As a short-term trader, it is very necessary for an individual to understand the difference between strong and weak stocks. Our aim is to cut losses at short and let our profits run.

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Strong stocks: These stocks show great momentum in the bull market and they are not much affected by the bear market.

Weak stocks: These stocks fall in the bull and bear markets and get beaten down very badly in the bear market.

A short-term trader can make use of charts to identify strong & weak stocks.

Indicators Required

  1. 20-day moving average
  2. 22-day exponential moving average
  3. RSI

Timeframe: Only daily & weekly charts should be used to identify a trend in stocks.

Strong stocks: These stocks trades above 20ma, 22ema in 1D & weekly charts. Their RSI is usually trending with minor ups & downs and is generally above 50.

Below is an example of Page Industries which is in very strong uptrend.

Page Industries daily

Page Industries weekly

Weak stocks: These stocks trades below 20ma, 22 ema in 1D & weekly charts. Their RSI is usually declining and is generally below 50.

Below is an example of Sadbhav Engg. which is declining every single day and has strong chances of getting hammered in a bear market.

Sadbhav daily
Sadbhav weekly

How to identify a stock is turning weak?

Such stocks start trading below 20ma, 22ema in the daily and weekly timeframe. They have broken major supports and finally, their RSI start declining in 1D, W charts.

An opposite scenario applies to the stock which is turning strong. They start trading above 20ma, 22ema in daily & weekly time-frame. They have crossed major resistance and their RSI is trending.


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