BSE FMCG; Will it enter a bull run?

Jetairways; an Analysis

Most of the aviation stocks are at a downtrend, few hit badly. I am seeing Jet airways to be a potential stock. it is forming a falling wedge along with it we are seeing divergence. The stock has even given a per-mature breakout. The target are showen above in the figure. If the stocks fail to give a breakout the stock is expected to find support at 275 

High Profitability Trading

When it comes to ultimate trading system; everyone are interested to know about. Obviously it is one of the curious topic discussed form centuries. Everything started form plotting “X” and “O” on cigarette packs or placing candles on a sand table.  Technical Analysis grew as an industry without even realizing.

We have witnessed many things in these times Black–Scholes, quant, expert system, cutting edge software’s, back testing and  dozens & dozens of indicators. Let me come again, where are we today. A time we are bombarded too many techniques, models, strategies and methods. Few sold over courses and coaching’s few are shown on YouTube few kept hush-hush.  Ultimately, today we leave in a world where we have too many techniques to follow too many indicators been invented few paid, few unpaid, few reliable and few aren’t.

After spending centuries of time, and spending huge amount of money. What we have found? Is it an ultimate trading system? The answer is no and we won’t find it until we understand the simplest things of stock market. That’s volatility, price and volume; all these are the basic pillars of technical analysis. Any indicators, trends, patterns follow these basic principles of markets.

Stock market is not a Pandora box it’s a simple demand and supply. There is nothing called as high profitability trading technique, every system have its own risk. Risk and reward are the basic inherent variables of any trade using a system. Remember, every system have certain risk even a risk free model such as Black–Scholes model also had a risk with it. Ultimately we are left with models which can be applied the only thing that you have to know is when to apply.

I love Kung-fu Panda, the most loved part in that movie is “nothing”. The soup-noodles isn't made up of a special ingredient nor there is any special description about martial arts on dragon scroll. Similarly we have left out with nothing in stock market. I have literally seen peoples who make money only using candle sticks and moving averages. And they are doing well, I regularly hear about a marwadi in Bangalore who use manual tools for predicting market. And that man is well-known for accuracy. How did he do that? It is nothing but shear dedication towards market.

This Sunday I was able to interact with an interesting man he is very close to Indian army. He told “Any army in the world have an average IQ. It isn’t an IQ that make that difference, it the discipline”. Larry Berman told something similar “I am a technical analyst; I have people to punch my orders”. Guys, any bullshit can make money out of market and we have good examples for that: Turtles, Million Dollar Traders (documentary) and many more. In an official blog of Rakesh Junjunwala described “people laughed at me when I told I want to be in stock market”(When Rakesh took a decision to start trading in his college days).

Coming again, we have nothing called as high profitability trading. If there is so than its you. And only you.

RIL: An Analysis for 25/4/13

After one cycle swing seen in reliance I am looking a reversal. The stock has a powerful resistance at 850. If it able to cross then we can see the stock going up to 920.

Indicators:  we are seeing a bullish divergence which is been building from long days. We see this divergence in MACD. We have even seen a good crossover as most of the stock has been in a bearish mode. It is been a hotspot for many of the investors.

Fib Levels:  As I had told above this stock may find resistance at 50%. If it manages to cross that level, it will reach to 920. Which will lead to 920 levels; the stock is looks potential and we may even see the stock moving more than 940 as the divergence is strong.

Moving Average: I have been looking for a long time. The stock is more sentimental towards 20 DMA. After confirmation of a breakout in 20 DMA this stock is found to be bullish.

A Falling Wedge in Sensex

We have seen market consolidating, these days. The cocktail of negative news have driven market near to 18000 levels. Before it reach 18000 we are seeing falling wedge pattern forming. 

A Falling Wedge

A Divergence Building up 

Simultaneously, we are seeing a Bullish Divergence forming in market. As we are seeing a gap filling have started up in Sensex. We may see a reversal @18000 level after filling up of gap; which will eventually lead to a bullish breakout in Falling wedge.

Important SAR

A Story of Turtles; History of Trend Following

Richard J. Dennis, a man who made a history in the world of trend following. Many of us use trend following in their investments & trading practice. But most of the people are not aware of this person and his contribution to Trend and Trend analysis.

Richard Dennis

It was the year of 1970’s when a 17 year old student of philosophy Richard J. Dennis; started this career as a floor trader at Chicago Mercantile Exchange. Soon after his education he returned to trading. He borrowed $1,600 from his family, which after spending $1,200 on a seat at the Mid-American Exchange left him $400 in trading capital. In 1970, his trading increased this to $3,000, which he described as "compared to $400 ... a real grubstake", and in 1973 his capital was over $100,000. He made a profit of $500,000 trading soybeans in 1974, and by the end of that year was a millionaire, just short of twenty-six years of age. Today he is well known as a commodity speculator once known as the "Prince of the Pit".

The story of turtles

Dennis believed that successful trading could be taught. So, along with William Eckhardt, a friend and fellow trader, Dennis recruited and trained 21 men and 2 women, in two groups, one from December 1983, and the other from December 1984. In January 1984, after the two-week training period was ended, Dennis gave each of the Turtles a trading account and had them trade the systems they had been taught . During this one-month trading period, they were allowed to trade a maximum of 12 contracts per market. After the trial-period ended, he gave the few of them who had successfully traded the system during the one-month trial, accounts ranging from $250,000 to $2 million of his own money to manage.

An advertisement by Richard Dennis

Selection of Turtles

 Dennis placed an ad in The Wall Street Journal and thousands applied to learn trading at the feet of widely acknowledged masters in the world of commodity trading.

In the selection process he asked basic question like

1.     The big money in trading is made when one can get long at lows after a big downtrend.

2.     It is not helpful to watch every quote in the markets one trades.

3.     Others' opinions of the market are good to follow.

4.     If one has $10,000 to risk, one ought to risk $2,500 on every trade.

5.     On initiation one should know precisely where to liquidate if a loss occurs.

Trading Strategy
Dennis trained this group, known as Turtles, for only two weeks introduction about a simple trend-following system, trading a range of commodities, currencies, and bond markets, buying when prices increased above their recent range, and selling when they fell below their recent range. They were taught to cut position size during losing periods and to pyramid aggressively—up to a third or a half of total exposure, although only 24% of total capital would be exposed at any one time. This type of trading system will generate losses in periods when the market is range-bound, often for months at a time, and profits during large market moves.

In "The Complete TurtleTrader: The Legend, the Lessons, the Results" (2007), author Michael Covel offers some insights into the specific rules:

• Look at prices rather than relying on information from television or newspaper commentators to make your trading decisions.
• Have some flexibility in setting the parameters for your buy and sell signals. Test different parameters for different markets to find out what works best from your personal perspective.
• Plan your exit as you plan your entry. Know when you will take profits and when you will cut losses.
• Use the average true range (ATR-an indicator) to calculate volatility and use this to vary your position size. Take larger positions in less volatile markets and lessen your exposure to the most volatile markets.
• Don't ever risk more than 2% of your account on a single trade.
• If you want to make big returns, you need to get comfortable with large drawdowns.

Outcome of Turtles
The story of how a group of non-traders learned to trade for big profits is one of the great stock market legends. Dennis earned more than $175 million in only five years. He also proved that, beginners can learn to trade successfully. Number of turtles (e.g. Jerry Parker of Chesapeake Capital, Liz Cheval of EMC, Paul Rabar of  Rabar Market Research) began and continued careers as successful commodity trading managers, using techniques similar, but not identical, to the Turtle System.

Support for Yes Bank

Bajaj Auto Ltd, A Analysis

After a corrective wave from 2223 the stock fell upto 12% causing a bullish divergence. MADC is below 0 line and making the stock more attractive and RSI is showing a strong bullishness. The stock have a potential to go upto 2220. 

State Bank of India, Analysis

Success Story, A Analysis on Rel Cap

On 26th November 2012 I had told this stock will shoot up. And I was right, the stock gave nearly 30% return. Know I find this stock to be at a profit booking stock as we are seeing a bearish divergence.

Strategy: profit booking, can go with a fresh buy if it cross over 520 level.

Look for my previous article on Rel cap(on 26/11/12): Click Here

"Haven't I told you?" ITC Reversal

I repeatedly wrote 2 articles regarding ITC Ltd seeing a possible reversal. I gave an exact support when a guy  asked  me a query, on my Blog. The stock was in a corrective phase where I saw a bullish divergence and predicted well before it happened.

• My article on ITC where I told it will go into a corrective Phase(Date:20/12/2012): Click Here
• My article on ITC where I spotted a reversal (Date:8/1/2013):Click Here
• My article on  ITC standing on my support(Date:7/1/2012):Click Here

ITC- Reversal

Yesterday at this time I wrote an article on wave analysis and and other factors in ITC. The wave seen in ITC Ltd is a Zig-Zag corrective wave along with it we are seeing a bullish divergence in this stocks. The stock have shown a reversal know.

Conclusion: can go with a good stop loss, it have a target of 10%.

Strategy: see for down-trend line, if it break today. Then bullish  

See yesterdays article on ITC: Click here

ITC, wave analysis

After seeing a bearish divergence the stock went to a correction we are currently seeing last wave correction . ITC have started showing a bullish divergence,  stock is having a support around 270

Tata Steel, Elliott Wave Analysis

It’s almost a year or more I have been observing that Tata Steel is more sentimental towards gaps theory. This phenomenon may be usual and may be seen in many stocks but we are seeing this "gap theory" again and again in tata steel.  Long ago I was speaking regarding "Magical support" of sensex. But Tata steel have too much of such SAR

The stock has started to correct and have a possible correction till around 417 and move in the bullish channel.

Elliot Wave Analysis

This is my 1^st EWT analysis. Currently we are seeing Tata steel correcting. It has just started corrective wave A and may have a support as mentioned above (around 417). 

ITC, How long to correct?

We have seen negative divergence due to which the stock have started its consolidation phase. 

Technical Analysis on IVRCL Ltd

On 3rd December I had had told my opinion on my page Experiments With Stocks, The stocks went up to  +9% and gave a bearish engulfing. the price is currently ruling around 42. I was away from this stocks but a sudden Harami drew my attention.

According to me the stock have a potential to go upto 47. If it show a reversal know. If not the stock have a  support at 39.

DEC12, 2012

Know everyone are fantasied with today’s date but for me today stand as a milestone. Yes, I completed 2 year out in stock market. One thing that I always ask: what I learnt in this year, is there something new? How it might help me? Every days is a new day for me, learning something new different from others.

For many people Technical Analysis might be a piece of cake, they might have learnt by a relative, friend, college or any training program. But, a college guy who specialize himself in marketing. Take a weird step on 12^th dec 2010 saying “I will enter Stock Market”. It might be a easy thing for many people whose parents, relative, friends are into this market and they just need to approaches their respective people. I was one guy who didn’t have any such source but had a determination for learning it. Trust me friends, determination is the only thing that is needed in life. I am not a motivational speaker but it is a myth of life.

How I actually learnt Technical Analysis?

Whenever people find me, they ask me one frequent question. Where you learnt Technical Analysis? You worked in any company? And such question. Today, I will let you my secret. How I learnt Technical Analysis?

It was on 8^th dec I actually decided to enter market. On 12^th dec I sent a request to join a group owned by a lady called Darpana Sharma. The group found to be resourceful. I found some potential guys who worth following. Then I sent them a friend request, added them and for 6 months or so. I just observed them. The way they place there stop-loss, the way they take their decisions, entry point, strategies and levels. I am a student of psychology (Cognitive Psychology), and it was a easy task for me to decode there thought process using reverse engineering. I classified my people into categories

AmitMalhotra-A perfect Strategist

Abhivandan Nagia- A Superhuman

Team Eaibs -Godfather of magical supports and resistance

Dilp Jain- Trading with NEWS

And there are number of people along with these people, I can’t name them all. But do have a great respect to call them my Dronacharya. These people were Brokers, Analysts, traders etc.

Simultaneously I started reading books suggested by CMT(MTA) for their examinations. I felt really easy to read them, I used to read them and look for pattern formation out in market. Till September 2011 I quietly decoded these people. Then to practical’s I started applying what I learnt. I personally felt some difficulty applying what I learnt.

A Journey With ATMA

I was a great fan of MTA. I always used to dig MTA website, then I found Association of Technical Market Analyst which is a Indian chapter of MTA. I was in a huge dilemma to join into ATMA or carry my current psyco- reengineering process. I took an initiative to get into ATMA. I majorly used to explore MTA’s knowledge base during my initial days. But today association have its own library with number of books, website, and podcast for members. As I have told you I was having problem applying what I read. Because applying knowledge is different than what we actually read out in books.

One turning point came when ATMA started to conduct Regional meetings it was a golden opportunity for me to be there every time. The reason why because I was been surrounded with the people who can’t follow what I am speaking, whenever I used to take words like Head & shoulders, Triangles, indicators and all people saw me as if a I am alien. The people who surrounded me were from marketing, they knew brand management, advertising, sales etc. ATMA was the only option. People out in ATMA are really cooperative with open heart for everyone; few are at peak active all the time.

My personal words  

• You make profit/ loss, keep an account.
• Always have control on your emotions, never give a chance for your emotions
•  Keep your ego at bay
•  Love what you do, stock market is not mandatory for all
• Marks and degrees are bullshit. Experience  and knowledge are the key factors
•  Don’t hurry making money. 1^st Back-test, at least work on knowledge aspect remember Abraham"If I had six hours to chop down a tree, I'd spend the first four hours sharpening the axe".
• Determination and confidence are 2 phase of same coin.

Rel cap

Good Morning,
                        Rel cap is showing a bullish divergence along with a breakout. The stock is also about to make a Bullish crossover on MACD.

Have a nice day :)

An analysis on Pantaloon Re

The key things that are attractive for me are as follows:

• MACD cross-over
• Divergence in RSI
• Breakout in price level

Conclusion:  If we see this stock crossing 196 we can see this stock heading towards 226 which will yield around  12% to 15% profit.

Common Misunderstanding of Stock Market

It’s over a year that I have been writing in this blog. I came across many people with many “FAQ”. I have been always writing articles on Technical Analysis. But this time I’m willing to share something regarding “common misunderstanding” that people are having regarding markets.

Stock market is an illusion, everyone enters will end-up in loss

It doesn’t mean that if you have made loss, then everyone will make loss. There are 100 reasons for going wrong out in market. Analysis sometime fail, but you need to have a backup plan. If your stops trigger you have look for things like what went wrong, which is the next support, dose it worth bottom fishing the stock? And so on. Let me take a small example assume that you are out to market to buy a soap/bread/biscuit or any other item such. What you will do? Hope you go out for a retail shop and buy. Isn’t it? What if you don’t get? Easy go to another shop. For this we always use a world “don’t marry your stocks”

The reason is every stock has a cycle, a phase and a trend. Everyone have to understand it then go for an investment you know you can’t sail against wind so you have to go according to the winds of market. It doesn’t mean we have to buy a stock at a high and wait for the stock to go high. This is something what most of the “Breakout traders” do. Breakout traders are professional traders they understand the breakout more than a common man.  See every breakout aren’t bullish, some are fake and the great way to understand it to check volumes during breakouts.

I see TV and made Profit/Loss

 I am a student I don’t want to fall into any controversy. Let me communicate what Larry Berman and other such traders and analyst say “SWITCH OFF THAT TV VOLUME AND TRADE” few even go to an extent saying switch off your TV. Recently I had a chance to sit a wonderful seminar held in Bangalore, speaker as Vishal Malkan . Do you know what he told? He told “I never see TV” this isn’t weird I have many people saying this even I do the same thing.  I never say PM/President rule this world I say Media rule this world with psychological gimmicks, mind control and NLP.

I am a psychology guy hold a special interest in cognitive psychology and neuro linguists, I am not matured to speak things but can only say “ It’s your money, don’t make someone to take your investment decisions”. If you take their advice don’t blame them. If you get poor marks in an exam you can’t blame your pen, isn’t it?

I want to invest so and so, what will be the return after so many years

 Believe me even god find difficult to answer it. There are few concept involved like range, current price, policy, economics etc. many media say Sensex will touch 20k/30k etc but there is some “T&C*”. The best way to do money is to buy at a low and sell at high. It is very hard to specify time.

How can I become a very good trader?

 Everyone wants to be a Rakesh Jhunjhunwala. I have seen people who are trading for show-offs. When people ask this question I normally question them asking. What you do for leaving? Many answer mobile shop, owner of petrol pump, jewellery shop, hardware shop etc . Time, emotions, analysis and capital are some key pillars of trading. And trading is a different game. Everyone can play but there are few who are good at it, like Sachin in cricket.

I am not a trader but would like to call myself an analyst. I don’t spend 24*7 out seeing market. Yet I made around 12% to 51% profit out of 10 stocks in September. You can be a investor can do handsome money.

Do you know in ancient time there used to be a percentage of farmers, a percentage of carpenters, a percentage of blacksmith etc etc. every city was balanced that time son of a carpenter will be  a carpenter.  If your family /your business is doing well. Then, why you need trading? Investment is smartly a good decision compared to trading.

“Hope this article bring some change, in you”

ALL THE BEST