Hurst Cycles Trading Software - Accurately Forecast Nifty and Stock Cycles

Saturday, May 10, 2008

Panacea Biotech - A Study

I am posting a study of this stock over here...Panacea Biotech...Why? Because this is a fundamentally very strong stock and also I love it...Reasons? I will tell you....This stock trades at around 400 levels right now...You will not believe it..I had this stock when it was at 20 odd levels...I held on till 44 and sold it off at almost 100% profit...At the time I thought it was a big profit and I sold off....Then again one fine day I checked this stock and it was at 90 odd levels...Since it technically looked good, I picked it up again only to sell off at 110-120 levels thinking it was overvalued again....Then again a year later I check it only to see it was 250+ levels...I was shocked to say the least....Again picked it up and sold off at 330 levels...Still having not learnt my lesson...This stock was a multibagger for me over a period of 3-4 yrs...from 22 to 400+...20 times...If that aint a multibagger I dont know what is....

Now why did I say all this? Investing vs. Trading...Or even I can say long term trading...This is always better in hindsight..Many a times we think a stock is overvalued and sell it off only to see it much much above our sell price a few months later...This is a problem I believe every single trader has...

What can we do about this...I believe if we have a fundamentally strong stock, I think that we can hold on to this with a stop...a very loose stop is also ok in cases of stocks like these...Instead of just selling off, its better to have a trailing stop based on the charts....
And this is very important - Be very ready to pick up the stock again if it goes above obvious resistance lines...if you see above chart, I have drawn what are the obvious resistance and support lines...240 or 300 for this stock if it ever comes is a SURE SHOT buy...I think if we get a correction in the general markets, pick this stock for sure...if you get 300 or best shot 240, pick it up in size...I will....And since I believe we will get a big correction(maybe a slow correction even though big) ready to pick this stock at 300 and 240 levels.
Then again stops are important as always...Set stops whenever you pick up a stock...We can always pick up a stock later after reevaluating the situation. Obvious supports are always readily visible on charts...You dont need me to tell you what that is...
Similar stocks I have seen over the years are reliance petroleum, reliance, and some other stocks...I will try to cover some of these in following posts...

Added some new stuff

Added chatbox, polls(PLEASE VOTE) and some other details today....Will look to post some technical stuff later today....


Friday, May 9, 2008

Quick Note on viewing the charts

I saw a comment asking about the chart size being too small...Just click on the same and it will open up in large size...Hope this works out...


Position Update

Well hows that guys...Really nailed it today....As I said in earlier post, it was a mistake to be holding longs today so I got out at open and shorted some in NF at 5070. NF continued to rise and when I saw some weakness shorted more at 5085. And hedged with 5100 calls at avg price of 110. Well what happened after that we all know. Still holding now...If US markets crack today,
we can see more decline next week. However also note that 4950 area is very strong support and the attempt to protect this will be very strong...Let us see how it goes.

My earlier longs netted a loss of around 15 points if I consider the hedge included.

So overall a very good day for me.

I will try to post my position entries in real time in the future as I know that will be more beneficial to all.

Will post more thoughts later and over the weekend.


Thursday, May 8, 2008

US Markets Update - 8th May 2008

Small update on the US markets trading action today and what that means to us....

Well lets face it guys....Todays US market action was NOT bullish...Just whipsawing about and no real underlying strength...Infact it looks to me to be outright dangerous to be holding long positions today...Which is exactly what I am doing right now...

As I said in earlier posts, I was very short term bullish but medium term bearish..Now it looks to me more like the very short term might be over or close to over...In fact I will look to cover my longs today at the highest price I can get...Might even try to open small shorts..Lets see how it turns out today. Any bounce I get and I will cover and get short...Only small amounts here.
Market has not taken any sort of direction...Still consolidating to breakout or breakdown.
5100 on upper band and 5070 on lower band looks important to me.

Asian markets also look weak today.


Nifty Hourly and Daily Outlook - May 9th

Starting with the hourly chart of Nifty...Comments are added on the chart....Yesterday's market action was consolidation and it looks to me like its building a case for one last spurt upward. At this point I do not know how high but it looks higher. If you see the channel in above post, this is what will define market movements in the following days. We remain bullish as long as the channel is respected. MACD could give an upward crossover soon and stochastics also look like its bottoming. Important figures are 4950 - Really key for the bullish case and On the upside to me it looks like 5100 is important. We need to cross this to the upside to regain some kind of momentum.

My positions update - I closed my shorts yesterday at 5090 levels(taken from 5250 so thats 150+ pts profit) and flipped to small long positions as I said I would probably do in earlier post. I am looking for a good bounce to come into Monday or Tuesday of next week. However as I said before 4950 is key...Break this and we are done.

Next the daily chart.

Okay here also I have added comments on the chart. The most interesting things I see here is the volume factor as I have pointed out and explained in the chart above and the fact that we have a possible triangle building up...Dont want to look further than few days right now but I am bullish very short term and remain bearish over medium term...


Wednesday, May 7, 2008

Nifty Shorter Term Outlook - May 8th 2008

Okay here is my nifty shorter term outlook...Nifty hourly charts...If you see above chart, I have marked the waves from the lows...Elliot wave says that every bullish or impulsive wave consists of 5 waves...3 UP and 2 DOWN...In the same way, every corrective wave will have 3 waves...Of this 2 down and 1 up in between....A corrective wave 'corrects' the impulsive wave. Generally fibonacci retracement techniques allow us to measure how much a bullish wave is retraced by a corrective wave...50%, 61.8% etc are normal levels to retrace....So is 38.2%.

So coming to above chart, I saw certain bullish signals at the wave 1 beginning and so went long....Also got out at almost 5250 levels....Now you might ask why?...simply because 3 waves completed and I do not at this point know whether we have a bullish wave which will have 5 waves or a bearish wave having 3 waves....

So scenario 1 - I kinda favour this one - This I have marked above....That is after this correction which should be close to over, we should shoot up higher for one last time...Targets for this final 5 wave will be 5500/5600 area max and a min of 5350/5400. But for this to happen, 5000/4950 area should HOLD. If this fails, the higher targets go down the drain in the short term and we will fall....So ultimate stop of longs here will have to be 4950. Break this and we are going down big time.

Scenario 2 - That this is just a 3 wave move...This means we will break 4950 and go down very quick....Maybe to test lows at 4400 and lower...This is obviously the more bearish scenario...
So its clear...If you're long, keep strict stops. 4930 to avoid whipsaws.

If short, well its up to you...As you know I am short from 5250 area...I am looking to cover today and possibly flip a little long...Very small positions only for the higher targets I mentioned before...Ofcourse as I mentioned in earlier posts, I will be hedging my futures positions since this is a high risk trade....Will enter today and update when I exit.

Will watch stochastics and macd to confirm my thoughts and also look at the daily timeframes to get more ideas.

For today 5100 looks like key...If it manages to hold this throughout the day, it will be very bullish...If not, it will open up 5050 and 5000/4950 areas. Let us see.

Also - watch the beauty of simple trendlines in the above chart...aint it a beauty...! Often its the most simple things that work the best. Study the chart more and you can see how wave 1 shows 5 waves and wave 2 marked shows 3 waves - meaning corrective...And so on...

I will post the longer term setups and charts later.


Some thoughts before moving onto charts

The last time I posted on the forum I was referring to in the previous post, I gave an intermediate term update stating that I closed all my long positions on the 1st of May almost at the recent top..All of which was picked between the 4600 and 4800 area on Nifty...And all closed at 5250...Hows that!! :-)

I had recommended stocks such as rpl, polaris, infy etc...All of them gave amazing returns...

Why did I say this?...Not exactly tooting my own horn...But its just to set the stage for what I believe is coming next.

So What Next? I am not SO sure but I am bit bearish for next 2 months and then reasonably bullish after that. I opened few shorts in Nifty on May1st and hedged with calls...All these in good profits now...I am looking to cash out on these probably in the next few days.

I plan to reenter my long positions in cash only by mid/end of June or so after reevaluating the bigger picture...I will explain with charts what I see happening over the next few posts.

Right now I am only trading...No investing..Simply because the bigger picture is not clear...It looks like we chop around and correct a bit before taking off again upward....Downside might be limited going forward...But the market and technical analysis-the art of reading charts-being what it is will change over time...Why? Because it is a function of price...And as price changes, the analysis also changes. Funnily enough very few people can grasp this simple concept...All the public want are tips...If I buy this stock, will it go up?...Thats all that they want to know...

I said in my earlier post that I never take positions especially when leveraged in FNO without hedging it the other way...Now this will reduce my profits somewhat but it will also keep me from going bankrupt one fine day....I learnt this the hard way after losing a big chunk of my capital...So no more risky business...I will take what I get...

And why is it so bad?...I mean I said above I had taken an NF 5250...It was hedged with 5300 calls bought at avg price of 94....Now, NF is at 5150 or so....the call is worth 54....So my profit per contract is 100 on NF-40 on the call....Still a good 60 pts per contract...Good enough for me....And I am safe and can sleep sound at night ;-)

Folks, sleep and health is too important to worry about what the market will do the next day.
You know you are over your limit in the market if you cant sleep at night! :)

Remember Jesse Livermore was a great trader and speculator in the earlier part of the last century...He made and lost several millions many times over. He also went bankrupt many times...In the end, do you know what happened to him? Very few books will tell you this - He went into a store dressing room and shot himself....

So folks, remember, profits are important...But the most important thing is - Capital protection...Profits will follow...And dont ignore your health!


Starting Up...

So finally decided to start up in earnest...Been a while since I wanted to begin posting in full strength but some things held me off...Namely -

- I was posting on another site all my thoughts but some recent developments over there and general lethargy from others to reply or debate posts have given me pause. Also the site quality is quickly disintegrating over time and good members are also leaving over time....

- Then ofcourse starting trouble...I got over that...But I guess more important than that I suppose is maintaining the momentum on this blog...I guess I was very afraid I would not be able to do that...So did not want to start something I cant continue...But what the hell...I will give it a shot. Lets see how this goes. If not I will hand over to some guestbloggers over time :-)

So here goes...What I intend to do is keep this as a place where I posted my thoughts on the indian stock market and what I expect to happen in different timeframes..long and short...I can go wrong a lot of times so that why I will NEVER EVER take an unhedged position...I will explain how I take positions in my next few posts so that its clear....

One of the reasons that pushed me to get this blog rolling was the fact that I got bombarded by emails and chat messages after I posted my last message on the forum I was talking about before...And since its almost impossible for me to respond to all emails and chats, I figured I will post them in a blog...And it also serves as a place for me to put my thoughts in.

Okay on to the next post...