Rotation in full swing.. too much churning is not good in the short term.

BREADTH indicators are bullish.

Current TREND: Up


(chart courtesy of breadth is from @ChartinkConnect 's software.) ImageImage
#FII inflow (10 day rolling) at ALL TIME HIGH
probably because COVID new cases in INDIA are at 3 month low... European countries cases are flattening..

US cases chart looks like parabola.. So if new stimulus dont come now then probability of US Index falling is high. ImageImageImage

FIIs putting all the PRINTED Dollar In INDIA at one go? Image
Market Breadth : Bullish
FII Flow: Massive
Sector Breadth: Broad based


is Market extended? Yes.
Will there be mean reversion? Maybe but probability is only in overextended stocks for now.
#NIFTY ImageImageImage
Market Breadth : New higher high , highest level of 2020.
FII Flow: Unstoppable probably
% of stocks > 50 SMA: 93%
% of stocks > 200 SMA: 94%


CRAZY things happen when everything is overbought..
#BLOW OFF rally possible here

SL: 12800 ImageImageImage
Last week's DOJI high crossed, probably the #BLOWOFF rally started.
SL of view is now 12970

as long as this level is intact.. crazy move possible. Image
Update: Data which should not be ignored..

FII flow (cumulative) at a new 2 year high for the first time since 2015.

I feel this is NOT A SHORT TERM BET for them as they return in full force after 5 years. #NIFTY Image
Outperformers are OUTPERFORMING.. thats what happens in a BULL MARKET Image

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More from @sumitverma29

Jun 22, 2020
It is said that Bull Market climbs the wall of worries...

Happening across many markets...

#Copper is one of them too..
Chart Pattern resembles an old one from history

Post 5th breakout higher high, S&P never looked back. ImageImage
Updated chart of #Copper...

Today at 5th Breakout level ImageImage
Update on #Copper...

5th breakout happened...
(Similar to #1987 #S&P500 chart)

Copper Uptrend is Bullish signal for Emerging Markets. ImageImage
Read 12 tweets
May 26, 2020
Today headline Index was weak but breadth was pretty good both on price as well as volume side. #Nifty Image
Breadth do speak.. we just need to hear them well.. #Nifty Image
Breadth... Breadth... Breadth... most important momentum tool for me.. always.. #NIFTY Image
Read 5 tweets
May 23, 2020

Earlier I explained how to make charts cleaner by using Two day Swing Lines & today I explained how to identify Relative Highs & Relative Lows in an objective manner



Now I will try to show how to make a TRADING system out of the two....

Tools used:
Relative High AND Low identifier (N=10) and
Two day Swing Lines


Further to the above thread to find trade setups using the above mentioned tools.

Topic: Identifying "TREND FOLLOWING trade setups" using Top-Down approach

- Weekly and Daily charts are taken with Relative Highs and Relative Lows marked (parameter N=5)

Read 7 tweets
May 23, 2020
A thread on how to Define correct Swing Highs / Lows for the purpose of Dow Theory analysis or drawing Trendlines:

Thomas DeMark in his book "The New Science of Technical Analysis" said that drawing
of trend lines is a highly arbitrary process. 1/n
A trend line is typically intended to connect
several Relative Highs or Relative lows. If there are two or more such points, the trend line can be drawn
precisely. (notes from Jack Schwager's book "The Complete Guide to the Futures Market").. 2/n
Relative high is a High that is higher than high on the N prior & N succeeding bars.
where N is a number of bars (can be anything as per individual's setup 5 / 10 / 20...)

if N = 5, Relative High is Current High > last 5 days & succeeding 5 days. Viceversa for Relative Low.. 3/n
Read 10 tweets
May 17, 2020
Further to my initiative of #LetsLearn where my objective is to de-code complex things & make things simple and available for analysis...
Today, I will try to make a complex looking chart into a clean & simple one (only useful for people who are PATTERN based trader/analyst)..1/n…

Further as disclaimer, the presented way will be more useful for people who have followed Martin Pring's book on chart patterns.. (images taken from Kindle version of the book)
The below are Candlestick charts of #NIFTY50.. a lot of times market moves inside a range throwing multiple Bullish/Bearish candlestick patterns and adds up the clutter in analysis (Pro Candlestick / Bar / short term traders wont have a problem) but for others it is a confusion..
Read 12 tweets
May 15, 2020

This is how see / read through #FII data.. (Participantwise category)

Quantum of Buying / Selling in. cash Market + Index Futures + Stock Futures.
How the flows are basis last 3 days? How the flows are basis current week? It give an indication which camp is strong
Updated ..


Relentless selling by #FIIs in Cash segment

Cumulative chart attached (how #Nifty trends with FII flow)
Read 6 tweets

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