Top down analysis is a stock screening method which is very popular🔥 among trading community
BUT HOW TO DO IT?🤔
Today, we’ll present examples and frameworks that will help you perform top-down analysis🔍 in just 15 minutes.
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#1 Scrolling through Indices Charts - 3 min🧐
What to look for?
Start with indices charts and check which ones are improving📈
Observation
Many indices are struggling near their moving averages, while Nifty Realty is bouncing from key moving average levels.
Note
Indices lag, so one need not wait till breakout; many leaders will have already moved by then.
#2 Find the strong industries in the sector - 2 min🏭
What to look for?
Review all industries in the sector and select the industry with the highest no of stocks with relative strength > 80 or70💪
Observation
There are only 2 industries: real estate & Construction residential and commercial. With real estate industry contributing 23.9% out of 28%, where 28% of realty stocks have Relative strength above 80.