NOUS — What, How & Why

Financial markets run on who has the more AUM, that's how people keep score but remember AUM can come from distribution edge also and that will not get same respect as someone gathering AUM due to outperformance. Everyone at the end of the day invests to make money and thus it is natural the one who is giving better returns ends up with more money to manage. This is the underlying philosophy of relative strength and NOUS.

What is NOUS?

NOUS is a relative strength momentum indicator that measures how well a specific security (e.g., a stock or ETF or a commodity) is performing compared to its benchmark.

• In the Indian stock market, NOUS uses a fixed benchmark — the Nifty 500 index — for all broad-market comparisons
• It operates with fixed parameters
• Benchmark: Nifty 500
• Time Period: Always 55 candles
• Timeframes: Daily, Weekly, Monthly

NOUS helps identify outperformers (beating the Nifty 500) and underperformers (lagging it) using color signals and a numerical score.

How Does NOUS Work?

NOUS evaluates relative performance over 55 candles across three fixed timeframes:

1. Daily (D)
2. Weekly (D)
3. Monthly (M)

Signal Logic (Fixed Rule):

• GREEN:The stock is outperforming the Nifty 500 over the last 55 candles in that timeframe
  —> Relative performance is above its 55-period average
• RED:The stock is underperforming the Nifty 500
  —> Relative performance is below its 55-period average

Example:
NOUS Daily = GREEN → The stock has outperformed the Nifty 500 over the last 55 daily candles compared to its own historical relative strength.

What is the NOUS Score?

The NOUS Score is a composite momentum rating ranging from -6 to +6, based on the status of Daily, Weekly, and Monthly signals.

Fixed Scoring Weights:

All Possible NOUS Scores

How to Use NOUS Score in Trading/Investing?

Buy/Hold only if NOUS Score ≥ +3
→ At least two timeframes must be GREEN

Practical Tips:

• Screening:Use NOUS ≥ +3 to find stocks beating the Nifty 500 in momentum
• Entry:Best when Daily turns Green (Daily NOUS Crossover) while Weekly & Monthly are already Green → Buying the dip in a strong trend.
• Exit:
  
  1. Monthly turns Red → Strong sell signal (long-term breakdown)
  2. Weekly turns Red → Intermediate caution specially for positional trades
• Avoid: Stocks with NOUS ≤ -3, even if undervalued — they are lagging the market

Visual Example

Key Takeaways

Pro Tip: Use NOUS as a momentum filter — combine with price structure and volume for better results like SBD and SVD

Try to explain what the above scanner output represents and how you can use it. Want a ready-made screener logic for NOUS? Go To NOUS Scanner