29 October 2012

DJIA AT MAKE OR BREAK

Hi Friends,


DJIA - Daily

Its been long since we have posted something on Dow Jones Industrial Average which is one of the most tracked Indices in the World. But currently it's at a Make or Break Point. 

DJIA - Hourly

DJIA has been moving up in a Channel since Oct. 2011 lows & taking support at lower boundary line. Currently it has a strong Support near 12970-13030 which if held DJIA may further Rally to New High to 13750-13800 till Mid Nov. On Daily Chart it's Oversold & on Hourly Chart it is showing a positive RSI Divergence. So a Bounce from current level is very likely, but Traders shall look for Faster Retracement of the Falling Segment as confirmation for Rally towards New High.

DJIA - Weekly

On a weekly chart also DJIA has been moving up in a Chanel since March 2009 lows. It's a 42 months long Recovery Cycle which is Maturing. While, most of Analysts, Financial Magazines & Investment Bankers are Calling this as a Long Lasting Bull Market; we still believe that it's just a Bear Market Rally Which is Driven by Easy Credit through QE's. And this Credit Bubble will Burst soon. Therefore,  if DJIA manages to hold this Support & Rallies to New High; Investors shall use this Rally to Liquidate their Longs.

We will post more on Long Term Cycle on DJIA & How today's Investor Sentiments Depicts Start of Yet Another Forthcoming Stock Market Crash in our next post.


So lets wait & watch..


Thanks & Regards,

Harsh Dixit.

11 October 2012

THE 14 STAGES OF TRADING PSYCHOLOGY

Hi Friends,



The chart below is a visual representation of the 14 stages that I’ll cover below. This would be a great visual to print out and put in your office or desk to remind you to ask yourself: “Where am I right now?”


1. OPTIMISM – It all starts with a hunch or a positive outlook leading us to buy a stock.

2. EXCITEMENT – Things start moving our way and we get giddy inside. We start to anticipate and hope that a possible success story is in the making.
.
3. THRILL – The market continues to be favorable and we just can’t help but start
to feel a little “Smart.” At this point we have complete confidence in trading system.


4. EUPHORIA – This marks the point of maximum financial risk but also maximum financial gain. Our investments turn into quick and easy profits, so we begin to ignore the basic concept of risk We now start trading anything that we can get our hands on to make a buck.

5. ANXIETY – Oh no – it’s turning around! The markets start to show their first signs of taking your “hard earned” gains back. But having never seen this happen, we still remain ultra greedy and think the long-term trend is higher.

6. DENIAL – The markets don’t turn as quickly as we had hoped. There must be something wrong we think to ourselves. Our “long-term” view now shortens to a near-term hope of an improvement.

7. FEAR – Reality sets in that we are not as smart as we once thought. Instead of being confident in our trading we become confused. At this point we should get out with a small profit and move on but we don’t for some stupid reason.

8. DESPERATION – All gains have been lost at this point. We had our chance to profit and missed it. Not knowing how to act, we attempt to do anything that will bring our positions back into the black.

9. PANIC – The most emotional period by far. We are clueless and helpless. At this stage we feel like we are at the mercy of the market and have absolutely no control.

10. CAPITULATION – We have reached our breaking point and sell our positions at any price. So long as we can get out of the market to avoid bigger losses we are content.

11. DESPONDENCY – After exiting the markets we do not want to buy stocks ever again. The markets are not for us and should be avoided like the plague. However, this rare point marks the point of maximum financial opportunity.

12. DEPRESSION – We drink, cry and/or pray. How could we have been so dumb we think to ourselves. Some start to correctly look back and analyze what went wrong. Real traders are born here, learning from past mistakes.

13. HOPE – We can still do this! Eventually we return come to the realization the market actually does have cycles (shocking). We begin to start analyzing new opportunities.

14. RELIEF – The markets are turning positive again and we see our prior investment come back around. We regain our faith (although small) in our ability to invest our money. The cycle start all over again!


Thanks & Regards,

Harsh Dixit.

7 October 2012

CIPLA - ELLIOTT WAVE UPDATE

Hi Friends,
CIPLA

In our last post we mentioned that CIPLA seem to have started its Down move in 'C' leg of Flat in Cycle Degree Wave 4. Of which Wave (i) seem to have over at 353. We mentioned that Wave (ii) might retrace up-to 78.6% to 387. CIPLA exactly retraced up-to 387 and started Tumbling Down.

On completion of Wave (ii) we posted a comment that Faster Retracement of this Corrective Rally  would help us to conclude that Wave (iii) down has started. CIPLA has Retraced more than 50% of this Corrective Rally in Wave (ii) up in less than 50% of time. Further, on hourly chart we can clearly see Impulse move down sub-dividing. So this satisfies the criteria for Directional move in Wave (iii) down. Following pure Elliott Rule, Wave (iii) can Extend up-to 1.618% of Wave (i) to 317 or 2.618% to 274.

The Current move may take a pause at 350-352 area & Retrace back to 368-370. Investors still have chance to Exit Longs before Wave (iii) starts accelerating. As a trader I would wait for a Corrective Pullback Rally to initiate Short Trade. And would not suggest to Buy this stock until Wave (iii) gets over. Since Wave (iii) is Fastest and Longest, Bulls must stay away from this stock.


Thanks & Regards,

Harsh Dixit.

INFOSYS - ELLIOTT WAVE UPDATE

Hi Friends,


INFOSYS
INFOSYS

In our last post we mentioned that INFOSYS seems to be in Wave 2 of (C) of the Cycle Degree Wave 2, which might develop as Zigzag Correction. The correction seems over at 2648 and it might have started moving in its 3rd Wave down. Generally Zigzags are Bounded by Channels. So until the stock doesn't break above this Channel our assumption of wave 2 holds true. There could be a Double or Triple Zigzag & stock may try to fill the Gap at 2740. But owning this stock as an Investor is still bit Risky. 

This is not a Short Call on the Stock. But an alert for Investors to exit Longs. For Short confirmation traders mus wait for break down from the rising channel. As a trader I would wait patiently till the stock breaks down from the Rising Channel an initiate Short trade on a pullback.


So lets wait & watch..

Thanks & Regards,

Harsh Dixit.

3 October 2012

NIFTY AT INFLECTION POINT

Hi Friends,

Yesterday I wrote about 5th Extension within 'c' of 3rd on Nifty. However, after carefully observing the charts, we have now two possibilities on Nifty.
NIFTY- 5th EXTENSION IMPULSE

1. As per the yesterday's post 5th within 'c' of 3rd might be developing as Extension Impulse Wave. Break above 5756-5780 will confirm the target of 5944-6040 in this case. 
NIFTY- ENDING DIAGONAL IN 'C'

2. The entire formation from low of 5215 might be developing as an Ending Diagonal. Ending Diagonal generally develops in 5th or C wave.. So Break below 5691 will be initial sign of weakness and below 5639 we will get confirmation for 5520-5440.

So at this crucial juncture Bulls must keep strict stop-loss of 5639 and wait for break above 5756-5780 to Ride further Up Move. And Bears must wait for break below 5691 and confirmation below 5639. Once 5639 breaks Bears can take a short trade on corrective pull back for target of 5520-5440.

Since, momentum is loosing as seen from RSI Negative Divergence formation discussed in 2nd is more probable.

So lets wait & watch..

Thanks & Regards,

Harsh Dixit.

NIFTY - EXTENDED 3RD WAVE

Hi Friends,
NIFTY

In our last post we mentioned to be cautious around 5738-5756. As per previous post we were expecting this Rally in 3rd wave to End around 5738-5756. And were waiting for the missing (v)th of 5th wave to to take short trade. But after the Friday's action it seems that 5th wave under this 3rd wave is developing as an extension impulse and can shoot up to 5932 or even 6040 till Oct 24th. Sustained move above the trend channel around 5780 will confirm that 5th wave is developing as an extension impulse and will also confirm that its the Extended 3rd wave on Nifty.

Generally 3rd wave is the fastest and longest among wave 1-3-5. Similar kind of move was witnessed in Jan 2012 where Bears got completely wiped out in 3rd wave of the wave 'A' of this corrective up move. There are lots of shorts active in the system and Nifty will keep moving higher until all these shorts are totally wiped out.

Experts say that never try to predict the end of 3rd wave. So it is better to keep trailing the protective stops to ride this up move.


Thanks & Regards,

Harsh Dixit.