Empirical

Notes

Weekend Rundown - 23rd May '21

It was a strong week for equities—major indices like the Nifty 500, Nifty 200, Nifty 50 Equal weight closed at an all-time high. It shows the inherent strength of the market and broader participation in the rally.

For the first time, all industrial groups closed positive (Year till date).


#BSEMETAL

- Paused at long-term resistance. Same price action on copper price as it touched its lifetime high.



As the commodity names paused at long-term resistance, it would be interesting to see shorter-term trends in constituent base metals.

#MCXBaseMetal


#BSEUtilities

- Base breakout on Utility index.

- Relatively strong stocks against the index are expected to perform well.


#LogisticIndex

- Base breakout on custom logistic sector stocks index.


#OBEROIRLTY Oberoi Realty Limited. - Base breakout

-Looks strong above 600


#AEGISCHEM Aegis Logistics Ltd

- Strength as long as above 300.

- Similar breakout in the logistic sector index is a big positive for its relative strength compared to other sectoral stocks.


#KEI KEI Industries Limited

- Strength above 600.


Technical Analysis Concept

Confirmation

We use indicators for signals and confirmation of buy/sell decisions. It helps in filtering out strong signals and decision-making according to the weight of the evidence approach.


Steps for conformation-


1.Primary conformation using volume

Spike of volume near support and resistance level.


2. Momentum

Rate of change in price and Trendline gives the idea for the presence of momentum. It helps us in identifying when the current trend is no longer maintaining the same level of strength.


3. Oscillator

They are of two types-

  • Bounded (RSI)

It shows the relative change of price, not absolute. We usually look out for overbought/oversold levels as a range and divergence for a potential reversal.

  • Unbounded(MACD)

Here the value of the oscillator is meaningless. We watch out for oscillators' direction before there's a price change.


Here's the Weekly chart of #RELIANCE. RSI shows the range of overbought and Oversold region and Bearish divergence signal in July-August 2020, where the price was making higher high, and RSI was making lower high. It gave an early indication for the weakening of momentum.