Bank Nifty Component Score 27 Oct 2017

INTRODUCTION

I am experimenting and developing a Component Strength Score based on the study of the underlying constituents of the Index itself. I have started with Bank Nifty. Here is a WIP version.
  • The graph has three data points
    • The movement of BN itself (absolute points),
    • then there is a Component strength (CSS) raw score
    • overlaid with an EMA of the CSS.
  • How to read the Component strength score (CSS)
    • A score of 50 is neutral
    • A score between 51 and 60 is neutral with bullish bias
    • A score above 60 indicates strength in the rally
    • A score between 40 to 49 is neutral with bearish bias
    • A score below 40 indicates weakness (i.e. selling pressure)
    • CSS crossing over the EMA indicates a change in sentiment. As per data, BN getting into a neutral (from bearish) with a positive bias.
  • How to interpret the EMA
    • This a 13 period moving average of the CSS itself.
    • CSS above EMA with EMA above 50 can be considered strength
    • CSS Below EMA with EMA Score below 50 can be considered weakness 
    • A crossover of the CSS and EMA indicates a change of sentiment.

DATA 27-OCT-17

Component Strength Score : 53.64
EMA : 51.16
Conclusion : Neutral with Bullish Bias
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Commentary:

Day: Down Day
Candle pattern: Bearish Candle. Neutral Pattern (Spinning Top) 
Range: Narrow
Volume:  High  
Conclusion : Bank Nifty managed to stay neutral on Expiry. Two strong follow up days will make the trend clear. 

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Disclaimer :


This blog is for educational and awareness purpose only. The views are intended for discussion and exchange of views rather than an expert opinion. This is not an recommendation to buy or sell or invest in the stock market and derivatives market. Kindly exercise caution and perform your own due diligence before investing in the market, after fully and clearly understanding the risks involved.


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