[Premium] These Leaders Need A Rest

One of those signs is bearish momentum divergences in a lot of leading stocks. This action suggests there's likely to be more short-term sideways or downside action before Equities continue to the upside. We're also seeing similar action in the US.

Below are a few examples of what we're seeing.

PVR Ltd. is putting in a failed breakout attempt.

RBL Bank Ltd.'s recent highs are not being confirmed by momentum.

Nor are the highs in Reliance Industries.

Another example is SRF Ltd.

We're seeing this in leading stocks across sectors. In weaker sectors like Autos and Metals, we are seeing stocks resolve their consolidations to the downside. Until those weaker names firm up and the leaders find their footing again, we're likely to see slight downside or sideways action in the major indexes.

If this was the long-term bottom in stocks, then we'll have plenty of opportunity to trade it on the long side in the weeks and months ahead. The evidence remains mixed, so we want to stick with the best individual reward/risk setups that we outlined during our Conference Call last week.

Cash remains a position and gives us flexibility to approach the market from a position of strength when the time comes to be more aggressive.

As always, thanks for reading and let us know if you have any questions.

Allstarcharts Team