Intepreting Stocks - 31st May 2010

NIFTY EOD Analysis as on 31st May 2010

Small bodied green candlestick with small upper shadow and longer lower shadow. The pattern looks like a hanging man, if we take into consideration the brief uptrend. Apply caution for next day.
CMF is showing +ve bias compared to yesterday(+) showing accumulation.
Stochastics is showing +ve bias(+).
EMA3 crosses above EMA13 (+). EMA3 support at 5047(+). EMA 13 support at 5019(+).
Slope of EMA 13 is up.(+) Price is above EMA 13(+)

Answers for Yesterday
Bulls continued their momentum, but the volume was lower than Friday. Made higher high and higher low today.

Questions
What's going to happen next? Let's wait and watch.

Weekly Analysis of Stocks as on 28th May 2010

NIFTY Weekly Analysis as on 28th May 2010

Interpreting Stocks - 28th May 2010

NIFTY EOD Analysis as on 28th May 2010

Green candlestick which made higher high and higher low showing buying pressure. Volume was good, but lower than yesterday.
CMF is showing +ve bias compared to yesterday(+) showing accumulation.
Stochastics is showing +ve bias(+).
EMA3 is kissing EMA13 (~). EMA3 support at 5000(+). EMA 13 support at 5000(+).
Slope of EMA 13 is flat.(~) Price is above EMA 13(+)

Answers for Yesterday
Bulls rightly marched past the flag showing +ve bias. Also, the close was above EMA 3,13 showing more bullishness among the crowd.

Questions
What's going to happen next? Let's wait and watch.

Important Points that I learned from Come Into My Trading Room by Alexander Elder - Part 2

II - Important Points that I learned from the book – Come Into My Trading Room by Alexander Elder

METHOD— TECHNICAL ANALYSIS 

1. 
   
   
   1)      It is important to select analytic tools and techniques that make sense to you, put them together into a coherent system, and focus on money management.
   2)      You must follow up chart analysis by establishing profit targets, setting stops, and applying money management rules.
   3)      Individual behavior is difficult to predict. Crowds are much more primitive and their behavior more repetitive and predictable. Our job is not to argue with the crowd, telling it what’s rational or irrational. We need to identify crowd behavior and decide how likely it is to continue.
   4)      An uptrend is a pattern in which most rallies reach a higher point than the preceding rally; most declines stop at a higher level than the preceding decline.
   5)      A downtrend is a pattern in which most declines fall to a lower point than the preceding decline; most rallies rise to a lower level than the preceding rally.
   6)      An uptrendline is a line connecting two or more adjacent bottoms, slanting upwards; if we draw a line parallel to it across the tops, we’ll have a trading channel.
   7)      A downtrendline is a line connecting two or more adjacent tops, slanting down; one can draw a parallel line across the bottoms, marking a trading channel.
   8)      Support is marked by a horizontal line connecting two or more adjacent bottoms. One can often draw a parallel line across the tops, marking a trading range.
   9)      Resistance is marked by a horizontal line connecting two or more adjacent tops. One can often draw a parallel line below, across the bottoms, to mark a trading range.
   10)  We identify downtrends by drawing trendlines across the peaks of rallies. Each new low in a downtrend tends to be lower than the preceding low, but the panic among weak holders can make bottoms irregularly sharp. Drawing a downtrendline across the tops of rallies paints a more correct picture of that downtrend.
   11)  Congestion areas reflect crowd behavior, while the extreme points show only the panic among the weakest crowd members.
   12)  Exchanges are owned by members who profit from volume rather than trends. Markets fluctuate, looking for price levels that will bring the highest volume of orders. Members do not know where those levels are, but they keep probing higher and lower. A tail shows that the market has tested a certain price level and rejected it.
   13)  A one-day splash of uncommonly high volume often marks the beginning of a trend when it accompanies a breakout from a trading range. A similar splash tends to mark the end of a trend if it occurs during a well-established move.
   14)  Divergences between price and volume tend to occur at turning points. When prices rise to a new high but volume shrinks, it shows that the uptrend attracts less interest. When prices fall to a new low and volume falls, it shows that lower prices attract little interest and an upside reversal is likely.
   
   
   
   
   INDICATORS—FIVE BULLETS TO A CLIP
   1)      Simplicity and discipline go hand in hand. To be a successful trader, choose a small number of markets, select a few tools, and learn to use them well.
   2)      Keep in mind that indicators are derived from prices. The more complicated they are, the farther they are from prices and the farther away from reality. Prices are primary, indicators are secondary, and simple indicators work best.
   3)      Time—The Factor of Five :- Choose your favorite timeframe and then immediately go up to the time-frame one order of magnitude higher and start your analysis at that point. Use at least two, but not more than three, timeframes because adding more only clutters up the decision-making process.
   4)      A stock catches the public’s fancy, shoots up 20 points one day, and then slides 24 points down the next. What drives those moves? Fundamental values change slowly, but waves of greed, fear, optimism, and despair drive prices up and down.
   5)      When Bollinger bands become narrow, volatility is low, and options should be bought. When they swing far apart, volatility is high, and options should be sold or written.
   6)      When prices blow out of a channel but then return to the moving average, trade in the direction of the slope of that MA, with a profit target near the channel line.
   7)      There is an old Russian saying: “your elbow is near, yet you can’t bite it.” Try it now—stretch your neck, bend your arm, go for it. So near, yet so far. It’s the same with day-trading—the money is right in front of your face, yet you keep missing it by a few ticks.
   8)      There are no certainties in the markets, only probabilities.
   9)      An aggressive trader can make that stop “stop-and reverse,” meaning that if stopped out of a long position, he will reverse and go short. When a super-strong signal doesn’t pan out, it shows that something is fundamentally changing below the surface of the market. If you buy on the strongest signal in technical analysis and then your stop gets hit, it means that bears are especially strong, making it worthwhile to sell short. Reversing positions from long to short is usually not the best idea, but the failure of a divergence of MACD-Histogram is an exception.
   
   

Interpreting Stocks - 27th May 2010

NIFTY EOD Analysis as on 27th May 2010

 Green candlestick which made higher high and higher low showing buying pressure. Volume as higher than yesterday, showing more players are interested to join the rally.
CMF is showing +ve bias compared to yesterday(+) showing accumulation. Also, today it entered the +ve territory.
Stochastics is showing +ve bias(+).
EMA5 is below EMA15 (-). EMA5 support at 4948(+). EMA 15 support at 4994(+).
Slope of EMA 13 is flat.(~)

Answers for Yesterday
Bulls again continued their ride today with good volumes than yesterday, showing more players are interested to join in now. There is a resistance at the channel. The Flag pattern might test the strength of bulls. Let's see tomorrow if Bulls can successully pass the battle with bears.

Questions
Can Bulls march past the Flag? Let's wait and watch.

Important Points that I learned from Come Into My Trading Room by Alexander Elder - Part 1

1. I - Important Points that I learned from the book – Come Into My Trading Room by Alexander Elder
   
   
   
   
   1)      People are more likely to be rational when alone, and grow more impulsive when they join crowds.
   2)      A stop order becomes a market order when the market touches that level. Suppose you buy 100 shares of Guinea Pig Factory at $4.25, expect it to rise to $7, but protect your position with a stop at $3.75. If the price slides to $3.75, your stop becomes a market order, executed as soon as possible. You’ll get out, but expect to suffer slippage in a fast-moving market.
   3)      Daily charts alone aren’t enough, and you need weekly charts with at least two years worth of history.
   
   
   MIND—THE DISCIPLINED TRADER
   1)      It is OK to make mistakes but not OK to repeat them. When you make a mistake for the first time, it shows that you are alive, searching, experimenting. Repeating a mistake is a neurotic symptom.
   2)      Money management rules draw a straight line between a business-man’s risk and a loss.
   3)      Healthy trading boils down to two questions you need to ask in every trade: “What is my profit target?” and “How will I protect my capital?”
   4)      Becoming a good trader means taking several courses—psychology, technical analysis, and money management. Each course requires its own set of records. You’ll have to score high on all three in order to graduate.
   5)      Whenever you enter a trade, print out the charts that prompted you to buy or sell.
   6)      What will you do if your stock jumps five points in your favor? Five points against you? What if your future goes limit up? Limit down? If you have to stop and think while you’re in a trade, you’re dead. You need to spend time preparing trading plans and deciding in advance what you will do when the market does any imaginable thing. Play those scenarios in your head, use your computer, and get yourself to the point where you do not have to ruminate about what to do if the market jumps.

Interpreting Stocks - 26th May 2010

NIFTY EOD Analysis as on 26th May 2010

Green candlestick with no lower shadow and a small upper shadow. The close was above the mid-point of yesterday's candle. Also, the trend channel acted as a good support from where the prices bounced back. Volume was higher than yesterday, showing that more people are eager to see the prices UP than lower levels.
CMF is showing +ve bias compared to yesterday(+) showing accumulation.
Stochastics is showing +ve bias(+) and just waiting to crossover.
EMA5 is below EMA15 (-). EMA5 support at 4897(+). EMA 15 resistance at 4992(-).
Slope of EMA 5 is up.(+)

Answers for Yesterday
Bulls came back with strong force today. the Breakdown yesterday was just a trap as of now. We have to wait for few more days of action so see if it was really a false breakdown.

Questions
Can Bulls continue their ride ahead? Let's wait and watch.

World Market Analysis as on 25th May 2010

Interpreting Stocks - 25th May 2010

NIFTY EOD Analysis as on 25th May 2010

 Big Red candlestick showing selling pressure. Volume was comparitively lower than yesterday. The close just broke the trend channel and the trend line.
CMF is showing -ve bias compared to yesterday(-) showing distribution.
Stochastics is showing -ve bias.(-)
EMA5 is below EMA15 (-). EMA5 resistance at 4880(-). EMA 15 resistance at 5010(-).
Slope of EMA 5 is down.(-)

Answers for Yesterday
It was all bears day today, dominated from start to end and in turn broke the trend channel and trend line.

Questions
Is this breakdown of NIFTY from trend channel and the trend line an indication of more bearish attack? Let's wait and watch.

World Market Analysis as on 24th May 2010

Interpreting Stocks - 24th May 2010

NIFTY EOD Analysis as on 24th May 2010

A Small bodied candlestick with long upper shadow and small lower shadow, showing bulls tried to push the prices up, but faced stiff competition from bears.  Hammer formed on friday needs more confirmation to act as a reversal. Volume was comparitively low.
CMF is showing -ve bias compared to yesterday(-) showing distribution.
Stochastics is showing +ve bias and waiting to breakout.(+)
EMA5 is below EMA15 (-). EMA5 resistance at 4950(-). EMA 15 resistance at 5040(-).
Slope of EMA 5 is down.(-)

Answers for Yesterday
The course of action will depend on Global cues. It was an indecisive day today and NIFTY looks more in favour of Bears at the moment. Though, it made a higher high and higher low, the read body was small, showing bearish pressure.

Questions
What is going to happen next? Let's wait and watch.

Weekly Analysis of Stocks as on 21st May 2010

NIFTY Weekly Analysis as on 21st May 2010

Interpreting Stocks - 21st May 2010

NIFTY EOD Analysis as on 21st May 2010

A Hammer which found support at the downtrend channel. Is this a sign of reversal? Let's wait for confirmation.
CMF is showing +ve bias compared to yesterday.(+)
Stochastics is showing +ve bias compared to yesterday.(+)
EMA5 is below EMA15 (-). EMA5 resistance at 4950(-). EMA 15 resistance at 5055(-).
Slope of EMA 5 is down.(-)

Answers for Yesterday
A Hammer was formed today, which found support at the downtrend channel, showing that, bears ran out of steam after touching the support line and then it was bulls pullback from the support line. In my opinion, if bears continue to power, then next support will be at 4815 level. But, after a hammer today, and seeing the CMF and Stochastic bias, NIFTY should move up from here.

Questions
What is going to happen next? Let's wait and watch.

Interpreting Stocks - 20th May 2010