THE LEADING "STOCK SELECTION STRATEGY" IN '2020'

Hey Elite Traders,

At last, you got your most valuable time to invest in our BlogSpot. Let’s get immersed in a technical analysis of the stock market from this blog series “OPTIMISTIC STOCK SELECTION STRATEGY” onwards. This is our first and foremost post of this series.

In this first part of this series, we will take a closer look towards corrections and indexes in the market so that we can find pivotal stocks in the depreciation stage of the economy. To understand our strategy, in brief, these terminologies should be taken into consideration is necessary

CORRECTION: A correction is a fall of 10% or substantial in the price of a security, asset, or a financial market. Corrections can last for the short-run and also for the long run the timespan in the market. While the decline in the short term, a correction is up to snuff, adjustment of overvalued assets can do and creates buying opportunities.

INDEX: Market indexes impart a wide characteristic portfolio of investment holdings. Methods for computation of individual indexes assorted but more or less all computations are rooted in weighted average mathematics. Indexes are used as a touchstone to indicate the movement and performance of market segments.

Let’s dive into the central framework of our post with these terminologies as guiding tools. When there is a large correction in the market for instance if it’s above 30% at that time which stocks should be bought or successful stocks that we are going to see in today’s post

In INDIA, NIFTY50 & SENSEX are two crucial indexes. When there is a fall in this index at that time there other indexes are affected with high or low impact on them. At this time we are going to consider NIFTY50 as a predominant index and we will work on it in according to the following steps:-

Calculation of correction in NIFTY50 

This correction is going to be based on the percentage of this index. This can be calculated through that Quarter in which there is correction and it is after the completion of the last candle in that specific quarter only. To find out how much correction is given by NIFTY50 we have to find all-time high in its index and low in that concluded quarter which is essential to know. Assuming this all-time high as “H” and low in the quarter as “L” in the above context.

First and foremost we have to see how much correction is given by NIFTY50 from “H” and calculate it present wise. Along with it, we have to also see how much correction is given by other indexes from “H” to “L” can be searched through data. The formula for calculation of correction is given by CORRECTION (C) = (L - H)/H * 100 [Here ‘H’ & ‘L’ are same as above denotations only]

The correction value of NIFTY50 which is the principal index should be compared with other indexes' correction values. Here are some Indexes & their corrections:

Srno.	NSE INDICES	VALUES	%VALUES
1.	NIFTY 50	4597.45	36.99
2.	NIFTY 500	3691.8	36.28
3.	NIFTY 100	4580	36.51
4.	NIFTY BANK	13937.45	42.72
5.	NIFTY IT	5891.2	34.9
6.	NIFTY SERVICES SECTOR	6765	38.31
7.	NIFTY 200	2340.95	36.46
8.	NIFTY FINANCIAL SERVICES	5581.05	39.88

From data collection of correction values, we have seen those indexes which have given less correction than NIFTY50 index and we name these indexes as STRONG INDEXES. Also, we will search for stocks in these indexes only. For instance, the NIFTY50 index has given 38% of correction and the NIFTY IT index has given 30% of correction. Then we will compare NIFTY IT stocks and their charts. We have to see how much other stocks have corrected less than the NIFTY IT index.

After the selection of a strong index, we have to speculate on the stocks. Then in the next quarterly period, we have to observe that our previously selected stocks are making any kind of reversal patterns or not. There are a variety of reversal patterns such as Island reversal, Head & Shoulders, Wolf or ‘W’ pattern.

It would be fruitful to pursue further research about 10 stocks of NIFTY IT index in order to select suitable stocks for buying which would be discussed in our upcoming post till then take your time and study this post in brief. Share your queries if you have or want to ask any question-related to this post.

“THE BEST IS YET TO COME”