Monthly Archives: April 2013

Save – Technical Analysis…

You must be thinking, why I am writing this, what is wrong.

I have to write this because, I sense some are directly or indirectly hurting the interest of Technical Analysis and people who are seriously involved in it.

In last few days I had written couple of times about Blog Marketers, who are using Technical Analysis as one of the tool for earning. Unfortunately they don’t know anything about the market, only they know is Nifty and some popular stocks, and poor Janata get trapped in their hands. Height of their ignorance is, this blog marketers keep on asking to their readers, what is you view. B…S… Stop this Crap.

Another category is like this – one fellow Technical Analyst I know, probably he must not be knowing me. I was observing his trade patterns, and analysis. This guy is hardcore intraday player, and probably he must be good into that, I don’t know, because I only receive information about successful trades, even though he has initiated that call one or two months back. Yes, intraday player also gives positional technical call, or I don’t know if his intraday call turns into positional call. No updates about failed trade.

I still remember my learning days when I was making so silly mistakes and I was not getting job, but fortunately that time has gone, and now I believe that I am grown up. Come to my friend, he is practicing from long time and still he has not come out of his early stages. Still he books his profits into 6-7 tranches, yes book 20%, book 10%, and book 15% profit. Please don’t laugh; this is how he books profit. I am really surprised, if you are hardcore technical analyst and seating in the market, do you think that any trader will take trade in this way. I think even in penny stock trader will get out in 2-3 tranches max, and you are talking about front line stock. It sound foolish, but there are this kind of people, and who also has their great ego of being Technical Analyst.

It is my urge to fellow Technical Analyst that please follow some ethics, by your act you are spoiling the name of Technical Analysis, and due to which others think twice to trust us. Fortunately, till date I had not face such situation, but why to wait for…. Save – Technical Analysis.

Reliance Infra – Technical Trading Strategy

reliance infra

Reliance Infra

Reliance Infra as on 22 April 2013 – 382.45

In the last session prices moved sharply higher. I sense that this rally will continue, based on my technical observations.

Trading Strategy –

Ideally, due to yesterday sharp rise we should wait for better entry level in Reliance Infra, near 373-375 level (cash), with this buy trader can put stop loss below 355. Initial target is around 415.

Or alternatively,

Traders can Buy Rel Infra call option of 400 strike price for next month expiry, which is lastly closed at 15.90.  Don’t jump to buy, as premiums are high at this level, enter near 12-13 range, and based on cash level. Stop loss will be 355 only.

Nifty Trading Strategy as on 23 Apr’13

Nifty as on 22 Apr’13 – 5834.40                       Bank Nifty as on 22 Apr’13 – 12576.60

Today, it was Bank Nifty who remained in focus. Bank Nifty witnessed sharp rise compare to Nifty. Although, Nifty closed in positive.

Going in details, momentum in leader of bank nifty-state bank of India (SBIN) seems exhausted, and somewhat similar situation has arisen in other banking stocks too. Please there is no sell signal yet, but on immediate term there is limited upside left, probably prices may take minor pullback and move ahead. (Overall trend remains bullish).

Nifty remained somewhat range bound, but it happens. In such type of market your trading strategy should be strictly followed, infact it should be followed in all market conditions.

Nifty Trading Strategy –

Traders who are already long Nifty can hold position with strict stop loss of 5800 (cash), taking fresh positions can be little riskier at this point in time. If, Nifty witness selling pressure, and moves below 5800 than  Buy Puts of 5700, next month expiry, can be bought with target of around 5730 level.

Technical analysis on Tata Motors.

Tata Motors as on 18 Apr’13 – 282.45

Tata Motors as on 18 Apr’13 – 282.45

As It can be seen in attached chart, Tata motors has made a low of 203 in end of July’12, and since from then making higher tops and higher bottom up till Jan’13 where it made a high of 337.40, notably which is higher than life time high of 320.75 made in Apr’12.  From Jan’13 price corrected exactly 61.8% last up leg from low of 203 to high of 337.40.

From last two weeks after making a low of 251.80 (61.8% Fibonacci Retracement) prices are moving higher on gradual note. In the last session we saw spectacular move where prices moved sharply higher.

According to my observation, Tata motors will continue to move higher. Undoubtedly, it has to cross some strong resistances in between, but I believe broader market can retest its highs, in such scenario Tata motors can also move higher.

Continue reading

Nifty trading strategy for 18 Apr’13

Nifty as on 18 Apr’13- 5783.10    Bank Nifty as on 18 Apr’13- 12288.25

Yesterday, I partly went right and partly wrong. I was expecting Nifty to consolidate and may be weaken slightly, before moving higher again. But I proved wrong and Nifty moved sharply higher. Similar to that, I mentioned that Bank Nifty looks bullish to me, and that is the reason I was cautious even while going short on market, because Bank Nifty has high weight-age in Nifty.

Anyways, I take full responsibility of my call.

Now what, Nifty and Bank Nifty will rally? Answer is yes, Nifty is setting stage to retest recent high of 6111.  It may not achieve in 2 or 3 days, probably take some time. Tomorrow is holiday of Ram Navmi, so market will reopen on Monday.

NiftyTrading Strategy –

Go long in Nifty above 5800, please note only above 5800, below which Nifty likely to consolidate for some time. Don’t rush to buy, and don’t hesitate to give financial stop loss what you must have decided in your mind. If you want to play safe, than Buy Call option, once Nifty manage to move above 5800, you can take risk of buying next month’s call, as expiry is near.

Bank Nifty, can also retest the highs. Can go long in Bank Nifty with stop loss below 11900.

Technical analysis on Nifty

Nifty as on 17 Apr’13 – 5688.70          Bank Nifty as on 17 Apr’13 – 11981.05

nifty as on 17 Apr'13 - 5688.70

Today Nifty closed with no price change, after prior session’s sharp rally. May be market was anticipating more. In the prior session Nifty managed to move above its 200-day EMA, but in last session (17/04/2013) it faced resistance from its 50-day EMA, and turned lower after making a high of 5699.25. For this there could be multiple factors coming into the picture, one might be heavy profit booking near 5700 level; another could be option writing and so on so forth.

I sense for time being Nifty has limited upside from current level may be here Nifty may consolidate further before moving higher again.

On the contrary, Bank Nifty looks bullish to me, but keeping above fact in consideration, I believe it is advisable to go stock specific in banking sector than going long on Bank Nifty alone.

(Please note, in a medium term perspective, I expect Nifty to move higher. For time being, in shorter term, we can play the pullbacks.)

Trading Strategy :-

If you are a short term trader and long on Nifty than it is time to book profit. If tomorrow i.e. 18/04/2013, Nifty opens lower below today’s close than buy Puts with stop loss of 5710 on spot Nifty.

Bank Nifty, book partial profit as I have already recommended on going long near 11410. (Please read)

way2profits

View on Nifty and Bank Nifty

Nifty as on 12/04/2013 – 5528.55

Bank Nifty as on 12/04/2013 – 11410.10

Last week I was expecting Nifty to test 5445-5400 levels, but it tested 5477 levels, and then traded in a choppy manner, where many full proof trading strategies failed, which were well acknowledged and traded. Anyways it is the part and parcel, you cannot expect 100 out of 100, if you are, then you fooling yourself. On above I have lot to say but topic will get divert.

Coming to markets. Broadly speaking market is in midst of indecision, where both parties are really struggling to drive the market. I sense Nifty should take U turn in coming days, as most of the stocks are showing initial signs of recovery, Bank Nifty and its components are showing some early positive reversal signal, only spoil sport is CNX IT index which was moving as per expectation.

So, Nifty on staying above 5400 level are likely to stay on a positive note.

Trading Strategy –

As markets are giving early signs of reversal and there is no solid confirmation. In such scenario trader should opt for options. I expect Nifty to trade with positive bias, so Buy the Call options, where risk is limited and profit potential is unlimited. Traders can apply similar strategy on Bank Nifty as well.  I am not recommending any strike price here, as I keep it open.

Infosys crash down was surprise for you?

On last Friday every market person was talking about Infosys Ltd., every blog was ready to encash on the name of Infosys. Some analyst were really very frustrated because of such unexpected fall, might be they must be long on the counter. Yes, I received few calls on Infosys to go long also, but anyways it has fallen.

Dear friends, before moving ahead let me confess that even I had not expected such sharp fall. But with this disclaimer let me move ahead.  In my last post on 5th Apr’13, I have clearly mentioned that Infosys – Weakness Expected (you can click here).

Point I am trying to make is, Technical analysis study has already alerted about underlying weakness in prices, and which was quite evident on Infosys and CNX IT.

In fact I was casually going through my past posts and checking out my performance, and I am really glad to say that I am on a right track with an excellent strike rate. Although I become lazy many a times, and don’t care to write article on my blog, but whatever I have given I have done with due respect to my subject and achieved good results.

I know critics can doubt on my argument, but you can check my past post, and I am sure my critics will become my fan one day.

Technical analysis on Crude Oil

Crude Oil as on 10 Apr’13 – 5140

It’s almost a year to complete, Crude Oil is moving in Triangle formation. After giving an initial breakout in last week, prices corrected further and reentered within triangle formation. In the first instance move appears to be false breakout.

Crude Oil as on 10 Apr’13 – 5140

Crude Oil as on 10 Apr’13 – 5140

As depicted in above chart, prices moved higher after testing its long term moving average and in last few days prices are correcting a bit, but still prices holds above its 50-day EMA, and also on the downside it has support from its average.

Momentum oscillator RSI (14) also holds above 40 level, so it gives possibility of positive turnaround in prices.

Trading Strategy-

Combining above technical observation, traders can go long once prices move above 5180 level with stop loss below 5050 level. If prices hold above 5200 mark than I sense prices will move to retest recent high of 5517 and gradually move higher. But go slow & steady.

 

Too Big to Fail…

I am sure, any financial news paper readers have must read above lingo many a times. This term was mainly used for 2008 Financial Crisis, and later on it was used for large Pvt Ltd companies, whose book size is so huge that, it is too difficult for them to fail. But, you know the history, there is nothing Too Big, to Fail,,, yes anyone can fail in this market.

You must be thinking, what is going in my mind, and what next. I come to the main point-

In last couple of days I came across some smart stock scanners (I am little skeptical to call them Technical Analyst), who keep on bombarding about their performance and blah blah. I thought let’s give them a chance and try to gauge whether they really outperformed the market or not. You know what is the result, they manage to give good returns*.

Now you must be thinking what this (*) mark is all about, if you have noticed. Undoubtedly their performance is better, but their performance is not their client’s performance. Little confused? Let me clarify, what this smart stock scanners do. During an intraday session, roughly they give 15-20 probably more, because I am not their client. Out of this given calls, some will do better; some will be marginal and some stop losses. Now, if you check their so called performance sheet than in an intraday their performance could be around 60-65% or more, and I appreciate that because even though with this performance anyone can make good amount of money with trading.  But immediately after that, one thought came in my mind; if suppose I would have been their client than could I able to replicate same performance in my balance sheet? Immediate answer is absolutely no, because I am 100% sure that I am not going to take all the suggested trade, just because of many reasons like, limited capital, lack of conviction, if initial few trades got hit than lack of morale and many other factors.

Now, in above case service provider has a valid argument to make that, I have performed better than others, and for that they have the proof, but what about my balance sheet? In worse case I may be in a loss.

I hope now you are in line with me, Too Big to fail applies to this smart people. Because they keep you giving the calls and finally they bunched so much together and beautifully manage their performance sheets.

Dear readers, while taking any services just make sure whether you can able to digest it or not. If your answer is No, than their service is of no use to you. Big No.

And dear stock scanner, you must understand that, even if your client is a pure intraday trader and even though his livelihood depends on trading, even though he seats with two trading screen, then also in all the case he cannot take more than 5-7 calls a day, and just leave the idea of layman, who just trust you.

I think it is time to make a revolutionary change. Service provider has to evaluate performance based on their client’s performance. I know what I am saying, it is extremely difficult, but it should be the goal.

Always aim for the Moon, even if you miss, you’ll land among the stars.”                                       ― W. Clement Stone.