The Ratio between stocks above & below 50MA is 0.14, while that for 20MA is 0.04.
The 10-day cumulative ratio for stocks above 50MA is 0.3 now. A value >2 is good for swing trades on the long side.
Bias
On a modified Stockbee market monitor, the short-term indicator of 13% up in 34 days was already negative since past week.
Now, the intermediate 25% plus in a month & long-term metric of stocks 25% plus quarter are also negative.
4% up/down in 1 day
The 10-day cumulative ratio (10-DCR) between stocks up & down 4% in a day is now below 0.5, & an indication of a bearish breadth thrust.
When market is in bearish phase, a fresh bull move starts when 10-DCR first time crosses above 2.
Primary Breadth Ratio
Overall, the market is now bearish, as the number of stocks up 25% plus in a quarter is now lesser than that down 25% plus in a quarter. The ratio between the two is the primary breadth ratio, which is now 0.29.
That’s all for this week. If you'd like to read this as a newsletter, find it here:
The time has finally arrived to simplify how we use the volume indicator on our charts. With a Tradingview script at the end, here is a thread🧵 on what “simple” volumes are, & how to use them: 👇
The conventional volume indicator is full of ‘noise’ in that all volume bars are given the same importance. Color & size are the two informations they provide. But this information is “across the board”, irrespective of when it’s important enough or not.
The Simple volume indicator is minimalistic, in that it strips away the conventional volume indicator from a lot of “noise”, & help narrow our focus on actionable volume bars only. It displays only 3 type of volume bars prominently: blue, green & red.
One of the strongest pattern is a gap-up on the weekly chart that stays unfilled. More often than not, the price will pullback & retest the high of the gap, & give us a buying oppurtunity.
e.g EXCELINDUS - entry above high of 24 Feb candle
If this weekly gap-up coinicides with a new-high base breakout, it’s even much stronger. As per O’ Neil, gap-ups that are also base breakouts are the most powerful base breakouts.
e.g MBAPL - entry above high of 22 Feb candle
Another recent example of weekly gap-up + base breakout is UGARSUGAR. Entry above high of 22 Feb candle:
⦿ Most major indices (including Nifty, CNX500, Midcap, Smallcap) stay in downtrend.
⦿ Auto & Realty join the red list this week
⦿ Metals, PSUbank, Power & Energy stay in uptrend under pressure.
Momentum
⦿ No index is having positive momentum
⦿ Most indices (including Nifty, CNX500, Midcap, Smallcap) are showing negative & worsening momentum
⦿ Only Energy, IT, Metal & PSE are having negative but improving momentum
Market breadth measures the degree of participation & the conviction in the overall mood of the underlying index. A positive market breadth is said to happen when more stocks are advancing than are declining.
A thread on how do we interpret market breadth👇
A simple way to measure market breadth is % of stocks trading above a certain moving average. When majority are above a specific MA, market breadth is termed strong.
We use 20 & 50-day MA for short to medium-term timeframes, & 150 & 200-day MA for medium to long-term timeframes.
Bullish/bearish bias
We have a bullish bias when >50% of stocks are above their 150 & 200-day MA. We don't see the longer-term timeframes for oversold/overbought levels.