KK's Corner: Quick Note On Today's Rally - Oct. 5, 2023
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After some bearishness recently, there was some respite to the selling today (October 5, 2023). I wanted to dive deep to figure out the strength and the quality of the rally. I looked at the Ratio Trend Matrix to study the relative performance of the Nifty 50 constituents. Here is the summary of patterns for today.
Out of the 50 stocks, only 36% qualified for the Flying pattern. This means only 36% of the stocks outperformed Nifty 50 today which is not impressive. What is even more disturbing is that 30% of the stocks qualified as Cat pattern suggesting that they closed in the red even though Nifty 50 closed on a positive note.
The remaining 34% stocks qualified as the Bearish Star pattern suggesting that though they closed on a positive note, their performance was inferior to the benchmark.
If you look at the market breadth, it captures a similar picture. Though the Nifty 50 closed on a positive note today, the PF-X% breadth indicator closed lower today at 20%, compared to 22% yesterday.
In essence, there is no reason to get carried away with today's rally. Watch for improvement in breadth for more clues.
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Nice Write up sir
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Nice way to validate market breadth.
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Thank you so much for sharing.
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kindly update more sir on this readings
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Okay. Here is the update based on today's price action.
What happened today probably is the exact opposite of the rally that happened on Oct. 5. Today, there were only 23 stocks out of Nifty 50 index (46%) that were Drowning candidates, meaning their performance was worse than Nifty 50. The remaining 54% stocks were relative outperformers of which, 20% or 10 stocks qualified as Lion, suggesting that they closed in the green even though Nifty closed in the red. Looks like a handful of index heavyweigths along with few others pulled down the Nifty.
Here is the list of drowning stocks
Here is the list of Lion stocks for the day.
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thanks sir
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Sir does this mean, we can start nibbling in these stocks say 25% buy now and keep on adding till nifty is ready to move up again?
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Hi Pankil. When to enter is different concept. That depends on the rules you have created. I personally would wait for Nifty 50 price trend to turn bullish and then look for stocks to buy. I do not take short trades in stocks. What we are discussing here are ways to dice the market data to decipher the underlying strength / weakness. These are clues that will helps us be better prepared. But price action will be supreme.
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Oh ok understood now clearly
