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Detailed Nifty Analysis 13 Nov 12
May we all the people connected with ActiveTrades, and all other people and lives be blessed with the good wishes of all the Diwali Tiles. While we thank Laxmiji and Ganeshji for everything that we have got, may we able to enrich many more lives than ever.
2009 – You cannot analyse sound spectrum because it is Random & Non- repetitive. You cannot analyze something like this. Pattern failures become frequent, trade bandwidth squeezes, confidence reduces. This was happening in Nifty since years now. Traders said goodbye to markets, number of participants got reduced. Noise in market increased, profitability got reduced. People started believing in Khabris lot more. Technicals werent performing.
Observations. Extremely sharp double 6354 Higher lows Indian Market has been range bound since years. The range is Summarizing: Market has been rangebound - Both on medium term ( ) and on longer term ( ). There have been sharp double tops at 6300 zone, which are nowhere seen in history. Despite a sell off post the wave ( : year ), to 2200 and a rebound, there are higher lows consecutively without fail. Note that 6300->2200->6300->4500 is no wave and just a pattern.
Case 1: Triangle formation. If markets have to move up, then this is the most probable formation. Per this, Nifty should not break lifetime high decisively and should continue to move below that. There will be higher lows, which would further narrow the trading zone. Once 6300 is taken, expect massive upside, maybe of points on Nifty. Trigger Point: 6300 zone. Case 2: C&H formation. The move of 6300 to 2200 and 2200 to 6300 was a V shape one. The bottoms give only slight points which match with C&H, but they do. So there can be possibility of this too. Per this theory, lifetime should soon break BEFORE making another lower high, and thereby causing a big rally. Trigger Point: 6300 zone. Case 3: W formation. The , , moves resemble to a W in formation. Per this, there would be an upmove which could be as bigger as the fall 1800 points (tgt 6500) or this could be limited to 6300 only (because of stiff double tops). If 6500 comes, this would activate C&H pattern, which could spark a major rally. Trigger point: None. Its active. The Projections.
DOW JONES DOW JONES is moving in a decent, constant and symmetrical upper channel since 2009 (<7000 levels) to cmp 13579, unlike India. There was a resistance created between the channel support and mid-channel, leading to a rising wedge. This has broken now, opening gates for upside, which should take it to (hoping lifetime high wont cause much of a problem). Supports: 13050, SL
Summarizing There was a long period of nothingness in the market which seems to be over now. Even though Nifty was almost there where it was, ALMOST ALL the drivers of previous rally ( ) have retired and have been on a constant and stiff downtrend. These stocks might move up, but the dominant trend will remain down. Indeed, engines of Nifty have completely changed. There are stocks like Asian Paints, and major stocks like RCOM are now out of Nifty. Come what may, when you look at stocks, you dont understand – How is Nifty not at 3000?? The old dying horses have been replaced by new young ones who havent had their day yet. The show must go on.
Summarizing History tells us that whenever a major movement happens, there is an eventual sharp correction (which marks the end of that up leg), followed by a rangebound movement for YEARS. In , Harshad Mehta worked upon Nifty, and made it rally 400% in short time. Then it crashed. But what happened? It fell just 50% of 400% rally, and then stayed in that zone for years. Economy continued to perform and stock prices didnt, which led to a correction in valuations. This is called Time-Wise correction. The same has been happening this time around (in 5 years) was Niftys entry into an entirely new zone. To bring down valuations, it cant fall totally. Hence time-wise correction happens. Hence this nowhereness.
Summarizing Economic situation is mysterious, nothing can be believed. Data is changed overnight. Scandals worth staggering 40% of total Indias fiscal budget have happened. Nothing can be said, hence nothing can be analyzed, hence no comments on that. Technically, to summarize: 6300 zone is important. Its likely that 6300 might come eventually (SL 5555), but even if it comes, its nothing extraordinary, because its just the 3 year range top. Yes, if it breaks past 6300, then the real game will start… If it breaks it this time directly, the rally would quick but would not last that long. If it bounces back from 6300 and consolidates further, then I expect rally to be much stiffer and stronger. It depends on timing entirely. Dow Jones is bullish. All these slides are copy paste from old PPT file. Because long term still holds. Today the idea is not to just analyze Nifty in short run, but more. Real game begins now.
1995 – 2008 It was a growing market. People used to buy, and hold it. If their stock moved up, they booked profit. If dipped, bought more. SL What stoploss? Now People were heavy long when the biggest ever fall happened. They were leveraged. Not only this resulted into a huge loss, but it also gave a lesson to all – ALWAYS KEEP SL. Now you suggest a stock, and the first thing the other person asks – What is the SL? 95% loose. This is market. 5% of the people make 95% of the money. If 100% people start doing the right things, will all 100% make money? No. Why? Who will pay for these 100% people?! The same happened with SL. Its a right thing, but not now. SL, TGT HIT! Does this happen with you more frequently now? Stocks first break SL and then move up. Shorts first move up, give a dreadful spike then move down? Right?? Analysts. Till 2006, only few knew about Analysis. Most of the people had their own logics derived by their own observations. Till 2006, person who knew technicals was great. But not anymore… Now knowing analysis isnt enough. Success now depends a lot on Noise (spikes). The more noise you have, more SL, hence more failures.
There are many more zeroes than heroes in this market now. Most of the scrips are dead. Heroes of yesterday are zeroes of today. Zeroes of yesterday are heroes of today. Because every stock moves up but only once in a lifetime. Because you cant fool public twice. Today number of scrips to buy are very less. And these less ones sound scary! You cant give a Pizza company too much of valutation, isnt it? Economy isnt junk to move on junk food stocks. Nifty Vs Stocks Look at Nifty. It gives you a feeling – AAL IJ WELL But when you look at stocks, you dont. Only a few stocks have charts headed North East. TCS for example is one such great mover. Cement stocks are another example. But what about Reliance LT BHEL Infosys Bharti SBI Relcap Tatasteel and many others? Nifty is standing dangerously on only a few scrips. Weightages are changed overnight. Infosys falls 10% and Nifty closes in green! Nifty Vs Stocks Stocks in midcap and small cap have literally become penny stocks. You have IFCI back to 20-30, RCOM at 50 (only ), LITL at 9-10, GMRINFRA at 20-25, Unitech at 25 so on and so forth. Adlabs which traded at 2000, is now 70 Rs only. No there is no bonus/split. And no theatres and multiplexes (bigcinema) are not shut! Pop corn still sells at same high premium. Then what? Few Players Not only the number of scrips moving up have reduced, the number of players have also gone down. Death of Mutual Fund industry has made it completely dry. Mood swings of these key few people can give wild swings in market. High handedness of these few people has considerably increased. High cost of essential items too have contributed severely to this dryness. This has caused a possibility of much bigger role of OPERATORS. So in short: Summarizing, the problem today is that few people have all of the money (and hence power too). Market breadth is super narrow and number of bullish scrips are only few. These few scrips give a lot of false breakouts and breakdowns. The scrips which are in a great bull run look dubious at the best. Dissimilarity of movements between Nifty and Large Caps does give a strong sense of disbelief in the system.
STAR NEWS ab ban gaya hai ABP News. Trader ab ban gaya hai Producer, for English Vinglish. But WHY?
We have pointed out the issues that have cropped up in this market since many months. But what is the solution? Should we also start producing movies? No. After lot of detailed research, we have found 5 ways of making money in this kind of market. We will discuss them in next few slides. Today the discussion is not where Nifty will go? But how to trade Nifty/Scrips. Hope you like them!
y=mx + c Price Gradation Lag adjuster Strategy 1: Create a virtual scrip
Asymmetrical, Full of noise, Risky, has wild swings. Comfortable trading it? Probably No. Symmetrical, Beautiful, Low in noise, Safe, Bullish. Comfortable trading it? Hell Yes. Out of the 4 issues: Nothingness (no trend), Noise (spikes), Foul play by operator, Bogus scrip, we have countered all 4. We have created a new scrip based on an underlying A grade F&O scrip, which no operator can ever dream about! Hence there is no foul play, much less spikes, self hedged scrip. The same trendless chart looks much better after treatment. Like it?
Strategy 2: Trade all moves It is possible to defeat the nothingness and pattern failure by trading all the moves. Fake breakouts will still make you loose but overall it will be profitable. It will give multiple trades per day.
Strategy 3: Invest into great upcoming businesses You can invest into all the multibaggers. Investing in multibaggers has its own risk and rewards. Risk is that you never know will this company ever perform or not. If it works out, your money will multiply by times, if not it will be zero. The other way to investing is by investing into great companies available at relatively cheaper prices. Remember – Investing and trading are different things.
Strategy 4: Do what operator says. You can do that. But then you are ruled by somebody else. Would you like doing that? And what is the guarantee that the operator will remain genuine with you forever?
Strategy 5: Old classic – Average! Our elders do it. They have made money by using this strategy. Yes stocks have went to places in their time, hence this strategy worked, but does it work even today? Yes it does. Identify a bullish scrip and buy any upmove. If it falls, average. Hold till the last hope (support). %Risk increases, but success probability increases a lot too.
Its not just to aim, you must also hit your target! We have been putting up slides on analysis which always emphasized on making money by trying to find out what will happen. That we will continue to do probably forever. But now we would also focus on what to do. Last few years have been very taxing for Indian investors and traders and hence its time to stand up and fool the operators. Join https://www.facebook.com/YesIcannnn We will put up innovative ideas based on all the 5 ways on this page.https://www.facebook.com/YesIcannnn