In this video, Julius analyzes current asset class rotation, revealing why stocks in the lagging quadrant may signal continued market weakness. By combining sector rotation trends—particularly strength in defensive sectors—with SPY seasonality, Julius builds a compelling case that downside risk in the S&P 500 may outweigh upside potential in the current environment.

This video was originally published on April 30, 2025. Click on the icon above to view on our dedicated page for Julius.

Past videos from Julius can be found here.

#StayAlert, -Julius

Thursday’s market rout, triggered by the grim arithmetic of a negative first-quarter GDP, hardly provides fertile ground for a ‘risk-on’ appetite. Yet some stocks continue to defy the mood, climbing despite the volatility and uncertainty weighing on investor sentiment.

One such stock is Palantir Technologies, Inc. (PLTR), which has consistently ranked in or near the Top 10 Large Cap stocks on the StockCharts Technical Rank  (SCTR) report since late 2024.

FIGURE 1. PLTR IN TOP POSITION. PLTR stock has been at or within the top 10 since late September 2024.

Palantir Technologies (PLTR) is a software company that helps governments and businesses analyze and act on big data. It blends human decision-making with AI, making it a go-to for national security, defense, and enterprise operations.

Why Palantir May Be Tariff-Proof

Unlike typical analytics tools, Palantir combines human insight with AI, so people stay in control while getting help from powerful machines. That balance has made it a trusted choice for just about everything from national security to big business.

So, how does Palantir fit into today’s tariff environment? Here are a few key points:

• Tariff-Proof Tech. Since Palantir sells software, not physical goods, it’s mostly insulated from tariffs and global supply chain drama.
• Stable Government Money. Over half of its revenue comes from government contracts, and most of it is from the U.S., offering a steady income stream even when markets get rocky.
• Budget Watch. If the government tightens its belt, especially through efficiency initiatives (think DOGE), Palantir’s federal dollars could take a hit.

Looking ahead, analysts generally see strong growth for the company in governmental and commercial sectors.

PLTR Stock’s Weekly Chart: A Long-Term Perspective

Let’s take a long-term view of PLTR’s price action, starting with the weekly chart.

FIGURE 2. WEEKLY CHART OF PLTR STOCK. The stock is attempting to test its all-time high of $125.41.

This chart highlights PLTR’s dramatic climb from its 2022 slump to a parabolic uptrend, followed by a sharp pullback in 2025. The blue rectangles mark three early bullish signals—sustained SCTR readings above the 90 line. A well-timed buy setup based on those signals could have helped you catch the uptrend early.

Now, though, PLTR is trying to claw back the 99% gain it notched earlier in 2025. While analysts—and seemingly investors—remain bullish on PLTR’s long-term outlook, its stretched valuation and the broader market’s volatility make the risks impossible to ignore.

PLTR Stock’s Daily Chart: Rangebound or Poised for a Breakout?

Shifting over to a daily chart, after reaching $125 per share in February, PLTR plummeted due to defense budget cut fears, insider selling, and overvaluation concerns. But then in April, after hitting a low of $66.12, PLTR rallied strongly on easing trade tensions, new government deals, and renewed AI optimism.

FIGURE 3. DAILY CHART OF PLTR. Note the sharp decline in February and rally in April. What happened?

Year-to-date, PLTR stock’s intermediate-term trend remains unclear. On one hand, the wide range between its 2025 high and low suggests the stock may stay rangebound until a clear direction emerges. On the other hand, it’s hard to envision PLTR breaking above its recent high without a meaningful pullback first.

Momentum and volume indicators offer tempered, yet optimistic signals. The Relative Strength Index  (RSI) is approaching the 70 level, hinting at overbought conditions. Meanwhile, the Accumulation/Distribution Line (ADL) sits well above the current price, suggesting that sustained buying pressure could eventually push PLTR back toward all-time highs.

The Ichimoku Cloud, which helps visualize potential support and trend structure, points to a possible support zone around the $90 range. Lastly, the blue dotted line at $66 marks a key swing low—if PLTR closes below that level, it could spell trouble for the stock’s broader uptrend.

At the Close: Should You Buy Palantir Stock?

Well, everyone seems to be buying it, considering its 613.86 PE ratio, which, though indicating strong growth expectations, can also signal market euphoria—and that’s where caution comes in. If you’re planning to go long, it might be wise to wait for a pullback toward the support zone highlighted by the Ichimoku Cloud.

Also, keep an eye on its earnings date—May 5—which you can find in StockCharts’ Earnings Calendar. Political and geopolitical shifts are just as critical, having shaken markets throughout April and being likely to keep doing so.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your personal and financial situation, or without consulting a financial professional.

Speaking overall, the stock market hasn’t changed course after last week’s bounce; the upside momentum is still here, albeit acting a little tentative. One piece of news that may have helped move the market higher on Tuesday, though, was President Trump’s decision to scale back on auto tariffs.

Investors seem to be looking forward to any news of progress on trade negotiations and key economic data, namely Q1 GDP, March personal consumption expenditures price index (PCE), and the April jobs report. There are also some important earnings this week, including META Platforms, Inc. (META), Microsoft Corp. (MSFT), Amazon.com, Inc. (AMZN), and Apple, Inc. (AAPL), among others. So, don’t be surprised if there’s some turbulence this week.

Recent economic data hasn’t moved the needle much. The latest JOLTS report showed fewer job openings in March, but layoffs declined. This indicates the labor market is still strong. The April nonfarm payrolls report on Friday will bring more clarity.

Consumer confidence took a hit, falling to its lowest reading since May 2020. This drop reflects concerns about tariffs and how they might push up prices. The bottom line is that consumers are nervous about what’s ahead.

Technical Update

Despite its bounce, the S&P 500 ($SPX) is still down around 9.0% from its February high, but up about 15% from its April lows. The weekly chart below has the Fibonacci retracement levels from the October 2022 lows to the February 2025 highs. The index bounced off its 50% retracement level and is now above its 38.2% level. It’s also trading below its 40-week simple moving average (SMA), which is the equivalent of a 200-day SMA.

FIGURE 1. WEEKLY CHART ANALYSIS OF S&P 500. The index has bounced off its 50% Fibonacci retracement level, and breadth is improving. However, the market appears to be in a wait-and-see mode, and any negative news could send the index lower. Chart source: StockCharts.com. For educational purposes.

It’s encouraging to see the S&P 500 Bullish Percent Index (BPI) above 50%, and the percentage of S&P 500 stocks trading above their 200-day moving average showing slight signs of reversing from a downtrend. However, the S&P 500 appears indecisive and is waiting for some catalyst to move the index in either direction.

Does the daily chart show a different scenario? Let’s take a look.

FIGURE 2. DAILY CHART ANALYSIS OF S&P 500. The 50% Fibonacci retracement level is an important level to monitor since it could act as a support level. Resistance levels to the upside are the 50-day moving average, the 61.8% Fib retracement level, and the 200-day moving average. Chart source: StockCharts.com. For educational purposes.

The daily chart of the S&P 500 above shows the index trading below its 200-day SMA. In addition, the 50% Fibonacci retracement level (from the February 2025 high to the April 2025 low) is acting as a support level. One point to note is the wide-ranging days in April, which have subsided toward the end of the month. This suggests investors have calmed down—the Cboe Volatility Index ($VIX) has pulled back and is now below 30.

The short-term perspective shows the trend is leaning toward moving higher. Keep an eye on the 5500 level as support and the 50-day SMA as the next resistance level. If the S&P 500 can break above the 61.8% Fibonacci retracement level with strong momentum, that’s reason to be optimistic. A break above the 200-day SMA would be more optimistic.

While the S&P 500 is inching higher, something is brewing beneath the surface—a shift toward the more defensive sectors.

Sector Rotation: Defensive Gains

The Relative Rotation Graph below shows that for the week, defensive sectors—Consumer Staples, Utilities, and Health Care—are leading, while offensive sectors, like Technology, Consumer Discretionary, and Communication Services, are lagging.

FIGURE 3. RELATIVE ROTATION GRAPH. Defensive sectors are leading while offensive sectors are lagging. Monitor sector rotation carefully as we head into a volatile trading week. Chart source: StockCharts.com. For educational purposes.

This isn’t unusual, since investors are feeling more cautious and looking for stability.

What’s Ahead?

There’s still key economic data to monitor this week. Here’s what’s ahead:

• Wednesday: March personal consumption expenditures (PCE), the Fed’s favored inflation measure. A stronger-than-expected number could send the market lower since it may make the Fed more hawkish. There’s also the Q1 GDP growth, which will indicate if economic growth is stalling or continues to be strong.
• Friday: April nonfarm payrolls will give us an idea of the strength of the labor market. Evidence of a strengthening labor market would reduce the probability of an interest rate cut, which could put pressure on stocks.

Closing Position

The market is feeling cautious, waiting for the next catalyst to send stock prices higher or lower. And any of this week’s events—economic data, big tech earnings, and trade talks—could make or break this week’s price action. However, even if the S&P 500 trends higher, it doesn’t necessarily mean the big tech growth stocks are leading the move higher. Do a sector drill-down from our new Market Summary page and invest accordingly.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

If you’ve been exploring ways to take your options trading to the next level, the OptionsPlay Add-On for StockCharts is the single most impactful upgrade you can make. And now, it’s even better.

Courtesy of a big and highly-anticipated update, the Strategy Center within the OptionsPlay Add-On now runs directly on your ChartLists—allowing you to discover optimal Covered Calls, Short Puts, Debit and Credit Spreads, and Iron Condors on the stocks you follow or scan for. This new feature turns OptionsPlay into a fully personalized strategy engine, delivering the options ideas you need, when you need them.

What Makes the OptionsPlay Add-On So Powerful?

Whether you’re a beginner looking for guided trade setups or a seasoned options trader managing multiple strategies, the OptionsPlay Add-On brings you three core advantages:

1. Trade the Highest Potential Setups.

Every list of stocks is analyzed in real time to identify the highest yielding strategy—whether income-oriented like a Covered Call or directional like a Debit Spread—complete with strategy scores, max gain/loss, break-even points, and probability of success, so you are only trading the highest potential setups.

2. Find New Ideas & Generate Ideas from your Lists.

Up until now, users have relied on daily trade ideas curated by the OptionsPlay team. These are still available—and still quite valuable. But now, you can apply the same strategy engine to your own ChartLists: your holdings, your watchlists, and your scans.

This means you can:

• Identify the highest-yielding Covered Calls on the stocks you own
• Trade the best-scoring strategies on the technical breakouts you’re tracking
• Get paid the largest discounts to buy the stocks you love with Short Puts

All ranked—automatically.

3. Fully Personalized to You.

You can customize your options strategies for:

• Preferred Option Strategy & Outlook
• Days to expiration
• Strike Selection
• Risk tolerance

With one click, OptionsPlay surfaces only the trades that fit your profile in under two seconds, so you can make decisions faster and with full confidence.

Why the ChartList Integration Changes Everything

Your ChartLists represent your research, your insights, and your trading edge. Now, instead of scanning for the best options strategies on our list of ideas, you can apply them directly to the stocks you’ve chosen to follow.

This is especially powerful if you:

• Manage a long-term portfolio and want to generate income
• Actively trade sectors, earnings setups, or technical breakouts
• Prefer scanning based on technical criteria before looking at the options chain

With this new integration, you can:

• Launch the Strategy Center
• Select Any ChartList
• Instantly see top-ranked strategies for each stock
• Customize based on your preferences
• Analyze and trade immediately

Pro Tip – Maximize StockCharts & OptionsPlay Scanning

1. Create a Technical Scan using StockChart’s Advanced Scan Workbench
2. Save your Scan Results to a ChartList or Schedule your Scan to replace your ChartList
3. Open the OptionsPlay Strategy Center
4. Select Your ChartList and see the best options strategies on your Scan Results
5. Trade your best technical setups with the highest yielding options strategies

Final Thoughts

OptionsPlay was already a powerful companion for options traders on StockCharts. But this latest update transforms it into something even more valuable—a personalized trading assistant that works with your existing workflow.

Whether you’re trading for income, growth, or hedging risk, the OptionsPlay Add-On gives you the structure, confidence, and efficiency to act decisively.

Add the OptionsPlay Add-On to your StockCharts account todayand unlock the power of strategy-driven trading on your terms.

Shares of Tesla Inc. (TSLA) have been decidedly rangebound over the last two months, bouncing between support around $220 and resistance at $290.  The recent price action, as well as the momentum characteristics, have confirmed this sideways trend for TSLA.  How the stock exits this consolidation phase could make all the difference!

Today we’ll look at this intriguing technical setup, show how changes in momentum could confirm a new breakout phase, and describe how we can use a “stoplight” technique to better define risk and reward for this leading growth stock.

It’s Definitely Time to Go Fishing

Jesse Livermore famously said, “There’s a time to go long, time to go short, and time to go fishing.”  And were he alive today, I think the chart of Tesla would definitely elicit a “time to go fishing” mindset for Livermore.  With the stock bouncing consistently between clear support and clear resistance, this appears to be in a straightforward consolidation phase.

After peaking in December 2024 around $480, TSLA dropped to a March 2025 low around $220.  From there, the price has rotated between the 200-day moving average as resistance and that $220 level as support.  To be clear, the countertrend rallies in March and April have been impressive, but they have not yet provided enough upside pressure to propel Tesla back above the crucial 200-day moving average.

Momentum Indicators Confirm the Sideways Trend

As we love to highlight on our daily market recap show, RSI can be such a valuable tool to assess the interplay between buyers and sellers.  During a bullish phase, the RSI usually ranges between 40 to 80, as dip buyers use pullbacks to add to existing positions.

We can see this pattern from June 2024 through the end of January 2025, as the RSI remained above 40 on pullbacks within the bullish trend phase.  Then in February 2025, the RSI pushed below 40 as TSLA broke below its 50-day moving average.  We’ve color-coded this section red, showing how the entire range of the RSI drifted lower during a clear distribution phase.

Over the last six weeks, the RSI has been in a tight range between 40 and 60.  As the price of Tesla has remained rangebound, the momentum readings suggest an equilibrium between buyers and sellers.  Until the RSI breaks out of its own sideways range, the chart is suggesting we wait for new information to change the picture.

A Breakout Above $290 Would Suggest a Bullish Resolution

So if we apply a “stoplight technique” to the chart of Tesla, we can better visualize how we might approach this stock from a technical perspective as we negotiate an end to this consolidation pattern.

If we see a positive resolution to the pattern, and TSLA is able to finally clear price resistance and the 200-day moving average around $290, that would indicate a new accumulation phase with further upside potential.  A break below $220, on the other hand, would suggest a lack of willing buyers at support and most likely a new distribution phase.  

And as long as TSLA remains below $220 and $290, then Jesse Livermore would suggest we “go fishing” instead of taking a shot at an underwhelming chart!

One more thing…

I’ve heard from many investors that struggle with selling too early, leaving potential future gains on the table.  Is there anything more painful than that?  My recent video may give you some ideas of how to address this in your own investment process.

RR#6,

Dave

PS- Ready to upgrade your investment process?  Check out my free behavioral investing course!

David Keller, CMT

President and Chief Strategist

Sierra Alpha Research LLC

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice.  The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.  

The author does not have a position in mentioned securities at the time of publication.    Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

Today, Carl and Erin made a big announcement! They are retiring at the end of June so today was the last free DecisionPoint Trading Room. It has been our pleasure educating you over the years and your participation in the trading room has been fantastic! Be sure and sign up to follow the DecisionPoint Blog on StockCharts.com where we do plan to publish articles periodically. (Subscribers: you will be notified via email as to how your subscription will be handled. Stay tuned.)

After the big announcement, Carl opened the show with the DP Signal Tables to give us a sense as to the market’s overall trend and condition.

Carl then went through his regular market overview that included Bitcoin, Bonds, Yields, Crude Oil, Gold, Gold Miners and the Dollar.

Once finished with the market overview, Carl walked us through the Magnificent Seven in the short and intermediate terms by looking at both the daily and weekly charts.

The pair took questions including a discussion on relative strength using the Silver Cross Index and Golden Cross Index.

Erin took the controls and went through the 26 indexes, sectors and industry groups that have under the hood indicators. She walked us through the CandleGlance and explained her findings along the way.

Questions popped up again with Carl discussing his strategy of using dividend paying stocks in retirement. He mentioned the Dividend Aristocrats and Dividend Kings lists as a great source to find good dividends. Also a shout out to The Bahnsen Group ETF (TBG).

Erin finished by looking at viewer symbol requests.

It has been a great run learning and teaching about technical analysis. Thank you again for your support over the years!

01:10 DP Signal Tables

03:48 Market Overview

16:18 Magnificent Seven

22:53 Questions (Relative Strength with Silver Cross and Golden Cross Indexes)

29:18 Sector Rotation and Market CandleGlance

34:57 Question regarding dividend paying stocks

39:51 Symbol Requests

Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin

(c) Copyright 2025 DecisionPoint.com

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.

Helpful DecisionPoint Links:

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking

Bear Market Rules

Real Estate and Healthcare swapping positions in Top 5

The top five sectors show remarkable stability, with Consumer Staples, Utilities, Financials, and Communication Services holding steady in the top four positions.

The only change is Real Estate replacing Health Care. This shift underscores the ongoing defensive tilt in the market.

In the bottom half of the ranking, Materials and Consumer Discretionary swapped positions.

1. (1) Consumer Staples – (XLP)
2. (2) Utilities – (XLU)
3. (3) Financials – (XLF)
4. (4) Communication Services – (XLC)
5. (6) Real-Estate – (XLRE)*
6. (5) Healthcare – (XLV)*
7. (7) Industrials – (XLI)
8. (9) Materials – (XLB)*
9. (8) Consumer Discretionary – (XLY)*
10. (10) Energy – (XLE)
11. (11) Technology – (XLK)

Weekly RRG

Looking at the weekly Relative Rotation Graph (RRG), we observe ongoing strength in Consumer Staples and Utilities. Both sectors are advancing further into the leading quadrant and continue to gain on the RS ratio axis.

Real Estate is also making a notable move deeper into the leading quadrant. Financials and Communication Services are positioned on the brink of the weakening quadrant. However, they are still sustaining elevated RS ratio levels, which keeps them securely in the top five — at least for now.

Daily RRG

Consumer Staples and Utilities: Both reside within the weakening quadrant, but at high RS ratio levels. This combination, along with their strength on the weekly RRG, keeps them well inside the top five.

Communication Services: Moved into the lagging quadrant but with a very short tail close to the benchmark. This positioning allows it to remain in the top five — for now.

Financials: Similar to Communication Services, close to the benchmark with a slightly longer tail but not showing significant loss of relative strength.

Real Estate: Made a significant move, pushing into the leading quadrant on the daily RRG, combining with its strong weekly tail to secure its spot in the top five.

Consumer Staples

The Consumer Staples sector remains range-bound on the weekly chart, causing relative strength to stabilize.

With RRG lines at high levels, we might see some consolidation in the coming week — something to keep an eye on.

Financials

Financials are picking up steam again, closing in the upper half of last week’s bar.

This price strength is helping the relative strength line remain well within its rising channel.

If the sector can maintain this momentum, it’s likely to stay among the top performers.

Utilities

Utilities are trading within their sideways channel, continuing to push relative strength against (or just above) resistance.

This strength is keeping the RRG lines above 100. However, imho, we’ll need to see more relative strength in the coming weeks to keep Utilities at the top of the list.

Communication Services

Communication Services had a strong week, closing at the top of its range against former support, now acting as resistance.

Based on the price chart, we might expect some resistance and difficulty for the sector to move higher this week.

Despite this, the relative strength line remains within its rising channel, albeit losing some relative momentum at high RS ratio levels — not concerning at this time.

Real Estate

Real Estate — the new entrant in the top five — is benefiting from a strong bounce off the $36 low two weeks ago.

It’s now starting to push relative strength higher, although not yet extremely strong.

The RS momentum line is beginning to roll over while dragging the RS ratio higher.

For now, the combination of daily and weekly relative strength has been enough to displace Health Care and secure Real Estate’s spot in the top five.

Portfolio Performance

The defensive positioning of our portfolio has put a dent in performance relative to the broader market.

We’re now trailing the S&P 500 by almost 3%. However, we’ve seen over the past few weeks that these differences can equalize rapidly when the market moves in the direction of the portfolio.

So, I’m not too concerned at the moment — it’s all part of the ebb and flow of market dynamics.

#StayAlert and have a great week –Julius

The Zweig Breadth Thrust for the S&P 1500 triggered on Thursday as stocks surged last week. In poker terms, this thrust signals an abrupt participation shift as stocks move from folding to all-in within ten days. A bullish thrust signal is only part of the puzzle. How do we know when this signal fails? Today’s report will look at the ZBT signal in the S&P 1500 and offer an exit strategy. Stick around to the end for an offer to access a fully quantified strategy based on the Zweig Breadth Thrust.

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TrendInvestorPro subscribers have access to three timely reports. The first report/video explains the mechanics of the original NYSE-based Zweig Breadth Thrust indicator and then shows a modern version using S&P 1500 Advance-Decline Percent. Second, we also presented a trading strategy using ZBT signals for entry and another indicator for exits. The third report/video covers the setups and thrust signals for the percent above SMA indicators. Some of these indicators also triggered this week, but not all. Click here to take a trial and get full access.

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ZBT Triggers for S&P 1500, but Not S&P 500

The first chart shows the Zweig Breadth Thrust (ZBT) indicator triggering bullish as it moved from below -20% to above +23% within ten trading days (blue line). This thrust signal means S&P 1500 advance-decline breadth became oversold with strong selling pressure and then recovered in dramatic fashion with a surge in upside participation. Moreover, this shift occurred within a 10 day window. This reversal of fortune was both sudden and sharp.

Note that the Zweig Breadth Thrust triggered an epic signal in November 2023, and we were on it. See this report (11-November-2023) for details on the original NYSE-based Zweig Breadth Thrust. See this report (18-November-2023) for details on using S&P 1500 Advance-Decline Percent to create a Zweig Breadth Thrust indicator.  

S&P 500 ZBT Falls Short

The ZBT indicator for the S&P 500 did not trigger. The indicator was below -20% on April 8th and did not make it back above +23% within the 10 day window. In fact, the indicator did not make it back above +23% this week. This shows less upside participation within the S&P 500, and more upside participation within the S&P 1500. Small and mid cap breadth outperformed large-cap breadth this week.

Where’s the Exit?

The Zweig Breadth Thrust is only used for bullish signals, which means chartists must find another indicator to signal a failed thrust. As its name implies, a thrust is a strong upward move that is powerful enough to foreshadow an extended advance. The Zweig Breadth Thrust in November 2023 provides a classic example as SPY continued higher, never looking back. The blue line shows when both the S&P 1500 and S&P 500 ZBT indicators triggered in early November.

Chartists looking for an exit strategy can consider prior support levels based on reaction lows (troughs). The horizontal blue lines show these support levels, starting with the late October 2023 low. SPY forged a reaction low in January 2025, hit a new high in February and then broke support to trigger an exit. Current support levels are based on the April lows.

Chartists looking for a more dynamic approach can consider a trend-following indicator, which we will explore next (subscribers). This strategy is fully disclosed and quantified with backtest results. Click here to take a trial and get immediate access! 

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Following a strong move the week before, the markets took on a more consolidatory look over the past five sessions. Following ranged moves, the Nifty closed the week on just a modestly positive note. From a technical standpoint, the Nifty tested a few important levels on both daily and weekly charts. However, the trading range narrowed. The Index oscillated in a 517.60-point range over the past week. The volatility surged again; the India VIX spiked 10.93% to 17.16. The headline index went on to close with a modest weekly gain of 187.70 points (+0.79%).

The coming week is shortened, with Thursday being a trading holiday due to Maharashtra Day. We could write about more than one thing that the markets could be worried about over the coming days. It could be the lowered growth forecasts by the IMF that include India and other economies; it could also be the heightened possibility of escalating geopolitical tensions between India and Pakistan. However, all that said, the markets are also at a crucial technical juncture. The Nifty has closed just at the 200-DMA placed at 24050. Besides this, Index has also defended the 50-week MA at 23925. This makes the 23,900-24,050 zone a crucial support area for the Nifty. The consolidation is imminent as the Nifty has rebounded over 11% from its April 07 lows, and minor corrective retracements cannot be ruled out. However, if 23900 is breached, the markets may see some extended retracements.

The weekly RSI is at 55.46; it stays neutral and does not show any divergence against the price. The weekly MACD is bullish and stays above its signal line. A candle resembling a Shooting Star has emerged, increasing the likelihood of consolidation. Importantly, any candle formation should not be traded in isolation and must be used in conjunction with the overall technical setup.

The pattern analysis shows that the Nifty has defended the 50-week MA placed at 23925. The Index has also tested a rising trendline resistance; it violated this trendline support on its way down, and now this is expected to act as resistance. Overall, the zone of 24050-23900 is a crucial support zone for Nifty. If the level of 23900 is violated, it can lead to incremental weakness.

Overall, the technical structure of the market suggests that it is time for one to focus more on protecting gains at higher levels. While there could be some reactions by the markets due to external factors, the underlying buoyancy stays intact. The only thing to be cautious about is the natural corrective retracements that the market may experience following the steep upward move that has taken place. Investors must keep fresh purchases should be kept in low-beta stocks that have strong relative strength. With sector rotation visible, a cautious outlook is advised for the day.

Sector Analysis for the coming week

In our look at Relative Rotation Graphs®, we compared various sectors against CNX500 (NIFTY 500 Index), which represents over 95% of the free float market cap of all the stocks listed.

Relative Rotation Graphs (RRG) show the Nifty PSU Bank Index has rolled inside the leading quadrant. The Consumption, Commodities, Financial Services, Infrastructure, Metal, and Nifty Bank Indices are also inside the leading quadrant. While the weakening of Relative Momentum is seen in the Metal and Financial Services Index, they are likely to outperform the broader markets relatively.

The Nifty Services Sector Index has rolled inside the weakening quadrant.

The Midcap 100 and the Realty Index are showing strong improvement in their Relative Momentum while staying inside the lagging quadrant. The IT and the Auto Index continue to languish inside the lagging quadrant.

The Media Index has rolled inside the Improving quadrant, indicating a likely beginning of its phase of relative outperformance. The Nifty PSE, Energy, and FMCG Indices are also inside the improving quadrant.

Important Note: RRG™ charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.  

Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst

www.EquityResearch.asia | www.ChartWizard.ae