The All Star Momentum Scan

While we go through our lists of sectors and stocks on a weekly basis, we thought of launching a product that would highlight the strongest performers in our universe. These are the ones that are primed for an explosive move.

Like The Outperformers scan, this is a list of stocks belonging to the sectors that display relative strength in the market at any given time. Since sector rotation is the lifeblood of a bull market, we will be ahead of the curve before the gears keep shifting.

Here is the list of The All Star Momentum Scan that we sorted by way of relative strength. These stocks have been selected on the basis of inter-and intra- sectoral performances. So while these belong to the sectors that are outperforming the market, these stocks are also outperforming their peers within the same sector.

Click on the chart to enlarge the view.

In order to identify the high momentum stocks, we scanned the Nifty 500 index on the basis of relative strength. Then we sorted them on the basis of the distance between the current market price and their respective all-time highs.

This is a bottom-up scan that keeps us on our toes. Any new development in price and sector rotation reflects in this list. Sometimes with so much going on one may overlook an interesting story developing in a specific sector. This scan helps us remain up-to-date with all that’s happening in the market.

To make sure that we’re getting the best out of the scan we look for outperforming stocks within the outperforming sectors!

Quite often, we see the same names coming up in different scans, but that is something we love to see! If different processes and scans are directing us towards the same name, that just means we should not turn away from the inherent strength in that particular stock.

This list gives us a comprehensive idea of what's moving and what's not in the market. Since it covers Nifty 500, the stocks have to fight it out for their place on this list. And guess what? Something fought through for the first time this year!

All year, we haven't seen Pharma or Healthcare appear in the top 10 of this list. For that matter since we've launched the scan, we haven't seen these names in this list! Well, guess who made it straight to the top of the list this time? CIPLA!

I mentioned in our most recent conference call that I wasn't looking at Pharma until we get a specific signal taking me towards that sector. Looks like we have our first signal!

Cipla is making new highs in this market. That, all by itself, is relative strength right there! The price broke out of its base in the 2020 market recovery and halted once it hit the roadblock at 998. 998-1000 has been quite a challenge to get through as can be seen below.

But the more times a level is tested, the more likely it is to be breached. And that's what happened here. We have a 2-year base breakout whereby the price just moved sideways and is now ready to rally.

The indicator is close to bullish momentum territory, and the price is making new all-time highs. We are bullish above the risk management level of 1000, with a target close to 1,400.

Keep in mind, the market is volatile and it is imperative that your risk management strategy is in place and active(always).

This bottom-up scan helps us winnow down to the strongest stocks among as many as 500 scrip codes! So while we continue with our top-down analysis for a broader market perspective, an additional layer of the bottom-up scan adds to our process, ensuring that we’re not missing the names that are experiencing the most substantial moves.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team