Wednesday, December 30, 2009

The Blatant Truth

  1. On an average there are 240 trading days in an year
  2. If a day trader makes just 5 points, every trading day, he makes 1200 points an year
  3. On an average it takes 600 points to double your money, if trading in futures
  4. A trader who begins trading with 1,00,000 and assuming he has no drawdown since he doesn't carry any positions overnight, doubles his money in first 6 months, assuming he neither redeploys the earned profits nor withdraws them
  5. So after 6 months he has a capital of 2,00,000!!!!!!
  6. After doubling his capital he starts trading with 2,00,000, instead of initial 1,00,000
  7. At the end of the year he has 4,00,000 (at the end of the 5th year he would have made 10 Crore, ignoring taxes, and the fact that much before 6 months he would have the ability to increase his position size:::so no need to worry for taxes!!!!)
  8. This corresponds to a profit of 300% per year
  9. Can't you make net 5 points per day or just net 25 points per week, consistently?
  10. Think about it

Saturday, December 26, 2009

weekly outlook

  1. Nifty would present us with some fabulous trading opportunities in coming weeks
  2. These opportunities would be tapped by those who are humble, steadfast and daring
  3. The Overbought level is 5312, and Oversold level is 4839.
  4. The Phantom Price Line is at 5075, and BSAR is at 4941.
  5. The half yearly, quarterly, and monthly values in the table on the right, would be updated on the New Years Day, Inshallah.
  6. I am gearing up for Direct Market Access Trading, now available with NSE, trying to develop my own platform on *NIX framework, and for DOW, which should be available in next 5 years or so, which means that I have practically no free time left
  7. I do not provide any trading advice/calls other than those appearing on this blog, which is practically my thought process and trading ideas.
  8. Also I do not intend to start an advisory service/Asset Management Company, as I had thought earlier, simply because I don't have time and or inclination, and also because Almighty Allah has been very kind to me.

Monday, December 21, 2009

weekly outlook

  1. The Overbought Level is 5259, the Oversold Level is 4789
  2. The Phantom Price Line is at 5024
  3. The BSAR is at 4939, use it strictly to decide your trade direction
  4. As long as weekly closing is above 4939, Nifty would be bullish
  5. The next move would be in the opposite direction to the following BIG move
  6. These market conditions aren't favorable for novice traders
  7. As a rule of thumb, as long as Nifty is above 4800 it could slaughter bears, so be very careful if you go short
  8. Cdr VPB ji, I would post an article on Squeeze Set up in the VFM Forum shortly
  9. Thanks VK ji, welcome back

Saturday, December 19, 2009

The objective of technical analysis

  1. The purpose of technical analysis is not to predict where and when the market will go, as many traders think. The main goal of analysis is to define in advance the critical points or levels (PIVOTS). Then, based on this research, you can build a trading strategy for the next trade
  2. So here is a serious attempt: The Objective of Technical Analysis is ,
    1. To Understand and Identify the Overbought and Oversold price levels as derived from using all the historical data available;
    2. To Identify reversal patterns that might occur in overbought or oversold regions, so as to profit from contra trend trades;
    3. To maximize the gains from all sorts of trading activities, and minimise risk and losses arising from such activities;
    4. To identify the price levels where chances of a profitable trade are less, and recognize 'price-patterns' in and at such levels if and when they occur to avoid such trades;
  3. I hope I have been able to put things in right perspective

Saturday, December 12, 2009

weekly outlook

  1. The greatest people in this world were those who cultivated their characters and their intellects
  2. The weekly Overbought level is 5282
  3. The weekly Oversold level is 4803
  4. The Phantom Price line is at 5042
  5. The important Pivots between the Oversold and Overbought levels are as follows:
    4854, 4894, 4951, 4986, 5042, 5099, 5134, 5190, 5231,
  6. Please tighten your seat belts for the Roller Coaster, and trade using BSAR which is at 4921,
  7. EXIT ALL POSITIONAL LONGS, INVESTORS IT'S TIME TO BOOK PROFITS, WAIT FOR OVERSOLD LEVELS TO RE ENTER
  8. Where is VK Bhai, hope all is well with him
  9. The Title of the blog has been altered to reflect correctly the area of my study

Principles of Trading

  1. Determine the trend by drawing trendlines
  2. In an uptrend the trendline is drawn beneath the price bars
  3. In a downtrend the trendline is drawn above the price bars
  4. The trendline should merely kiss at least three bars
  5. Trendlines merely indicate the higher probability of market direction in the very short term
  6. The Stop Loss should be placed a little below/above the trendline
  7. This technique works best in trending markets, and is overall profitable
  8. Modern Statisticians have replaced trend lines with moving average lines
  9. The best Moving Average line is considered to be 7 EMA Closing
  10. If traded consistently, could give handsome returns over a long period of time, say 1 year

Thursday, December 10, 2009

Black Belt Trading

Trend or Range Bound Market

The Average Directional Movement Index (ADX) line helps determine whether a market is in a trending or range bound phase. It measures the degree of trend or direction in the market. A rising ADX line suggests the presence of a strong trend. A falling ADX line suggests the presence of a trading market and the absence of a trend. A rising ADX line favors moving averages; a falling ADX favors oscillators. By plotting the direction of the ADX line, the trader is able to determine which trading style and which set of indicators are most suitable for the current market environment.

Tuesday, December 8, 2009

Paper Trading: Is it Useful?

(Article by Richard L. Muehlberg)

On June 10, 2008, I opened a simulated futures account. My starting total was $50,000. Twenty-three trading days later, on July 11, my total reached $158,404. If you would like a JPEG copy of my July 11 statement, I will email it to you.

I opened the account because these words kept coming into my mind: "If you are a bad trader, why aren’t you a good trader? If you are a good trader, why aren’t you a better trader? If you are a better trader, why stop there?"

For years, I had been toying with the idea of opening a simulated ("paper trading") account. On the one hand, I felt that opening a paper trading account was something I should do. On the other hand, I was not convinced. Because I was actively trading, I did not see the point in opening a paper account while my real accounts were keeping me busy enough. But, those words "If you are..." kept coming back to me.

Then, on June 10, I made the move. I accepted that it was okay to have a paper account and real accounts at the same time. The idea of training is familiar to me. I keep a trading diary as a training tool. I study the diary to help me trade. I reasoned that trading money in a paper account would be another training tool. I would be able to compare what I was doing in my real accounts against my paper account.

I knew that the "fear factor" would be different with a paper trading account; you do things with simulated money that you might not do with real money; you might trade the way you are supposed to without letting emotions / fear overrule you. What I did not expect but soon realized was how seriously I would take my new paper account. The simulated money took on its own reality.

Now, when I read an article saying paper trading is a waste of time I wonder if the person who wrote the article has any direct experience with paper trading.

If you are new to trading and want to explore how trading feels, I recommend opening a paper trading account. Do a web search using the keywords "simulated trading account + paper trading account + stocks + futures" or some combination of those keywords. Create a short list of the websites that appeal to you. Some paper accounts are free. Some cost a small fee.

One alternative is to open a single account. Another alternative is to open two (or more) accounts through separate sites. Use one account to test one trading approach and the second account to test another.

Even if you are an active trader, I still recommend a paper trading account. Trade the account alongside your real accounts. You may be surprised by how mentally reinforcing the experience can be. Sometimes, you need to learn things by having someone else teach you. Sometimes, you need to learn things by having yourself teach you. Using a paper account, where the pressures are different from what they are with your real accounts, may help you show yourself just how much better you can become as a trader.

So how did I triple my paper trading account?

I followed the same trading approach I follow with my real accounts. (I am a day trader as a rule. My approach is to follow a consistent group of futures and ETFs and attempt to day trade no more than one or two of those futures or ETFs at a time.) I traded when I saw a low risk / high reward situation. Each day, when I made what I felt was enough money for one day, I stopped trading for that day. I did not let myself become overconfident.

At the end of each day, I looked over the trades in my simulated account and remembered why and how I made each one, just as I do with trades in my real accounts.

Paper trading is helping me in a lot of ways, but most especially with my discipline. If my answer seems too easy, then open a paper trading account and see first-hand what is possible.

Gold, 11-Day Chart, eSignal

Look at this linear regression intraday 11-day chart for August 2008 gold futures. The price bars are 180 minutes. See the action on July 10 and July 11? Would you have had the nerve to ride those two days on the long side using your real accounts? Would a paper account have helped? What if you had used both accounts? Do the math. Imagine just a $30,000 paper account on the long side of the July 10 / 11 move.

Look at your own charts tonight. Review the trades you wish you had made. Ask yourself if you might have made those trades if you had had a paper account. If the answer is yes, then open your own paper account. Next time you see a trade you want to make but don’t want to risk with your real accounts, use your paper account. Get some part of you in the game. Build yourself up in steps.

If you are experiencing a winning streak in your real accounts, then shift most of your trading to your paper account; let it absorb some of the "emotional high" that comes with winning. The "high" of winning can lead to overconfidence and recklessness. Your paper account can help protect you.

If you are experiencing a losing streak in your real accounts, then restrict yourself to your paper account. Once again, your paper account can help protect you. Get your rhythm back. When you are "back in the zone", start trading small in your real accounts; then, gradually increase the size of your real positions.

A trader is an athlete; you never lose the need to train, no matter how good you get. Trading is a competition. You are competing against other traders. You win money from them. When you lose, they win money from you. An athlete who does not train gets outclassed.

What do you think happens to traders who don't train? A trading diary can help you train. A paper account can help you train. Become that better trader.

*Reprinted (and modified) with permission from Richard L. Muehlberg (richardmue@yahoo.com, a contributor to Futures magazine and an active day trader of his own account using linear regression channels and intermarket analysis. His daily trading diary entries are available on www.DayTradingWithLinesInTheSky.com. Also, see his January 25, 2008 eSignal Weekly Trading Education article, "Is the Advice to Keep a Trading Diary Good or Bad", and his February 15, 2008 article, "What Is the Goal of Trading?"

Saturday, December 5, 2009

weekly outlook

  1. Nifty would be Ovebought above 5252, and Oversold below 4757
  2. The 5 EMA Weekly is at 5005
  3. The 14 Period TRIX is at 4924
  4. Nifty has to close above 5172 to regain it's uptrend
  5. And it has to close below 4676 to start a downtrend
  6. The 29 Weeks SMA is at 4689, and Upper Bollinger Band is at 5271
  7. The corresponding W%R reading is -4.84, suggesting uptrend (29 weeks = 7 months roughly).
  8. The 7 Weeks W%R is in the region of -11.35
  9. Warning:The Nifty could do a quick 4000 followed by 5200
  10. Tip:Sell When Overbought keep the target as the 5 EMA and buy when Oversold target again 5 EMA or use BSAR for exit
  11. Thanks Alnesh, for reminding me, Rajan ji, Mohid ji, Vaish ji, Jayant ji, Amit ji, Sunil ji and everyone else for your constructive comments

Thursday, December 3, 2009

Nifty at a glance

Welcome Friends,
You must have noticed that I have included a table of all the important pivots on the bar on the right hand side. It'd be updated regularly. Remember to Short in the Overbought region and go long in the Oversold region. I have also included Biased Stop and Reverse (BSAR), my own implementation of Stop and Reverse, to be implemented on closing basis(like at 3:25 pm). Only for those who have an IQ reading of greater than 100. Rest can search for Sunil Saranjame. He is the leader of those who could only KISS (Keep it Simple Stupid, the Great Motto of Simpletons)and do no more. All the Best

Wednesday, December 2, 2009

من كونت مولى، فى علين مولى

  1. Gold touches 1216
  2. I had expressed the same views here
  3. I am sure no forum reader would remember what I said in last December
  4. مہر مرے ٹوہ ہم مرے ورنہ مرے ہماری بلا سچے گر کا بلکہ مرے نہ مرا جائے मैहर मरे तो हम मरे वर्ना मरे हमारी बला सच्चे गुर का बालका मरे न मारा जाये Hazrat Ameer Khusro Rehmatullah Alaihi

Tuesday, December 1, 2009

a letter from a critic

Akhtar bhai, I hope yu would recall that a couple or so months back, u were sure nifty will not breach 4793 ( in vfm when I questioned khosboo's call of short selling around 4570-4600). Don't take it otherwise, but my own sense is nifty will comfortably breach this level of yours and even breach the previous top of 6357 in the next six months appx. After that my expectations of a slow and steady fall to 3650-3920 and miay be even 3150. As regards 21000 in the next 7 yrs on breach of 5480 appx levels, I see it a very very remote posibility as even 10-15% compounded growth in nifty EPS can't take it beyond 17000-18000 levels. Thx n regds Sunil

My Answer

Dear Sunil ji, Greetings! Why would I not recall what I had said on that thread, advising people to use SL for that short call? I guess you should try some brain enhancing tonic for that. Son, I have seen many people here who had a sense and later lost it, leaving their family in utter distress, so my friendly advise is: don't have a sense that is bound to leave you pennyless. Only time would tell whether I am right or wrong, but what if I am right and you are wrong? I make money. What if you are right and I am wrong? I make even more money! How? Read this blog, I write it in simple English. With Warm Regards, Javed P.S. I enjoy foolish comments more than the intelligent ones. I can't help it. BTW I guess that stupid forum owner is also lifting off my ideas and posting as his own, these days. To Mohan: Greetings! Boy I am straight, so that I don't enjoy the "touch". If you have a question, post it here, in comments section.

Monday, November 30, 2009

Outlook for December 2009

  1. The Overbought Level is 5354
  2. The Oversold Level is 4117
  3. The Monthly Phantom Price Line is at 4736
  4. Favorable Conditions for a swing are building up
  5. The Monthly Biased Stop & Reverse Point is at 4450
  6. The 14 Monthly TRIX is at 4071
  7. A mild to moderate correction would easily take Nifty into the region of 4071 - 4450

Saturday, November 28, 2009

weekly outlook

  1. The Biased Stop & Reverse for Investors is at 4814.50
  2. The Overbought Level is at 5201
  3. The Oversold Level is at 4704
  4. The Phantom Price Line is at 4952.90
  5. The 14 weeks TRIX is at 4908.05
  6. Nifty has to close(weekly) above 5156 for the uptrend or below 4660 for downtrend
  7. The important Pivots between Oversold and Overbought levels are:
    4704, 4757, 4799, 4858, 4894, 4953, 5011, 5047, 5106, 5148, 5201
  8. Nifty might fall below 4000, before continuing it's uptrend, in coming months
  9. So, Get Ready to Get Rich, there won't be a second call

Thursday, November 26, 2009

A letter from a friend...

Asalam Valekum Bhaloo Bhai :) today i have completed 3 months of testing with real money for 322/1364 as we discussed last time , i was trading with 2 mini nifty 1 lot I use to cover on 100 pts and another on crossover stop loss for both of them was crossover so the results are for the first one : it's -10 pts ( where i was covering @ 100 pts ) and for the second one it's : +285 pts :) i was purely following the crossovers no ADX, PSAR , and RSI , kuch nahi 100% mechanical trading in October i also got 3-4 whipsaws in a row where i was down by -350 pts but then that mega move came in Nov first week and i got +275 in one single trade at one point this trade was giving me +500 pts but i dint touched it as i wanted to test and follow this system without using my brains and emotions i have written records or each trade that i took and i have gained much more confidence now form the above data i think doing only crossover to crossover will be best , it's a trend following system so we need to let it run freely to gain maximum profit from this so now i am starting with one big nifty and doing only crossover to crossover aapka 6 mahine meh double is proved as this have given 50% return in 3 months :) also ur saying BE CONSISTENT is proved sirji after seeing the results i am getting the urge to start with 100 nifty ...aap kya bolteh hai i am entering next level with this system, ur advice and guidance based on above data will be very helpful

Sunday, November 22, 2009

weekly outlook

  1. The Weekly Overbought level is 5200.50
  2. The Weekly Oversold level is 4716.30
  3. The 5 EMA Weekly is at 4958.40, Triple Smoothed Exponential Moving Average is at 4895, 29 Weeks SMA is 4594
  4. The major Pivots for the week are: 4768, 4808, 4866, 4901, 5015, 5050, 5108, 5148
  5. Nifty is struggling to regain it's uptrend
  6. This week Nifty has to close above 5138 to regain it's uptrend
  7. Nifty could move violently in either direction in coming 3 - 4 weeks
  8. Gold has touched $1150, now just $50 away from the target given at $739 on my previous blog International Economic Review,(Where are my baiters?)

Saturday, November 21, 2009

Thursday, November 19, 2009

Midweek Outlook

  1. Stop Loss for Longs is at 4994, for Thursday, and 5010 for Friday
  2. Traders looking to go short could try if Nifty Spot goes below 4994, keeping 5080 as Stop Loss
  3. There is just a possibility of a minor correction as Nifty isn't truly overbought
  4. The supports are placed at 5020, 4999, 4957, 4902

Sunday, November 15, 2009

weekly outlook

  1. The Weekly Overbought Level is 5160.90
  2. The 5 EMA Weekly or Phantom Price Line is at 4911.40
  3. The weekly Oversold Level is 4662.0
  4. The 14 Weeks Triple Smoothed Exponential Moving Average is at 4882.35;
  5. Nifty made a low of 4538.50 on 3rd Nov and a high of 5017.90 on 13th of Nov; thereby as long as it is above 4834.75 it is bullish and the VIX is likely to remain rangebound
  6. Some Important Pivots to watch for this week are: 4822, 4854, 4874, 4936, 4957, 4978, 4999, 5020, 5041, 5062, 5124, 5144, 5176
  7. Exit Longs initiated at 4786, and initiate fresh shorts around 5176.

Thursday, November 12, 2009

Nifty 21000 in 7 years

If Nifty breaches 5479 in coming weeks, then surely we are in the Primary Wave III, and the target would be 21000 within 7 years. Will elaborate later.

Back in 1989 when Sensex was at 750 I had predicted it would touch 2000, while sitting at my broker's office, everybody had a hearty laugh. But when Sensex finally did, those same people came to touch my feet; while at a social function in March 2002 I had predicted that we are going to have Sensex at 10000 ( Sensex was hovering around 3200), people had thought that I had finally lost my mind, and stopped inviting me to social events. When it finally did, I was invited by the senior-most titans of Export Promotion Council for Software and IT in order to time their respective IPOs and that's when I got the break to work at the wall street; meanwhile I am happy that at least SN Vaish ji had guts to use poor language against me; but be warned I would not let anybody touch my feet this time around

Monday, November 9, 2009

weekly outlook

  1. Below 4616.60 Nifty would be Oversold
  2. Critical Supports in Oversold Region are placed at 4588, 4548, 4512, 4432
  3. Major Pivots above Oversold Level would be 4670, 4712, 4771, 4808, 4867
  4. Keep buying on dips, with proper hedging and money management
  5. Do Keep Referring to Monthly Outlook, as often as you come here
  6. Here is the link for Alan Farley and Dummies Book

Sunday, November 8, 2009

Week in Charts

Although these charts were meant for a certain forum, but it seems that forum is crumbling under the weight of some big personalities. So here are they:

Saturday, November 7, 2009

Overbought Oversold and Mastering the Swing Part I

  1. Overbought:
    • A stock or commodity market condition where there has been significant trading bidding up prices to higher levels, levels which seem overextended
    • In technical analysis, it is a market in which the volume of buying that has occurred is greater than the fundamentals justify
    • A technical opinion that the market price has risen too steeply and too fast in relation to underlying fundamental factors
    • A technical condition that occurs when prices are considered too high and susceptible to a decline. Overbought conditions can be classified by analyzing the chart pattern or with indicators such as the Stochastic Oscillator and Relative Strength Index (RSI). A sharp advance from $15 to $30 in 2 weeks might lead a technician to believe that a security is overbought. Or, a security is sometimes considered overbought when the Stochastic Oscillator exceeds 80 and when the Relative Strength Index (RSI) exceeds 70. It is important to keep in mind that overbought is not necessarily the same as being bearish. It merely infers that the stock has risen too far too fast and might be due for a pullback.
    • A term used to describe a market or a stock that has appreciated so rapidly and has generated such excessively bullish sentiment that a near-term decline is highly likely
    • A physical asset or futures contract whose prices have been pushed up to a level that some believe is unrealistically high and cannot be sustained ie. when the speculative long interest has rapidly increased and the speculative short interest is sharply reduced
  2. Oversold:
    • A term used to describe a technical opinion of a market has declined too steeply and too fast in relation to underlying fundamental factors
    • An analytical term for a stock that is underpriced
    • a condition of the marked after an abrupt recession. In this situation a correction rise is possible
    • A technical condition that occurs when prices are considered too low and ripe for a rally. Oversold conditions can be classified by analyzing the chart pattern or with indicators such as the Stochastic Oscillator and Relative Strength Index (RSI). A sharp decline from 30 to 15 in 2 weeks might lead a technician to believe that a security is oversold. Or, a security is sometimes considered oversold when the Stochastic Oscillator is less than 20 and when the Relative Strength Index (RSI) is less than 30. It is important to keep in mind that oversold is not necessarily the same as being bullish. It merely infers that the security has fallen too far too fast and may be due for a reaction rally.
    • The reverse of overbought. A single security or a market which, it is believed, has declined to an unreasonable level
    • A market which has fallen too far and too fast under excessive selling pressure and is expected to move back to a higher, more neutral level
    • Used in the context of general equities. Technically too low in price, and hence a technical correction is expected. Antithesis of overbought
    • A physical asset or futures contract whose prices have been pushed down to a level that some believe is unrealistically low and cannot be sustained ie. when the speculative long interest has been drastically diminished and the speculative short interest increases.
    • An equity (or market) that has gone down to which its valuation seems to support buying of the stock.
  3. Swing Trading:
    • Opposite of daytrading. Swing Traders speculate longer term on prices of stocks, futures, etc.
    • This term is typically used to imply a style where one takes a position for several days to a few weeks. A swing trade might be completed in less than a week, or if the stock consolidates it might take several weeks. While a swing trader will watch the market very closely, this style does not require the trader to be in front a computer screen while the market is open. A swing trader will typically aim for a 10-15% profit on all trades.
    • Swing trading is commonly defined as a stock, index, or commodities trading practice whereby the instrument is bought or sold at or near the end of an up or down price swing caused by daily or weekly price volatility. A swing trade position is typically open longer than a day, but shorter than trend following trades or buy and hold investment strategies. Swing traders engage in prospecting changes in an instrument's price caused by oscillations between its price being bid up by optimism and alternatively being bid down by pessimism over a period of a few days, weeks, or months. Profits can be sought by engaging in either Long or Short trading
    • Identifying whether a market is currently trending higher or lower, or trading sideways and when this will change is a challenge for many swing trading and long-term trend following trading strategies
    • Swing traders do not need perfect timing - to buy at the bottom, and sell at the top of price oscillations. Small consistent earnings that involve strict money management rules can compound returns significantly.
    • Most important is to understand that there is no foolproof mathematical model or algorithm that will always work so only use them as research tools not decision making engines.
  4. (courtesy: google.com; wikipedia.com)

Thursday, November 5, 2009

views for thursday

  1. Nifty is in downtrend
  2. The 5 EMA is at 4722
  3. The Oversold level is at 4621
  4. Pivots above Oversold Level are 4698.60, 4683.80, 4659.80, 4642.80
  5. The important support below OS level is 4593.40
  6. The SL [SAR] for Shorts is 4786 [again a coincidence]
  7. I have received a lot of mail regarding the SAR, I have already written everything in the article, some people attach their own names to it like Tom's Swing; Dick's SAR, Harry's Levels, don't get fooled, the underlying theory remains the same. I have spent nearly 23 years in this arena, and don't have a small ego or mind, so I would call somebody else's theory as his and not mine. And don't forget, Late Mr Jesse Livermore committed suicide, after loosing everything in stock market and Late Mr W D Gann's chief source of income came from conducting seminars and courses on trading, his son worked as a banker in California, rest is all lie. But don't get discouraged, as long as Mathematics is around, we shall overcome! (And it doesn't mean that I am greater than those legendry figures)
  8. .

Wednesday, November 4, 2009

views for wednesday

  1. HE's Most Merciful, indeed
  2. Nifty would be oversold below 4630.90
  3. The Supports below are at 4620, 4604.40, 4590.50
  4. The Stop & Reverse Point is at 4853.65, (Stop Loss for Current Short Positions & entry point for Next Long Positions)
  5. FIIs sold this time, and DIIs bought, while Nifty fell 190 points!

Tuesday, November 3, 2009

Views For Tuesday

  1. I begin this new chapter with The Name of God, Most Merciful, Most Beneficent
  2. The Oversold level for the day is 4720
  3. Supports below are placed at 4710.30, 4695.90, 4683, 4664.60, 4654.30
  4. Stop & Reverse Point is at 4867 (Stop Loss for Current Short Positions & entry point for Next Long Positions)
  5. The 5 EMA is at 4810.70, and 7 EMA is at 4849.50

Monday, November 2, 2009

Late Mr W.D. Gann's Stop And Reverse Concept

Definition:

A stop and reverse (often known as SAR) is a type of stop loss order that exits the current trade, and either simultaneously or immediately afterwards, enters a new trade in the opposite direction. Stop and reverse orders combine elements of trade management and risk management, and are used in place of regular stop loss orders.

When Are Stop And Reverse Orders Used?

Stop and reverse orders are used when a trader wants to reverse their position (hence the name stop and reverse). For example, if a trader is in a long trade, and wants to exit the long trade and enter a short trade at the same price, they would use a stop and reverse order. The same task could be accomplished manually (i.e. placing an exit order, followed by an entry order), but stop and reverse orders are more efficient as they can combine the entry and exit into a single order.

How Do Stop And Reverse Orders Work?

Stop and reverse orders not a standard order type, and are not offered by many brokerages or any exchanges (that I am aware of). Therefore, stop and reverse orders are usually implemented by the trader's trading software (order entry software), and therefore their implmentation can vary significantly, but with the same end result (a new trade in the opposite direction). If a trader's trading software does not offer stop and reverse orders (many do not), the trader can create a stop and reverse order by doubling the number of contracts (or shares, or lots, etc.) in their stop loss orders. For example, if a trader is in a long trade with one contract, a stop loss order that is placed for two contracts will function exactly like a stop and reverse order. Note that stop and reverse orders are not related to the Parabolic SAR indicator, however, a trader that is trading using the Parabolic SAR indicator may use stop and reverse orders in their trading.

Also Known As: SAR

(courtesy: about.com) Mr Gann calculated SAR from the previous two trading days data. If Downtrend, he would use the Highest High of previous two trading days as SAR, if Uptrend he would use previous two trading days' Lowest Low as SAR. I would use it in conjunction with the multiple band analysis, and the Normal Probabality Theory, that I had been using hitherto. I hope this refinement brings you and me profits unimaginable...and this is what trading is all about...isn't it? P.S. I am currently considering designing an RTOS for doing Technical Analysis on the fly. Anyone worked on Scientific Linux? I am also looking at the codes of OpenBSD, MINIX and various other Linux Distros.

Sunday, November 1, 2009

views for November 2009

  1. The monthly overbought level is at 5207.80
  2. The Pivots below it are 5075, 4971, 4897, 4824, 4734
  3. The Monthly 5 EMA is at 4587
  4. November and December would present us with some good buying opportunities
  5. There are no indications of an impending crash
  6. Important Trade Pivots For Setting Targets are as following:
    • 5148
    • 5127
    • 5110
    • 5093
    • 5069
    • 5023
    • 5000
    • 4980
    • 4968
    • 4952
    • 4936
    • 4898
    • 4865
    • 4808
    • 4715
    • 4676
    • 4605
    • 4573
    • 4514
    • 4436

weekly outlook

  1. Nifty is seemingly in a swing mode
  2. The Oversold Level is at 4655.90
  3. The Supports below are at 4628.20, 4588.60, 4553.40
  4. The Weekly 5 EMA is at 4903
  5. The Pivots above Oversold Level are 4708.90, 4750.50, 4808.90, 4845
  6. Pay attention to 4786 (Coincidentally it has 786 in it!!!), nifty would move wildly below it
  7. FIIs and DIIs were net buyers on Friday, ending the month net flat!(bought=sold)
  8. The Month opening was at 5087; shows that retail has sold short
  9. The trend remains up as long as 4350 is not breached

Wednesday, October 28, 2009

Views For Wednesday

  1. Nifty is trending down, it could fall further down
  2. Supports are placed at 4759.40, 4771.05, 4813.50
  3. Resistances are placed at 4852.30, 4893.30
  4. Intraday: If falls below 4759.40, Buy Nifty Futures below 4759.40 SL= 4732, target = 4813.
  5. Investors looking for buying opportunity should wait for sub 4750 levels

Tuesday, October 27, 2009

Views For Tuesday

  1. Supports are placed at 4936; 4927; 4914;
  2. Resistances are placed at 4997; 5016; 5034
  3. Intraday: Buy Nifty Futures below 4936 spot, targets: 4953; 4966; 4985
  4. If closing comes below 4913; it would signify birth of a downtrend

Monday, October 26, 2009

views for monday

  1. Today 4936.20 is the iron support
  2. Resistances above are 4999, 5019.70, 5038.70, 5057.70
  3. Nifty has created a range of 261 points between 4921 and 5182
  4. So as long as it is below 5082.30 the volatility would tend to be high
  5. In October so far, FIIs are buying and DIIs are selling

Sunday, October 25, 2009

weekly outlook

  1. This week Overbought Level is 5239 and Oversold Level is 4759.
  2. Pivots for Support & Resistance would be; 4907; 4942; 4999; 5055; 5147; 5187; 5239;
  3. If 4942 is supported, we might see 5200.
  4. The 5 ema, weekly is hovering at 5000 for the second consecutive week.
  5. The Options data suggest range-bound market with positive bias
  6. Momentum Oscillators Suggest a small bounce ahead.

Thursday, October 22, 2009

views for thursday

  • Positional: Buy Nifty below 5014, SL=4956 spot; for a target of 5032, 5045, 5064, 5076, 5094, 5113.

Saturday, October 17, 2009

views for muhurat

  1. Positional: Short Nifty if spot goes above 5175 for targets of 5157, 5143, 5123, 5111, 5100

Friday, October 16, 2009

views for friday

  1. The daily Overbought level is 5152.65
  2. Sell Nifty above 5152.65 Spot level for a target of 5120, 5100, 5087, positional call

Saturday, October 10, 2009

weekly outlook

  1. The weekly Overbought level is 5172.50, which would be very strong resistance
  2. The Pivots for Supports and Resistances below that are; 5120, 5079, 5022, 4987
  3. The 5 EMA is around 4929
  4. Nifty is likely to get strong support between 4859 - 4872
  5. Nifty would remain range-bound with positive bias
  6. Put Options for Nifty are going to get dearer/expensive
  7. Common traders are likely to expect a reversal in the trend, while there is none
  8. Wishing You All A Happy Prosperous and Wonderful Diwali

Sunday, October 4, 2009

weekly outlook

  1. The weekly overbought level is 5171; this should act as strong resistance
  2. The pivots below that would be 4980; 5017; 5075; 5117;
  3. The 5 ema weekly is about 4922; this should act as good support
  4. Investors going long should hedge through 4400 puts (Rs 10)
  5. Good conditions for a swing are building up

Thursday, October 1, 2009

views for october 2009

  1. The monthly overbought level is 5155
  2. The breakout point is at 5616
  3. Nifty would face good resistance above 5155
  4. The µ is 4526; it can retrace upto this point
  5. The maximum level that Nifty could attain before 31 Dec 2009 is 5681
  6. In a time frame of 3 - 6 months, nifty is getting overbought
  7. The important supports and resistances would be placed around: 4674.60, 4766.50, 4915.10, 5020.85, 5155.55, 5226.10, 5326.80, 5416.30, 5616.40

Sunday, September 27, 2009

views for tuesday

  1. The Oversold level would be 4883.10
  2. The 5 EMA is at 4966
  3. The Trading SL for Shorts is 5036
  4. The weekly Overbought level now is 5097
  5. Investors: Keep buying on dips
  6. Day Traders: If Nifty goes below 4925 before 10:30 am buy for a target of 4950
  7. Swing traders: Short Nifty below 4880; Above 4880 don't short

Thursday, September 24, 2009

views for thursday

  1. The Overbought level would be 5045
  2. Resistances below that level are: 5027, 5013, 4994, 4982
  3. The 5 ema is at 4962
  4. Trading SL for longs is 4931.90
  5. Investors SL is 4255; or 4300 puts of Oct Series
  6. As long as 4520 is not breached, Nifty is in uptrend

Monday, September 21, 2009

Views For Tuesday

  1. The Overbought Level for Tuesday is 5013
  2. The resistances above it are 5023, 5036, 5048
  3. The supports below are 4995, 4980, 4960, 4948,
  4. The 5 EMA is at 4927
  5. The weekly Overbought Level is 5048
  6. Nifty might not breach 5048 level this week
  7. There is likelihood of a negative closing
  8. Options data suggests that downside is limited
  9. The 5 ema of VIX is 28.17, lowest in 2009, reflecting stability

Sunday, September 20, 2009

Heiken-Ashi Chart For Nifty

read this

The October 4200 put was quoted at 13.40 last on Friday. Whether the Market crashes or bounces from here, the investor stands to gain in both situations; the true objective of Technical Analysis! (The article appears courtesy vfmdirect.com)

Thursday, September 17, 2009

views for friday

  1. Enjoy, but don't throw caution to the wind
  2. The Overbought Level would be 4992
  3. The Resistances are placed at 5002, 5016, 5028
  4. The Supports are placed at 4958, 4937, 4924
  5. The Options Data Suggests that Downside is limited.
  6. FIIs are net buyers for 11,282.16 Cr and DIIs for 24,468.81 since 1st September 2009.
  7. A link to a StockChart, that shows ADX and PSAR has been included under Easy Trading Rules in pure-profits.blogspot.com for the trailing Stop Loss.
  8. Thanks everybody for your wishes, and making this blog number one site in the world on the topic of Pure Quantitative Analysis (See here), I hope your wealth multiplies exponentially in the coming months

For Records Only

http://www.vfmdirect.com/forums/show.cgi?topicid=1242726273 http://www.vfmdirect.com/forums/show.cgi?topicid=1242861855

Tuesday, September 15, 2009

views for wednesday

  1. The Overbought Level would be 4922
  2. The Resistances are placed at 4932, 4947, 4960
  3. The Supports are placed at 4887, 4865, 4852
  4. The Options Data Suggest a bounce ahead
  5. The Monthly Breakout Point is 5392, for September - A closing above 5392 in September would invalidate my forecast of an impending C wave (Major Correction)
  6. If Nifty closes above 5392 in September, then we would have 12000 within one year. But a closing above 5392 in September 2009 is very unlikely
  7. Half Yearly Overbought Level: 4958, Monthly Overbought Level: 4925, Weekly Overbought Level: 4955
  8. A closing above 4941 would bring 5036 sure shot

Monday, September 14, 2009

Views For Tuesday

  1. Nifty continues to be in uptrend
  2. There is a likelihood of a swing this week
  3. If the swing doesn't happen this week, we would see a bounce from current levels
  4. Main Pivots are 4877, 4769, 4734, 4698
  5. Nifty would try to touch 4821 on the up and 4778 on the low.
  6. Thanks VK Bhai, Sureela ji, and Sundaribala ji, I would answer your queries in a day or two.

Wednesday, September 9, 2009

views for wednesday

  1. Nifty would be overbought at 4831.
  2. Resistances would be 4809, 4831, 4843.
  3. Supports are placed at 4767, 4752, 4727.
  4. A trend reversal is fast approaching Nifty.
  5. Gold touched $1000 yesterday.
  6. Next target for Gold is $1200, or Rs. 17200 locally.

Monday, September 7, 2009

Views For Tuesday

  1. Nifty has resumed it's uptrend, following a short squeeze.
  2. Nifty would be overbought at 4796.
  3. It has resistances at 4808, 4825, 4840.
  4. Supports are placed at 4773, 4755, 4729.
  5. It'd try 4825 on the high, and 4755 on the low.

Views

  1. On Monday, Nifty would try to cover 4726 on the high and 4667.35 on the low.
  2. Closing could be positive.
  3. This week important level would be 4614.
  4. There is a good chance that Friday's closing might be lower than 4680.
  5. In the current scenario, it's unlikely that Nifty would cross 4925 in September.

Thursday, September 3, 2009

Views

  1. Possibility of a Trend Reversal in next two months
  2. Meanwhile Nifty continues in Swing Mode
  3. Overbought at 4746.70, Oversold at 4529
  4. Pivots are at 4626, 4591, 4555, 4480, 4464, 4447
  5. Nifty would be weak below 4594
  6. The high could be around 4663 and low around 4570.

Monday, August 31, 2009

Traders Compass

  1. Nifty is in the swing mode
  2. Nifty would be oversold at 4556.55, this could be the day low
  3. The 5 ema is at 4666.25. This could be the day high
  4. Below 4556.55 the supports would be placed at 4544.30 and 4526.70
  5. Between high and low the main pivots would be 4626, 4591, 4555.

Traders Compass

  1. Nifty has resistances at 4756, 4779, 4786.
  2. Nifty has supports at 4710.65, 4694.50, 4668.35.
  3. Nifty would be overbought at 4779.
  4. Volume Indicators are confirming the Breakout.
  5. Momentum Oscillators are in divergence.
  6. So do not expect a Trend Reversal in Short Term, but only a correction.
  7. The day high could be around 4756.
  8. The day low could be around 4674.50

Thursday, August 27, 2009

Guidance for Next Trading Session

  1. Today Nifty closed at 4688.20.
  2. The high was 4707.90 and low was 4645.15; a range of 62.75; yesterday it was 38.70
  3. The 14 day Average True Range, a measure of average range has been 130, for past many months;
  4. So expect a sudden blast in coming sessions.
  5. Nifty would be overbought above 4748.45 and oversold below 4524.30;
  6. The 5 ema is at 4636.
  7. The 14 day RSI reads 60.25.
  8. For Tomorrow Resistances are placed at 4705.65, 4724.45
  9. Supports are placed at 4679.20, 4662.80, 4653, 4636.45, 4609.90,
  10. The day's high could be around 4724.45
  11. The day's low could be around 4679.20
  12. The day's close might be flat to positive.
  13. Nifty is unlikely to close above 4756 in August.

Wednesday, August 26, 2009

Trading Ideas

  1. Tomorrow is the Settlement day of the current month FNO Series;
  2. This day is generally more volatile than all the other trading days of the month;
  3. The Over Bought Level for tomorrow would be 4726.30;
  4. Nifty might face strong resistance at 4701.50 - 4705.
  5. The Day's range would be bigger than todays (38.7);
  6. The 5 ema is at 4610.45;
  7. The day low could be lower than todays low of 4659.10;
  8. The Put to Call Ratio Data suggests, anticipation of a Reversal by some people;
  9. The Volatilty Data Suggests that, Volatility might rise in coming sessions;
  10. Day Traders should take advantage while Volatility is still low;
  11. Those holding Longs in Futures, Calls, ETFs, Shares, are advised to hedge;
  12. No sign of a Swing Reversal;

Some Trading Ideas

  1. Overbought level for today is 4697.05. This might be the day high for today.
  2. Resistances above Overbought level are, 4705, 4710 and 4730.
  3. 5 ema is at 4575.25
  4. Supports would be placed at 4604, 4621.80, 4636, 4650.50
  5. Day Low might be around 4604.
  6. Volatility is still favouring Day Traders.
  7. A negative to flat closing is possible.
  8. The Uptrend that started in March is losing strength.
  9. There is still no sign of swing reversal.

Tuesday, August 25, 2009

HInts For Trading

  1. Today, Nifty is likely to trade in a bigger range.
  2. Nifty would be overbought above 4657.40.
  3. Resistances above the overbought level are 4671.35 and 4691.20
  4. Supports are placed at 4609.95, 4580.65, 4570
  5. The 5 ema is at 4533.
  6. Nifty MIGHT try 4671.35 above and 4580.65, below.
  7. It seems like expiry would be around 4580.
  8. Please do not initiate Positional Shorts, unless there is a swing reversal in sight
  9. Today Nifty might favour Day Traders.

Sunday, August 23, 2009

Some Trading Ideas

  1. Nifty made a swing high of 4619 on 14 Aug 2009. Swing low was 4353.45 on 19 Aug 2009.
  2. Range => 265.55;
  3. 61.80% of 266.55 => 164;
  4. Low + 164 => 4353.45 + 164 = 4517.55;
  5. Nifty closed at 4528.80; Meaning Nifty is/was Bullish...;
  6. Now Nifty would try to take the previous high of 4619;
  7. 14 day ATR is 120. Do not expect a big range on Monday;
  8. So 4528.80 + 120 = 4648.80. The high of the day is likely to be lower than 4653, in all cases;
  9. Nifty would be Over Bought at 4602.35, with resistances at 4616.25, 4636.10, and 4653.70;
  10. The region between 4591 and 4568 would act as a support. 4636 and 4653 would be very stiff resistances;
All The Best

Saturday, August 22, 2009

Long Or Short ???

Dear Friends, I have stumbled upon a very queer finding. No matter which system I try, if I derive the ratio of gains in long trades to gains in short trades it hovers around 150% !!!!! To put it simply, No matter which system you follow, if you buy on dips, your total gains would be 1.5 times that of the gains derived from sell on rise. So never miss an opportunity to go long!!!! Happy hunting.

Thursday, August 20, 2009

Outlook

  1. 5 ema is at 4453;
  2. Overbought level is 4576, & Oversold is 4330;
  3. Nifty still stuck in a range;
  4. 14 day RSI is at 49, ATR is 123;
  5. 20 SMA is 4541, 20 EMA is 4482.
  6. Nifty would try to touch the Overbought levels, although it's just not seeing any real buying.

Tuesday, August 18, 2009

TARGET 4600?

  1. There is a bullish hidden divergence in all momentum oscillators.
  2. The 5 ema is at 4482.
  3. The Nifty would be oversold below 4357 and overbought above 4607, as on today.
  4. We can look forward to the overbought state in coming sessions. Don't remain short above 4525
  5. Very aggressive traders looking for overnight gains might want to short tomorrow when 5 minute RSI > 80, for 50 - 70 points, gain on Friday.(This advice is only for professional traders)
  6. Nifty continues to be rangebound.

Monday, August 17, 2009

Some Trading Ideas

Today we are likely to witness a range bound market with a negative bias. The Oversold region is between 4415 - 4430. The Overbought Region is between 4665 - 4680. Nifty is likely to open around 4572 or lower. So we might witness a negative opening followed by further weakness as the day would progress, unless some positive news comes in. A long position could be initiated keeping 4396.20 as SL. in the oversold region. And a short position could be initiated keeping 4700 as SL, in the overbought region. 5 ema is around 4547, a breach would signal short term weakness. All the Best.

Sunday, August 16, 2009

Who's Best and Ahead? Me or Bob Prechter?

Robert Prechter Has Gone Bearish

By Dr. Declan Fallon

Robert Prechter of Elliot Wave International has gone bearish, bringing to an end his bullish February/March rally call. In the video he talks about a break of March lows - no chump change, so is this likely? The core thesis is based on how Elliot Wave Theory (EWT) applies to the current cyclical bear market. In EWT, trends move in five phases (waves) and counter-trends in three. According to Anthony Caldaro of Objectiveelliottave.com the last 25+ years have seen a five wave bull trend which has been followed by a two wave of three bear counter-trend. Assuming the second wave of the counter-trend has completed all that is left is the inevitable third wave of the counter-trend; this is what Bob Prechter is looking at as the way forward.

http://seekingalpha.com/article/155814-robert-prechter-has-gone-bearish

Saturday, August 15, 2009

Trading Idea For The Next Week

There are Fibonacci and and Swing Support & Resistance clusters between 4780 - 4790. If Nifty reaches there keep 4819.05 as Stop Loss, Short Nifty, for a target of 4674.20, 4605, 4562.15. I would expect a minimum of 200 points from this trade. All Prices are Nifty Spot.

Friday, August 14, 2009

Your Comments & My Answers

Sajal Ji, Make good use of this sense. Ashish ji, We'd talk. VK ji, I am neither a bull nor a bear, but a true market-man. I suspect that current bullish scenario is an attempt by the strong hands to wipe out small traders, before the next bull run. The momentum indicators on monthly charts, indicate correction from current levels. The X-O system of charting is referred to as P&F Charting. I would include some links for folks who want to understand them a bit. Thanks for your prayers, I need them always. Rishi ji, Please stick to your forum for expressing weird ideas. That's the place, nowadays. Sureela ji Nifty could easily correct upto 3894, and still remain bullish, this is why ::: Swing Low :=> 2539 Swing High :=> 4731 Range :=> 4731 - 2539 = 2192 61.8% of Range :=> 2192 * 61.8/100 = 1355 Swing Low + 61.8% of Range :=> 2539 + 1355 = 3894 Below 3894 Nifty would turn bearish and has support at 3056 & 2022. This calculation would need to be adjusted if 4731 is breached. Rajamani ji, In the Point and Figure Charting parlance, a bull trap is any buy or sell signal which reverts back without covering at least 3 boxes in the direction of the trade. Of course this is in the context of End Of the Day Charts. Such a trade eventually leads to a profitable trade in the opposite direction. Many eccentric and reclusive traders who practice Point and Figure Charting, actually initiate an opposite trade when a Buy or Sell Signal occurs, near major support and resistances. For example Nifty breached 4693 and touched 4731, and reverted and touched 4359. A PNF practitioner would have shorted at 4700 itself, keeping 4800 as SL. As far as Nifty is concerned, we all are awaiting a clear signal as to whether it'd breach 5479 or touch 1300. Ashfaq ji,
The SL for Long Position should be 4550, and a target of 4710, minimum. Please ignore the first 10 minutes of the trading on Monday. If SL is taken keep 4620 as SL and target of 4420 minimum.

The Rime of the Ancient Mariner

And through the drifts the snowy clifts Did send a dismal sheen : Nor shapes of men nor beasts we ken-- The ice was all between.

The ice was here, the ice was there, The ice was all around : It cracked and growled, and roared and howled, Like noises in a swound !

At length did cross an Albatross, Thorough the fog it came ; As if it had been a Christian soul, We hailed it in God's name.

It ate the food it ne'er had eat, And round and round it flew. The ice did split with a thunder-fit ; The helmsman steered us through !

And a good south wind sprung up behind ; The Albatross did follow, And every day, for food or play, Came to the mariner's hollo !

In mist or cloud, on mast or shroud, It perched for vespers nine ; Whiles all the night, through fog-smoke white, Glimmered the white Moon-shine.'

`God save thee, ancient Mariner ! From the fiends, that plague thee thus !-- Why look'st thou so ?'--With my cross-bow I shot the ALBATROSS...

Thursday, August 13, 2009

Fibonacci Analysis 12 Aug 2009

Nifty made a high of 4731.45 on 4th Aug 2009. Subsequently, on 12th of August it touched a low of 4359.40. The Range comes out to be 371.8. On correction watch following levels ::: =>Low + 371.8*23.6% = 4447.15 =>Low + 371.8*38.2% = 4501.40 =>Low + 371.8*61.8% = 4589.20 =>Low + 371.8*78.6% = 4651.60 =>low + 371.8*127.2%= 4832.30 The minimum target for correction as of now should be 38.2% i.e, 4501.40

Tuesday, August 11, 2009

11-Aug-2009

Rangebound....... If Nifty crosses 4800, then it would form one of the bloodiest bull traps, I would have ever seen

Friday, August 7, 2009

07-Aug-2009

In short term Nifty may bounce from Current Levels. In Medium Term, Nifty is loosing Strength.

Nifty View So Far

  1. If Nifty Breaches 3900 in near term then it'd seek support at 3200
  2. Watch 4420 closely, if breached on closing basis, then hell would break loose.

Wednesday, June 24, 2009

INDIA VIX STUDY

Sultans Of Swing

  1. Nifty made a high of 4693.20 on 12 June 2009 and low of 4143.25 on 23 June 2009.
  2. The range comes out to be 549.95.
  3. The phi comes around at 4483.10. Nifty can do a swing upto that level.
  4. If Nifty breaches 4575.50 on the up, then it would resume it's uptrend.
  5. Meanwhile Nifty shouldn't close below 4273, otherwise it would resume it's downtrend.

Monday, June 22, 2009

Calls For Today

  1. BUY NIFTY SPOT AT 4331, STOP LOSS = 4315, TARGET = 4350, 4362, 4387, 4404, 4420, 4433.
  2. BUY BANKNIFTY SPOT AT 7258, STOP LOSS = 7228, TARGET = 7299, 7324, 7374, 7410, 7442, 7468.
  3. BUY RELIANCE SPOT AT 2053, STOP LOSS = 2043, TARGET = 2067, 2076, 2094, 2106, 2117, 2126.

Charts

Sunday, June 21, 2009

Nifty Levels

Nifty made a 52 week high of 4693.20 on 12 June 2009. The 14 day ATR is 140.82. Subtracting the 3 times the ATR from High Point would be 4270.74. Nifty breached this level on 18 June 2009, when it made a Low of 4222.15. This represents short term reversal Nifty made the lowest low of the present Swing on Friday, 19 June 2009, when it touched 4206.70. The range from HIP to LOP would be 486.50 or the range from 4693.20 to 4206.70 is 486.50. The 61.8% of 486.50 added to LOP would be 4507.35. Below this point Nifty is weak. The 23.6% of 486.50 added to LOP would be 4321.50. Below this point Nifty would continue to be bearish. And if continued to close below this number i.e., 4321.50 It would target the 127% of 486.50 subtracted from the HIP, i.e., 4075.35.

Sunday, June 14, 2009

I got the Power

This is a Relative Strength Chart for Nifty to CNX 500. It shows Nifty in Sell mode but in X column ready to give a buy signal. The fastest movement in this chart after January 2008. Which might indicate that Nifty has bottomed out, in medium term.

Nifty Levels This Week

Nifty made a Swing Low of 4365.10 on 9th June 2009. 10 day ATR is 139. Adding 139 multiplied by three to the low would be = 139 * 3 + 4365 = 4782. Unless Nifty breaks above 4782, the uptrend can not be confirmed. Nifty made a 52 week high of 4693 on Friday; 4693 - 139 * 3 = 4276, unless this number is breached we can not say for sure that down trend has begun. On other hand Nifty can easily corect upto this level, and still continue in uptrend! Following, making the swing low, it touched 4693.20 on 12 June 2009. The range comes out to be, 328.10 points. The golden mean comes arounf 4567 and Nifty made a low of 4566.15 on Friday. It goes on to show the importance of Golden Ratios in calculating the major Supports and Resistances. If Nifty breaches 4567 then next major support is 4529, as always. Below 4529, we have 4443 and below that it may test 4288. Looking above 4771 would be a major resistance for Nifty this week. Nifty is quietly gaining strength at these levels, so we must be prepared for some stupendous fireworks, probably later in the week or may be week starting 21 June 2009.

Friday, June 12, 2009

CHARTS

The S&P CNX Nifty played out as expected. The momentum at the end of the day remains negative as it has closed near the low of the day. At larger time frame, RSI(14) has formed a Class A Negative Divergence, and it has been resisted by the 20 sma, thereby signifying a breach of the 2 and 3 day swing lows at least, in the coming week. But today it has retained the 2 day swing low at 4551. So next week would be more profitable, at least that's what seems at the end of the day, today.

Charts

The RSI(5) is in Class A Negative Divergences. This indicates a probable correction. RSI(5) has been unable to cross the 20 sma. All in all it's highly unlikely, that Nifty would remain rangebound on Friday. The Stop Loss for Positional Longs is 4550.