Apr 042014
 

Dr Reddy's seems to have completed an A-B-C correction and looks set for a new 52 week high. The elliott wave labels are shown on the chart below.

Dr Reddy Daily Charts with Elliott Wave Labels

If you connect the lows from Feb 2013, there is a trendline running through the recent low of 2540. Hence, it makes sense to go long at current levels of 2633 with a daily closing stop below 2540 and expect the stock to scale 2905-3000.

Please bear in mind that in the longer term time frame, we are in the fifth wave. Hence, one should not get aggressive on the long side. Also fifth waves tend to be slower than 3rd wave - something options traders need to be mindful (you may not want time decay eroding your premium despite being right).

Note: If you are a pay-per-view customer, remember to save this post as pdf.

Legal Disclaimer: This post gives an idea of how a trader chooses low risk entry points for trading and hence what you see in this post is for educational purpose only. This is no solicitation to buy, sell or hold any securities. I’m not a registered investment advisor and I strongly urge you to consult one if you are going to act on the above idea. If you decide to take action on the above idea, you are agreeing that you take full responsibility for the profit or loss that you may sustain based on such decisions and agreeing to indemnify the author of the same. You may have seen me on TV suggesting successful trade ideas but remember trading is inherently risky and past performance is no guarantee of future outcome.

NOTE: This was a premium content and has been unlocked now. The trade got stopped out at 2520 on 14th May after reaching 2780 on 30th April.

 Posted by at 10:34 am
Mar 132014
 

Reliance capital (last -333.8) has clocked a 5 up- 3down price action since its lows in Aug 2013. This is a classic bullish set up under the wave principle. The stock could be at the beginning stages of a huge bullish price move or a large corrective rise. In either case, one may expect a minimum rally to Rs.380. Traders may use Rs.304 at a daily closing level as a stop loss and may use dips to go long in this counter.

Reliance Capital - Daily Charts

Legal Disclaimer: This post gives an idea of how a trader chooses low risk entry points for trading and hence what you see in this post is for educational purpose only. This is no solicitation to buy, sell or hold any securities. I’m not a registered investment advisor and I strongly urge you to consult one if you are going to act on the above idea. If you decide to take action on the above idea, you are agreeing that you take full responsibility for the profit or loss that you may sustain based on such decisions and agreeing to indemnify the author of the same. You may have seen me on TV suggesting successful trade ideas but remember trading is inherently risky and past performance is no guarantee of future outcome.

Note: This was a premium digital content and has now been unlocked as Reliance cap has reached 373

 Posted by at 1:20 am
Feb 092014
 

It is always a good idea to start from a very significant market turn to get a clear picture of how a market is poised at its current juncture. Hence, we take a look at Bank Nifty from its 2009 low.

Bank Nifty - weekly charts with Elliott Wave Labels

After a close analysis of the weekly charts of Bank Nifty from an Elliott Wave perspective, we are able to label the move from the 2009 low to the 2013 high as a completed 5 wave move. The wave principle tells us that once a 5 wave move is complete, we should look for a 3 wave corrective move against previous trend. This 3 wave move is labeled as an a b c (in circle). Most often this entire corrective wave ends near the previous fourth wave. The blue dashed line on the chart is where the previous 4th wave started and this level corresponds to 7766, which is one possible ending point for this corrective move.

Bank Nifty Daily Charts with Elliott Wave labels

Now lets take a closer look at this corrective move. Drilling down to the daily charts, we are interpreting that at this juncture only Wave a and Wave b are complete and Wave c is underway. Since wave c's are normally a five wave structure, we are interpreting the current decline to be incomplete.

If so far everything has been Greek and Latin, do not worry. What we have to do with these interpretations and wave labels is right ahead. Using the guidelines and rules of wave principle, the key point for us is that, the bounce from 9961 (Feb 4th) on the Bank Nifty is unlikely to touch 10788  as wave iv cannot overlap into wave i and is very likely to end somewhere between (10453-10756).

So what do we do with this information? Once Bank Nifty enters this price zone of 10453-10756, we look to build short positions for the bigger target of 7766 (previous wave 4) or 7200 (where circled wave A would = circled wave C)(Ideally 1/3rd at 10456, 1/3rd at 10600 and 1/3rd at 10750). One can use 10788 itself as a stop but it would be safer to use 11040 as a stop - that is if you are a futures trader. If you are an options trader, one may look to build positions in March 9000 put or the March 9500 put when the Index starts enters zone of 10450-756.

Note: All levels mentioned here are Bank Nifty spot levels and not front month or next month futures levels.

PS: Make sure you save a copy of this report as this is a pay per view report.

Legal Disclaimer: This post gives an idea of how a trader chooses low risk entry points for trading and hence what you see in this post is for educational purpose only. This is no solicitation to buy, sell or hold any securities. I’m not a registered investment advisor and I strongly urge you to consult one if you are going to act on the above idea. If you decide to take action on the above idea, you are agreeing that you take full responsibility for the profit or loss that you may sustain based on such decisions and agreeing to indemnify the author of the same. You may have seen me on TV suggesting successful trade ideas but remember trading is inherently risky and past performance is no guarantee of future outcome.

PS: This was a premium content and has now been unlocked. Trade set up invalidated on a move above 11040.

 Posted by at 9:02 pm
Feb 022014
 

BF Utilities has had a stellar run from low 100's. Under the Elliott Wave model the current decline from 670 to 490 seems to be a wave iv correction. There is a good probability that the low of Friday, 490 marked the end of wave iv. As can be seen from the chart below, I'm interpreting this wave iv as a sub-wave of a large wave 3.

Hence, if we are seeing the beginning of wave v of Wave 3, we are likely to see BF Utility rise to atleast 824 (typical wave v ending point) and ideally 895, as  wave iii was normal and wave v would extend. Eventually, the larger wave 5 would send this stock to north of 1100.

Hence, I would look to create go long on BFUtility, 1/3 to 2/3 of my normal trading size at current levels (530) and look for 895. In the event wave iv is still ongoing, I would look to add balance closer to 490 and 460. Once we see a cross above 620, we can be confident that the move to 895-1100 is underway.

I will email you through updates as to where to place your stop loss orders but at the moment, I do not see BF utility dropping below 460.

Disclosure: I have earlier recommended this to my clients as a multibagger around 300 levels for a target of 1300.

PS: Make sure you save a copy of this report as this is a pay per view report.

Update to post on March 22nd 2014 (via email to subscribers):

536 CMP. LIMIT UP. If you stuck to the original idea, we are currently sitting on a profit of 10%, if you added more during the decline to 431 as per email of 17th, a slighthly higher MTM profit. I suggest booking 1/3 of the qty now. When the stock crosses 605, you can add back this 1/3rd. OR stay in the trade for the rest of the ride with 2/3rd of your position - its all up to you. Remember, always play extreme defence, the profits will roll in.

Update to post on March 17th 2014 (via email to subccribers):

I just want to let you know that despite Friday's weak price action, I see
no change in the longer term price structure. Remember, the original idea
was to buy in stages at 520, 490 and 460. And the confirmation to 800-1100
was only when the stock crossed 605-20. Please re-read the original post.

Great traders always look at minimizing risk. So when the stock moved 10%
in your favour to 590+, you should have taken a bit of profit. If you did
not.... well, we can always learn. Trading is a learning school for a
lifetime.

Coming to the short term structure, we may see a drop to 420-15 before a
bottom is formed. How you manage your risk is in your hands.

Legal Disclaimer: This post gives an idea of how a trader chooses low risk entry points for trading and hence what you see in this post is for educational purpose only. This is no solicitation to buy, sell or hold any securities. I’m not a registered investment advisor and I strongly urge you to consult one if you are going to act on the above idea. If you decide to take action on the above idea, you are agreeing that you take full responsibility for the profit or loss that you may sustain based on such decisions and agreeing to indemnify the author of the same. You may have seen me on TV suggesting successful trade ideas but remember trading is inherently risky and past performance is no guarantee of future outcome.

Note: This was a premium digital content and has now been unlocked after the stock scaled 680 (50% up if one managed the trade as per the post and mail updates)

 Posted by at 11:00 pm
Jan 302014
 

Gold:

Were you able to capitilize on the recent wild moves in Gold? We did.  Not only have we got a low risk entry point we have been able to make use of the wild gyrations of the last few days. Here is a screen shot of an update sent to those who purchased the Gold and Silver medium term view:

Gold Update

Gold corrected as expected from 1270's to 1248 and once again bounced from 1248 to 1270.

PNB:

Part of the trade idea was to go long on a just -OTM put. After the report was published, PNB's 560 put appreciated from 5 to 42, 580 put appreciated from 10 to 62 , 8 fold increase and 6 fold increase depending on which strike was taken.

Both these posts - PNB and  precious metals have useful trend guidance that can come in handy for the slightly longer term trader (albeit at a higher risk level now). If you would like to know what are the decision points (targets, key levels, stop loss) and where these securities are headed, click the purchase button( click here for PNB and here for Gold and Silver key words -credit/debit cards and paypal accepted).

 

 Posted by at 11:46 am
Dec 022013
 

Sun pharma has been the best performing stock in the Nifty index for the last 5 years and the trend still seems to be going strong.

The stock is making consistent higher high and higher lows. At the recent low of  562, the stock may have completed a minor wave 4  under the Elliott wave model and a trendline from the year low also passes just below that.  With today's 4% move, the stock is looking like it has started its 5th wave up.

So, it makes enormous sense to place a stop below 560-555 (on a daily closing basis) and go long on this stock. If the wave count is correct, we should see Sun Pharma clock at least 650-674 in the next 2-8 weeks.

If for some reason, the stock drops below 555 on a closing basis, we are wrong and will have to exit the trade at a loss.

Legal Disclaimer: This post gives an idea of how a trader chooses low risk entry points for trading and hence what you see in this post is for educational purpose only. This is no solicitation to buy or sell securities. I'm not a registered investment advisor and if you decide to take action on the above idea, you are agreeing that you take full responsibility for the profit or loss that you may sustain based on such decisions and agreeing to indemnify the author of the same.  You may have seen me on TV suggesting successful trade ideas but remember trading is inherently risky and past performance is no guarantee of future outcome.

 Posted by at 1:48 pm
Sep 172012
 

The sentiment in the investment world is on a sugar high over QE3. Retail traders are talking about sky high targets and broking houses are dishing out lofty year end targets. Now let us stop for a moment,  jog our memory as to what effect QE2 had on equity markets around the world. Date of QE2 announcement: 3rd Nov 2010. And here is what happened in Nov 2010...

Nifty in Nov 2010

Hang Seng in Nov 2010

Singapore STI in Nov 2010

It wasn't just Asian markets. The picture across the CIVETS markets was pretty similar.

Colombia

This is not a complete list of  equity indices that topped in Nov 2010 but I guess this is enough to drive the message.

Given that the new QE is not much different from earlier QE2 except for some small bells and whistles,  should one expect a much different outcome now and turn bullish on the markets for the long term? What was that Einstein quote about insanity?

I'll be watching the charts for reversal signals and be ready for a big punt if one comes through.

 Posted by at 8:51 pm
Feb 172012
 

A recent business insider article calls 'Gold bugs' thin skinned misanthropes because Warren Buffett "..devotes a few paragraphs to gold and the fools who worship it" in his upcoming annual letter!!   Regular followers of this blog know that I had turned cautious on Gold around $1700's and bearish in September 2011 - just establishing I'm no gold bug.

In my May 2010 post, I had highlighted how such fancy theories can be quite flawed and prevent you from arriving at the best investment decisions. Now to Mr Buffett's renewed Vitiriol against gold:

1) The cube of gold will produce nothing in the next hundred years

My answer: No one makes investment decision for next hundred years

2) The cube of gold will not pay you interest or dividends, and it won't grow earnings.

My answer: So will be the case with a boat load of stocks. The S&P has gone no where in the last 13 years.

3) You can fondle the cube of gold, but it won't respond.

My answer: Yes, witty.   Hence I'll try to be funny too.   Mr Buffett should know what to fondle.   If you own lots of gold you do not need to fondle, 'they' will fondle you :D

The reason for Mr Buffett's bashing?   Well, whatever I say would purely be a guess but I would let the performance of Gold speak for itself:

Gold's return for the last 10yrs - 488.19%

BRK's return for the last 10 yrs - 67.77%

Gold continues to wallop the performance of  Berkshire Hathway by a GIGANTIC 420% over his preferred time frame of 10 years.

And if you had listened to Mr Buffett's  Annual letter of last year, you are in the elite company of those who missed the best performing asset class of 2011 - long dated bonds that returned almost 30%.

Here are the words of another  billionaire who is in the same business. "At the end of the day, your job is to buy what goes up and to sell what goes down. So really who gives a damn about PE's?" – Paul Tudor Jones