Keeping up with the #Nifty50StockList

Update 5/12/21.

As has been said before the point of the Nifty-50 Stock List is to be able to see extremes, especially at the end of a down swing.

To reiterate the strategy is whenever 40 or more stocks on the list are on sells that is most often the bottom or the beginning of the bottom of a down swing. The buy signal is triggered with there are no longer 40 or more on sells.

Yesterday, 5/11, there were 40 stocks on sells. Today there are 38, giving the buy signal for the tomorrow’s open.

So what’s next?

We are walking around in falling-knife territory (see the chart below) but a signal is a signal.

If I have to bet (and of course I have to), I am betting the market is going to bounce tomorrow. Not sure it will be all that vibrant, and even then it may be a one-day dead cat but a bounce is a bounce.

So looking to be long with tight stops to dodge the knives.

(Click on the charts for a larger view)

Update 5/6/21.

The point of the Nifty-50 Stock List is to be able to see extremes, especially at the end of a down swing.

To reiterate the strategy is whenever 40 or more stocks on the list are on sells that is most often the bottom or the beginning of the bottom of a down swing. The buy signal is triggered with there are no longer 40 or more on sells.

Two days ago, 5/4, there were 40 stocks on sells. Yesterday there were 34, giving the signal for the today’s open.

So what now?

Based on today’s follow-through price action, an early sell-off with a solid reversal into the close, it would appear the next the market is ready for an upswing.

See the daily 3x-leveraged ETFs below — UPRO for the S&P, TQQQ for the Nasdaq, and TNA for the Russell. All three had key reversal days (although TNA just barely).

In addition, it should be noted that for option traders who like it simple — which is to say simply buying calls — many of the biggest and most liquid stocks have shown reversals of declines of note today See the AAPL, FB, MSFT charts below.

And it also must be noted that 26 of the Nifty-50 stocks are oversold so there is room to move to the upside across the list.

Update 3/25/21.

Wednesday the Nifty-50 stock list had 47 stocks on sells and 35 oversold, which no doubt explains why the gap down and sell off early today reversed hard during the day to the upside.

Forty-one stocks finished higher than their opens. That’s a lot of reversal days.

And yet, because of the early drop, even more are on sells on the daily charts, 49, and more oversold, 43. Almost needless to say both those numbers are unsustainable.

So what’s next?

If I had to guess…today’s broad reversal follows through to the upside Friday because these stocks and the market has been down a bit too far for a bit too long, and it’s a Friday.

In addition, the NYMO (short-term market breadth) turned up today from deeply oversold although all-important NYSI continues to fall.

Of particular note: there are so many stocks on the list that have reversal-day price patterns looking exactly like these three I don’t even want to go back and count them.

Update for 3/19/21 — posted on 3/21/21.

In the last update just below it was noted that there was subtle crack in the foundation of the upswing when the stocks in the Nifty-50 stock list clicked down Monday of this week from 44 stocks on buys with 20 overbought (a lot) to 43 on buys.

It was as just one stock but it suggested the latest up swing could stall and possibly dip. The market began to stall, 34 stocks on buys Tuesday, 16 overbought, even though the indexes continued move a bit higher. And yet even as the FED action Wedneday gave the market in a general surge, the stocks in the list continued to roll over, 23 on buys, 7 overbought, on close Wednesday.

The “bit of a dip” suggested in the last update came Thursday and Friday.

As has been said before here (on 3/8/21 entry below as a matter of fact): “Again and again, my nifty-50 stock list moves from oversold to overbought and back again to oversold like an ever spinning wheel within the market’s spinning wheel…”

Again and again. As of Friday, 14 of the stocks on the list are on buys, two overbought, six oversold (not a lot).

So what’s next?

Forty or more stocks on sells would likely insure a bottom of the dip but that is, as yet, not the case so early this week is a crap shoot. The dip can go deeper or it can bounce here, possibly to at least the recent highs.

A negative that needs to be noted is the NYSI has turned negative (the red dots on the SPY chart below) and as I’ve warned before “don’t fight the NYSI.” Based on the NYSE advance/decline line, it is the indicator that is the broadest measure of general market sentiment.

Consequently, what’s next is wait and see. If holding long positions control risk.

I have been asked how I calculate the buys and sells, as well as the overbought and oversold, for the stocks in the list. I have made as simple as I can. I use a nine-bar Channel Commodity Index (CCI), but RSI, MACD, Stochastic indicators will work too.

Let’s walk through a recent swing on a stock or ETF — in this example, SPY on the chart below.

At the vertical line, SPY is color-coded in blue which means the CCI is below negative 100 and SPY is on a sell, oversold. As the bar turns green and the CCI moves above negative 100, it triggers a buy. As the bar moves to yellow the CCI is above plus 100, SPY is on a buy, overbought. As the bar turns green again and the CCI drops below plus 100, it is on a sell.

Those are the four stages for every stock, ETF, future, option, currency, and commodity in the market as each rotates from oversold to overbought and back again.

Like spinning wheels in the market’s spinning wheel, again and again.

P.S. I have those buy and sell signals (the arrows on the chart) set to the open of the day after the signals are triggered. Don’t tell anyone (LOL) but that means one can check the trades the night before, put in orders for the open the next day and walk away.

Update 3/15/21 — posted 3/16/21.

Since the Nifty50 buy signal on the open of 3/8 the stocks on the list have moved from 44 on sells (3/5) to 44 on buys yesterday. Today, list is down one to 43 on buys.

There are now 20 stocks overbought. That’s beginning to be a lot.

So what’s next?

Being overbought doesn’t end anything but that one stock dip in the list, although not great, is a slight crack in the advance. In other words, I would not be surprised if there is a stall here, maybe a bit of a dip…

But, all in all, it is again a dip to buy since it’s very likely this rally is not over.

Here’s a chart of FNGU — the 3xLeverage ETF for the Fang+ Index. The index includes the main bellwether stocks in the NIfty 50 list — AAPL, FB, AMZN, GOOGL, NFLX, TSLA, etc.

I’m highlighting it’s chart since it is up 20% in the six days since the 3/8 buy signal.

Updated 3/12/21

Updated 3/11/21

My Nifty50StockList, which had 44 stocks on sells only five trading days ago has once again shown its value as an indicator in the stock market for suggesting “What’s next?”

Yesterday the NYSI turned up (almost did it Tuesday) giving a inarguable buy signal for general market on today’s open. See the “Don’t Argue With The NYSI” posts below.

So what was next?

Today 49 out the 50 listed stocks were up from yesterday’s close and 43 up on the buy signal from today’s open. Pretty much a Nifty50StockList blast across the board from the open led by NVAX up 33% (including the Biden and UK clinical vaccine trials news in the aftermarket), BEEM and TIGR both up 21%, and SUNW (the number-one stock on the list going into the day) up 12.5%.

In the list, 49 stocks are now on buys (that’s a lot), 11 are overbought (that’s not a lot) and zero are oversold. With only 11 overbought there room to keep going, to get more on the list overbought, probably tomorrow to end a bullish week.

But all on buys and none oversold once again begins to raise the never ending question in the stock market — What’s next?

Three Charts For Today:

SUNW, up 35% on the Nifty50StockList signal, BEEM up 38%, TIGR up 37%.

It’s the same signal for all three, the open of the day after the first day with less than 40 stocks on the list on sells (the purple bars on the charts).

That buy signal was on the open three trading days ago. Three days ago.

Updated 3/10/21

This past Thursday and Friday there were 45 and 44 stocks in the Nifty50StockList on sells. As stated below that usually marks the bottom or the beginning of a bottom of a down swing.

Those days are marked on the chart below by the purple bars.

At the close yesterday, there were 46 stocks on buy signals with futures looking higher today.

The important point at this moment is only three stocks are overbought, meaning there is a lot of room for them, and the market itself, to move up.

Updated: 3/8/21

Time to sit up and take notice…

Last time I posted this indicator here was in this link:

How 50 Can Signal A Market Low

The following is lifted from that link:

Again and again, my nifty-50 stock list moves from oversold to overbought and back again to oversold like an ever spinning wheel within the market’s spinning wheel…

And each time there are 40 or more of the 50 stocks on sells, it’s time to sit up and take notice since that is the number that most often signals either the bottom or the beginning of a bottom on each down swing.

I first posted about this strategy in November of 2015 on another forum.

Nothing has changed since then.

Usually it just takes one day of 40 sells, sometimes two days, to set up the bottom of a swing. Should be noted if it goes more than two days that’s is a warning that something bigger may be in the offing (last time that happened was the start of the Covid-19 bear plunge this year).

This is just an FYI since the signal is once again close by.

This is what market timing and swing trading are all about.

The results can be quite remarkable, in leveraged ETFs like TQQQ, TNA, leveraged sector ETFs like SOXL, FNGU, and, of course, hot individual stocks.

The purple marking on this chart are each time there were 40 or more of the Nifty-50 on sells.

Michael Petryni

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