US Outlook

1. Dow is trading in red
2. Continental wedge triangle break down noticed
3. Consumer confidence data come surprisingly low in January 2011
4. Read full story on bloomberg

UK Closed in Red

1. FTSE Closed in red again, though managed marginally up from previous close
2. Continuously second close below the trend line is not good for bulls

Nifty and Tuesday Factor

1. Today is 5th consecutive Tuesday to close with huge gain
2. Yesterday gap (5163 to 5204 has been filled today
3. Nifty struggled at weekly pivot of 5148 before moving higher
4. Oscillators have started showing sign of weakness and negative divergence

Ever since market topped out in November 2010 all bull months have been followed by at least 2 bear months. If this is actually a bull (which is unlikely) then second month should also close with white candle else...
Two weeks ago there was more bears and now there are more bulls. So this is time to scare not to be greedy or adventurer unnecessary. Wait for a firm close above 200 SMA and outcome of Greece bail out report

Nifty Intraday analysis

Today Nifty roaming around weekly pivot 5148 and then suddenly move up at 2:30 PM (1:30 and 2:30 is very crucial timing for the last one month)

Europe Dept in Graph

Europe dept is more than GDP and Greece is more than 150 % of it's GDP

Meet the 'Mind Traps'

Here is a quick test to determine your Investment Quotient (IQ).
Stock A at Rs100 has a 7% chance of dropping below Rs100 in the next five years.
Stock B at Rs200 has a 93% chance of gaining from this price level in the next five years.
Which is a safer investment bet--Stock A or Stock B?
In case you picked Stock A, you are being very smart or foolishly brave.
In case you picked Stock B, you are one among the many investors who fall for a very common mental illusion caused by "Framing" according to behavioural scientists.

In simple words, "Framing" stands for human fallibility to decide based on the way information is presented.
Let us revisit the IQ test
Both the stocks have an equal chance of falling by 7% from their current levels. After all a 93% chance of Stock B going up means it has a 7% (100-93%) chance of falling.

In case you chose Stock B, you are not very different from the average man on the street who prefers Stock B to Stock A just because it is presented in a manner that makes it appear more appealing.
As humans, we always make approximations in our decision making process. No wonder, we are all on the lookout for easy ways to make money. One of the approximations we do is to figure out departures from a base case described rather than calculate what is the eventual outcome.

So in this case, the description of Stock A's 7% chances of falling turns out to be the base case and the second option is evaluated against this. So a 93% chance of rising looks good for Stock B. The mind does not grasp the implications of a 7% fall and 93% rise in the first sweep!

In case you managed to get the above test right in one sweep, great show! But be sure to stay away from the many more that abound.  

Experience comprises illusions lost, rather than wisdom gained.
                                                                                - A French Parish Priest  
Investors are not as much "risk averse" as they are "loss averse".
Here is a desi version of classic example that the founding fathers of this discipline, Daniel Kahneman and Amos Tversky, presented to two groups of people.

Group I choice set
You have Rs1,000 in your pocket and need to choose between one of these two investing options
Option 1: A sure shot gain of Rs500
Option 2: A 50% chance to double the money and a 50% chance of making no profits
What would you choose?
Group II choice set
You have Rs1,000 in your pocket and need to choose between one of these two investing options
Option 1: A sure shot loss of Rs500
Option 2: A 50% chance of losing the Rs1,000 capital and a 50% chance of losing nothing!
Hmm! In their experiments they found that 84% in Group I chose option 1 whereas in Group II, a good 69% chose option 2!!

Know why the groups chose those options the way they did? It had to do with the way the options were posed to them. Group II participants had a sure shot loss staring at them as one option whereas the other option presented them an opportunity though half a chance to walk away with losing nothing.

Of course, the knowledgeable among you would have figured out that there is nothing to choose between the two options, as they are the same.

Hence, as long as the Sensex is climbing 400 points every month, a bullish trader will stomach a 100-point fall during a week and see it as a money-making opportunity. But when the Sensex is in a downtrend, even a 100-point rally during a week does not enthuse the traders enough!

In fact, empirical studies done in the USA prove the following: "Positive emotional value of a gain is only one-half to one-third of the negative emotional value of an dollar equivalent loss. For example, a $100 loss causes emotional pain two to three times the emotional pleasure of a $100 gain." This theory is called "Prospect Theory"?

Most people feel more pain for losing Rs100 than they feel happiness when they make Rs100.
Which portfolio would you prefer?
Portfolio A has Rs1,000 worth of one stock that appreciates by 10% and Rs1,000 worth of another stock that declines by 15%.
Or
Portfolio B has Rs1,000 worth of one stock that stays flat and Rs1,000 worth of another stock that declines by 5%.
There are similar studies done that demonstrate people prefer portfolio B to portfolio A.

Why?

Portfolio A has one stock that declines by 15% whereas the maximum decline of stock in Portfolio B is 5%. The mind ignores the fact that the other stock in Portfolio A appreciates by 10%. 

Hence, most people prefer Portfolio B to Portfolio A though both the portfolios lose the same.

Source: Sharekhan

Nifty Hourly analysis

We can expect a short term pull back which is based on purely technical basis of oversold indicator. Nifty is still in bearish mode. Do not keep losing position for long. Maintain strict stoploss if going long at 5050 level.
Target 5130 > 5148 (max)
use 5160 as strict stoploss for any short position. This expectation is only applicable for intraday.

Expectation from Nifty

 

Yesterday we noticed that Nifty climbed the mountain without volume, which proved fatal for our dear bulls. That is why I keep saying always we with volume. This is not hindi movie where hero and roam around like "Singham". 

1. 5050 level need to watch for immediate support as it has highest volume concentration and other reasons ( I will put on coming post)
2. 5170 is very strong resistance for any sudden upmove

Nifty follows Gann level like child

Gann level just mesmerized today by making nifty dance on it's tune. I am still learning the practical implementation on Gann Level on intraday basis, and it is very encouraging.

1. Nifty made high and low excatly on Gann Level, one may find it just a coincidence and I also do not want to drag anyone into any kind of argument. But, would not it be very satisfying even if Nifty close with a margin of 5 point from Gann Level.
2. Today Nifty confirmed hanging man pattern on intraday basis by opening gap down and closing with a huge black candle.
3. Bulls now need to wait for some time before resume higher run. Let bear finish some unfulfilled task.

Nifty Outlook Monday Jan 30

NSE Nifty moved in a range of nearly 200 points and ended with a gain of over three per cent at 5,205.
The Nifty has closed bang on its 200-day daily moving average (DMA). The index has not been able to close above its 200-day DMA since early May 2011. Given the positive momentum indicators, it seems set to cross this psychological level for now.
However, going ahead, the index is likely to face considerable resistance around 5,250 - which is the 50-WMA (weekly moving average). Above which, this uptrend could face another major resistance around 5,370, the higher end of the Bollinger Band on the weekly charts.
In the near term, the markets may now turn choppy, given the near overhead resistance (5,250) and overbought conditions on the daily charts (RSI is above 75 per cent). The wide consolidation range for the Nifty could be 5,250-4,950.
Next week, the index could face resistance around 5,280-5,325, while seeking support around 5,130-5,080.

Nifty outlook for the week Jan 30

1. Last corrective leg is due in Feb 2012

Nifty Long Term outlook

Source: Just Nifty

Looking at all these graphs, recent bull run seems excellent pullback by bulls only to sink again. Time will revel the truth. I believe mega bull can not take off without a solid consolidation of about 2 years. Some of the good signs has already unfolding but this is not sufficient enough to push the market. Market is king it loves more.....!!

Weakness noticed on hourly Nifty

1. Nifty is lacking volume at higher level, which is not good for bulls, bulls can not conquer higher levels without volume
2. Negative divergence has been noticed in hourly Nifty

Nifty outlook on weekly chart

1. 50 WSMA is waiting for bulls
2. Niufty unlikely to break weekly channel
3. 5200 resistance is very strong because it has took long time to built

Nifty Intraday Analaysis

1. Today Nifty has consolidated between 5180 to 5190 and then move higher. 
2. It has created hanging man on top of a bull run. Let's see if this time it proved unlucky for Bulls.

Remembering Feb 28, 2011

I got a very unique profile photograph of a blogger which was a intraday chart (Shown above). I tried to find out the day on which it was occurred and ultimately got it. It was Feb 28, 2011. Even though Nifty made a shooting star next day it opened high and went higher.

Happy Republic Day

Niftymama Wishes you all Happy Republic Day

News based trading

You can notice no level work if trading is based on some news. Still people make mistakes.

1. Never go against the tide in news based trading.
2. Do not do adventurer trading by taking put (that too if getting cheap)
3. Avoid any trade in option if it is near expiry because of time decay factor
4. Most of the trader simply forget that they can't manage their risk like professional by buying different call/put spread and other techniques like butterfly strategy etc
5. Go with the tide if you can not avoid trading and that too after waiting for some time

Next time you  may got such opportunity on budget day,

Intraday Analysis on expiry day

Nifty did not show much volatility on expiry day. More consolidation has been observed above 5148. This show more upside movement.

Nifty intraday analysis II

One more tight consolidation of Nifty between 5030 to 5060. As expected, RBI may not cut rates, but even if it give indication about rates cuts in near future, Nifty may move higher or cross 5100 at least tomorrow.

Nifty has observed all bad news these days, like, RIL report, Infosys report etc. Might be some smart money inflow has kept Nifty afloat higher.

Nifty Intraday update I

If Nifty could not sustain above 5040-5045 range for at least coming 1 hour then weakness can be seen and Nifty can touch 5000 level.

High divident yield stocks

High dividend yield stocks offer a safe haven to investors where safety has greater priority compared to high returns. Hence, even if the market remains volatile, going ahead, an investor can still get a decent return on investment, thanks to good dividend yielding stocks. The dividends are paid no matter what direction the stocks move and can provide a higher yield on investment in a weak market.

Company Name	Idirect Code	Div. Yield % 2011	Div. Yield % 2010	Div. Yield % 2009	Div. Yield % 2008	Div. Yield % 2007	Div. Yield % 2006	Div. Yield % 2005
Alfa Laval (I) #	ALFLAV	2.4	2.1	2.7	2.3	3.0	2.5	3.4
Allahabad Bank	ALLBAN	2.6	3.9	6.4	4.6	4.1	5.1	3.6
Andhra Bank	ANDBAN	3.6	4.6	10.0	5.4	5.0	4.3	2.8
Ashok Leyland	ASHLEY	3.5	2.7	5.5	4.3	3.9	3.3	4.8
Castrol India #	CASIND	3.3	4.1	4.5	3.9	4.0	3.3	3.8
Chambal Fertilizers	CHAFER	2.4	3.1	4.3	3.6	5.8	4.6	6.2
Clariant Chemicals #	COLCHE	4.1	5.3	12.3	3.0	5.3	7.6	2.4
Deepak Fertilizers	DEEFER	3.2	4.0	7.1	3.6	3.5	3.0	4.8
Electrosteel Castings	ELECAS	4.0	2.4	9.2	2.9	3.3	3.4	3.0
Finolex Industries	FININD	3.4	4.6	3.6	4.6	4.4	4.3	4.3
G N F C	GNFC	3.4	2.9	5.4	3.2	4.9	3.7	5.4
GE Shipping Co	GESHIP	3.0	2.7	4.3	4.0	5.7	3.4	5.9
Graphite India	CAREVE	3.8	4.0	13.7	5.8	5.8	2.0	2.3
GRUH Finance	GRUFIN	3.1	3.0	5.2	2.6	2.2	2.7	4.7
Hindustan Unilever	HINLEV	2.2	2.7	3.1	4.2	2.8	2.5	3.5
Indian Overseas Bank	INDOVE	3.5	3.8	9.9	2.6	2.9	2.7	3.2
Karnataka Bank	KARBAN	2.8	3.3	9.2	2.5	2.1	3.0	2.8
Nava Bharat Ventures	NAVBHA	2.7	2.1	5.4	2.6	4.0	2.5	2.3
O N G C	ONGC	3.0	3.0	4.1	3.3	3.5	3.4	4.5
Polyplex Corporation	POLCOR	4.9	4.1	6.2	3.8	3.9	2.4	4.3
State Bank of Travancore	STABTR	2.4	2.6	6.1	2.1	3.3	2.4	3.7
S C I	SCI	5.1	3.2	8.5	4.3	4.9	5.0	4.7
Supreme Industries	SUPIND	2.4	3.2	4.7	4.6	3.2	3.2	3.2
Syndicate Bank	SYNBN	3.0	3.5	6.3	3.7	4.4	2.8	3.7
T N Newsprint	TAMNEW	3.8	5.0	7.9	4.5	4.8	2.6	4.7
Tata Chemicals	TATCHE	3.0	2.8	6.4	3.2	3.9	2.7	4.3
Tata Elxsi	TATELX	2.8	2.2	8.5	4.4	2.4	3.3	3.0
Tata Investment Corporation	TATINV	3.1	2.6	6.5	3.1	4.4	2.8	4.0
VST Industries	VSTIND	7.0	5.8	13.3	6.5	6.1	2.6	5.4
Wyeth	WYELED	2.6	2.8	7.8	6.6	6.6	4.0	4.9

Gann levels and intraday

 

I am testing Gann levels on Nifty for quite some time. Now I am enjoying to count and watch Nifty accordingly. I have noted down some advantage of Gann Levels

1. It never change hence easy to memorise
2. It has not calculation involved (except once)
3. Easy to match with other level (Pivot, Camerilla, Fib Point)

Some times it happens that we did not calculate pivot and doubt on fib or Camerilla at that time, you can look at Gann level for confirmation. Will update you about more finding in next blog.

Today what happened in last 10 min is not understood my me. I am still looking for the reason and I am sure as a human being I will come out with some reason which will satisfy my understanding. But it clearly made us believe one more time the importance of stop loss. Bears were lurking full day and in 12th hours bulls took the cake and walk away, which left all frustated. Bulls because of missing time and bears because some one spoil the party.

Hence once again a good advise, maintain your stop loss to enjoy the party irrespective of nifty movement.

Euphoriac Bulls

It seems we are in Euphoriac bull run, but who know a 2009 repeat this time. Or at least March 2010 repeat. One need to be careful before going long or short, especially for trader community. Else if you are investor, do not worry and keep investing in small quantity.

Market is too hot to touch

Today Bulls are in denial mood and it seems recent high is even higher. After defying all technical indicator, Nifty is still bullish. It seems Nifty will repeat, March 2010 again, when all indicator was bearish still it was going high. (For full report please refer: Is Bulls Back, I doubt)

I am not expert in this field however a keen observer and try to catch Nifty as per tested and classical method. Some times it took time but it works. And even if it did not click, then stop loss hai na. Ask any bear who traded on last three tuesday, he may explain better the importance of Stop Loss

India Vix

India Vix is testing trend line with RSI and Stochastic in oversold zone. This may give a bounce and a chance trap Bulls.
A correction is very soon.

Good Fight of Bull vs Bear

Today Bulls were able to defend important level of 4949.00 which happen to be today's pivot and also bollinger middle band. please refer my previous post
Let's see what bear has stored to unfold tomorrow. Bears might get another chance near 5000 level

Intraday Nifty outlook

Nifty need to sustain above the middle trend line on hourly basis, it will move higher till 4990 or 5000
Else bears are waiting to pull nifty below 4900 on EOD bais.

Bulls are back !! is it true??

I tried to look Nifty at bigger frame, and found that, Nifty may repeat what it has done in March 2010 when everybody was expecting to get a quick down and bears were full of mouth watering oversold in almost every indicator but Bulls were the winners defying all odds.

1. 4947 should act as a major support now
2. Upper limit for current bull run might be between 5080 to 5110
3. Keep in mind Bulls are very strong this time as it has started it's march past after much consolidation
4. I am not bullish for short term, as this time Nifty is in down trend and RBI policy may trigger the down fall next week
5. Best time for long term investor is only after March 2011 when election in UP will be over and budget will be on the floor

Nifty Intraday

When Bulls works everyone take rest. I did not find much observation except consolidation in last two hours of trading after Europe opening. 

Next level to watch is 4987 > 5005 > 5023

Nifty Weekly outlook

Watch out for 4949 as upper limit for bulls to cross and bears last hope for tomorrow. It does not mean I am bullish for this month. I mean if Nifty crosses 4949 and sustain above it for around half hour then it may go higher

Nifty Daily

Nifty must close above 4900 if bulls wants to move further else bears are strong below 4865

Nifty outlook Jan 17

Important level for Nifty

1. 4823 to 4825 because it happen to be lower bollinger band and 50 hourly SMA respectively also this band is applicable for 50 DSMA

Intraday Nifty

 

1. Nifty made today higher high, higher low
2. Respected resistance of 4882
3. Closed above crucial resistance of 4865
4. Bears fails to make Nifty below 4830

Nifty Week @ 4866

 

Dallal St again started looking at negative news for possible sharp downfall. As a crowd we all behave in same way. We all will try to follow some resistance and support level. Some try to beat market by keeping stop loss slightly less than those level or slightly higher than so called important level. Still we do, not because we love to do so,  but because it gives all of us a direction in darkness.

 

Important observation for tomorrow

1.  Nifty may open on soft note amidth bad news from Europe
2.  Weekly chart is still bullish for short term
3. 4760 to 4765 is very strong support for this week
4. On upper side Bulls need to face stiff resistance at 4935 and 
5. Minor resistance at 4900 and 4917

 

Gann Level Chart for Quick reference