How Traders Carnival (#TC2013) can be useful to you

Traders Carnival 2013 is being held in Pune from 15th to 17th August.

It is a 3-day residential conference, where traders from all over the country and some from abroad will be attending.

More details can be seen at www.traderscarnival.com

I have been asked the question quite a few times; ' Is it for me?"

As long as you are trading in the stock market or even in the commodity market, YES, this carnival is for you.

Some traders are under the impression that they will be a misfit, and might not understand anything. That is certainly not the case.

Anyone who is into trading, be it part-time or full-time, has learned something from the supreme teacher "Mr. Market", and it is this that he/she brings to the table there.

The market teaches everyone a different lesson, and humbles you. There is no one in the entire world, who has made profits right from his / her first trade and is still making huge money continuously. There is always something more to learn.

The beauty of this carnival is, one will get to meet and rub shoulders with 120+ fellow traders from the age 25 to 60. Every single person has learnt lessons from the market, and will be sharing that 'lesson' with others, be it as a speaker or just a participant.

There will not be a single trader there who can claim to 'know all'. That cannot happen !!

If you wish to learn from the experience and mistakes of others, this is THE place for you.

Just imagine, if you miss this, there will be some experiences which you will never be able to listen in your life.

However, if you feel after attending this carnival, you will start making potful of money from the day you return home, the answer is a BIG NO !

What suits someone might not suit you. But, you will certainly get different ideas, and will be able to decide which one can benefit you, which one needs a bit of tweaking at your end, to suit your temparament.

So, if you dream of becoming a successful trader, please register at

www.traderscarnival.com.

See you there..................

My thoughts on the indices after the week ending 28th June

After making a low near 5477, Nifty made a new high near 6229, and it appears now that it has made a 'higher low' near 5566. Nifty as well Sensex have respected the rising uptrend line from June 2012, and that line remains crucial for the long term. In the last 2 days, Nifty has rallied very fast by almost 225 points from the low on Thursday.

Short term charts have given a strong reversal, and although my long term view (see previous post below), is of a sideways market between 4000-4200 and 6000-6200 for another couple of years, the short term trend remains UP, and it has become a 'buy-on-dip' market.

The hourly charts are now overbought, and there might be some cooling off in the next couple of days to perhaps 5770 and maybe even 5730. As long as Nifty does not break 5675 (spot) in the next few days, one needs to stay LONG, for much higher targets.

The resistances are 5860-65, and then 5935-70. Die-hard (perma) Bears can use these levels to try shorts near these levels (SL being a close above those levels).

If Nifty closes above 5975, I see another huge resistance near 6010 - 6075.

Only on a close above 6090, can we look for new highs to maybe even 6250, but I  will be careful with longs above 6000.

Nifty weekly chart :

 Sensex weekly chart (it is always better to also keep an on Sensex levels mentioned below) :)

 

Why I am not in favour of a runaway bull run yet

Most of those who read my tweets will be aware that I start looking for tops and opportunities to go short whenever Nifty goes near 6100 and above. This belief that our market is not yet going to run away comes from a long term chart of Sensex (Nifty came much later, hence the study on Sensex).

The yearly chart of Sensex is the reason for my bearishness at the levels mentioned above.

Although I believe in the science of 'waves' I do not think I have the expertise to apply the study on our charts.

However, in my view, even a simple longer term view of the same charts, gives a different picture than just studying short term charts.

To keep it simple, Sensex might be showing a period of consolidation in a broad range.

Those following Nifty alone might be under the impression that it gave a breakout when  6181 was crossed (that was the January 2011 high). However, high of Sensex in January 2011 was 20664.8 and the high in May was 20443.6, which means Sensex DID NOT give a breakout.

This is the reason I feel, our market is in a mode of consolidation similar to what it did from 1992 to 2003.

Whether this will take that much time, is not possible to say, but if one believes in the 'consolidation phase', our market needs to go and test the lower band of the broader range (4000 to 6200) over the next quarters.

Yearly chart of Sensex:

Coming soon

A look at YEARLY charts of Sensex and Nifty and try and predict what might happen in 2013.

I will be posting this study tomorrow - Sunday 9th December

A TRADERS' MEET

Announcing, perhaps, for the first time ever in India, a residential Traders' meet in Bangalore on 26th and 27th October.

This will be an unique opportunity for traders who trade with the help of Technical analysis.

There is a lot to be learnt from the speakers and also getting to know many other traders.

MORE DETAILS HERE:


www.traderscarnival.com

The DIRTY picture or the BIGGER Picture

After the massive rise from 4531 to 5629 in 2 months, the last standing bear had become bullish and had started talking of new highs in Nifty (above 6350). Targets of 7500 were also given on some channels.

The rosy picture soon became a DIRTY picture from 22nd February, and Nifty fell all the way to 5171, supported by the dismal performance of the ruling Congress in the state elections. As expected, the last bull became bearish and targets of even 4900--4200 were given.

Here it pays to see the BIGGER picture - weekly chart of Nifty. During the massive rise to 5629, Nifty had broken through a parallel channel above 5250-60.


Weekly charts seem to indicate that the subsequent fall is nothing but a retest of the breakout, and the recent low 5171, was exactly on that trendline. Additionally, the 200 DMA also could not be ignored.

Once bulls realised on Wednesday that they had managed to successfully protect the trendline as well as the 200 DMA, they did what they do best - a gap up today of almost 50 points (this gap may or may not be filled in coming days).

No sooner had they managed to trap bears today, good news started flowing in - a 75 bps CRR cut, and also rumours again of abolition of STT.

As long as the breakout above 5171 holds (the trendline), a simple arithmetic calculation gives a target of 5920 - 6000 in coming weeks / months.

In the process, the current weekly candle is a long-legged doji (almost a hammer), and once the high of 5382 is crossed next week, bears might panic. This level is just 40 points away from today's close and another gap up on Monday can take Nifty above 5382.

Happy trading.

How Volumes can confuse a trader

Volumes in a stock are very crucial in Technical analysis, and are generally followed by all good analysts. However, just as a chart can look different in different time frames, volumes too can be interpreted differently.

There was an example of this in DLF on NSE today. Anyone who studies only daily charts, would see that DLF declined 5.5% and with a 35 day high volume figure of more than 2.55 crores. This number is also 2.5 times the 20 day average.



This is bearish for the stock.

However, a peek into the intra day chart gives a completely different picture. The 15 min chart shows that DLF crashed from 216 to 197, and rose back fast. The rising volumes were far more than the declining volumes.



Anyone who follows hourly charts will treat this as a bullish sign.

As they say on Twitter #youprefer

Is January 2012 the new October 2011 ???

Nifty has touched the 200 D EMA (5129) today, and a close above it can take to the 200 D MA at 5211 - so the current chart says !!



What does the title mean - 'Is January 2012 the new October 2011 ?'

To see what can happen in the future, it is better to see what happened in the recent past.

The stock market saw a spectacular rally in October 2011 against all odds, when everyone was giving targets for Nifty which were far lower. There was a major congestion zone around the 5170 - 5200 band which was formed from August 2011. Nifty faced a major hurdle at this band and declined all the way to 4728 in early October and then a sharp rally happened which crossed the congestion zone. It cleared all hurdles making a double bottom, a W bottom - all hints of a significant bottoming formation. Nifty went all the way to 5399, and then many started giving targets of 5400--5700.

What happened then - Nifty could not cross the major resistance at 200 DMA (near 5400) and crashed all the way down to 4640 in just 3 weeks.From the bottom of 4640, the next rally took it to 5099, only to make a new low at 4531.

This 'previous swing high' of 5099 was successfully crossed today.

I am afraid, crossing just a previous swing low cannot be a start of the 'next bull run'.

The monthly chart clearly suggests that a bottoming out can be confirmed only on a close above the trend-line (above 5150-75 on a monthly basis). This might seem pretty easy, since there are 4 days left for January to close and the hurdle is only 50 points away.

However, a bottoming out formation needs to happen on the monthly chart too, and it either needs to spend a few weeks near the lows, or keep going down and rising to form a U shaped bottom. A fast rally in the form of a V shape is generally dangerous.

Monthly chart:




Looking at the rally in October and now, it is seen that the sector leading the rally is different in both cases. It was the CNX IT that led the rally then, but it failed to cross the Oct high of 6432, and has crashed below 6000.

CNX IT chart:




The sector that led the rally this time is Banking. The BankNifty too has not been able to cross the October high yet (10080 then, 9885 today). I heard someone saying that the BankNifty is at a level equivalent to Nifty 5400 already - yes, fine, but what about CNX IT.

It is not correct to use this as an explanation that a major bottom is formed.

Looking at the other indices, Midcap and Nifty Junior, one can see that these topped out a little later than Nifty in October (they topped out in early November), and are still way below that top.

Midcap and Nifty Junior:




So, what does this all mean?

I doubt that a bottom has been made, and Nifty might start going down in the first week of February.

Nifty might go sideways in the next week to 10 days, and midcap stocks might still rally (similar to what happened in early November).

One midcap idea:

If the market behaves as mentioned above, Aurobindo Pharma looks promising as long as it does not go below the recent low of 95.5. Aggressive traders can buy now with a stop below 95, and conservative traders can buy above 106 for a target near 125 - 130.

Speed breaker ahead for SBI

Update on SBI - comments on chart self explanatory.

Moreover, it is also approaching Overbought zone on daily chart

Bears in SBI - CAUTION

After the massive move in DLF, here is another stock that can rally fast and furious.

It has been the most hated stock in the past few months, and probably wants to give it back to bears this month.


SBI - A close above 1875 can take it fast to the 200 D EMA (2058) and possibly the 200 D SMA (2136).

The breakout is a parallel channel breakout of almost Rs. 300, and the 200 DMA is a good target to achieve - SBI has been below the 200 DMA for the last 7 months, and a rally back to 200 DMA is very much on the cards.

All the best...........happy trading