I haven’t been posting regularly of late…..NO I aint gone broke Trading, and no I aint quitting!!! It’s just that I am lil busy with my main business, as the season is on, and this the primary bread and butter for me. I am into the business of bulk selling of Fresh Flowers (to make it sound more exotic let’s just say I deal in HIGHLY PERSIHABLE COMMODITIES!).
Will be a taking a kinda long break as traveling to
Take a look at the SnP 500 chart below and you can see on the chart to your left (weekly), price is retracing to the 50% fib level and now the indicators also seem to hinting at a pause; a breather perhaps?
The Daily above (right) shows a small DT which gets confirmed only on break of the trough below (till that happens we assume it as multiple top). Initial weakness will set once we start trading below 1080. There is a massive Negative Divergence happening on the daily chart and it gets confirmed by the PRICE breaking those multiple supports courtesy short term trend lines and both the 20 and the 50 periods MA’s. In short (pun intended) a close below 1060 would be a welcome move!!!
Mucho has been written about the USD nowadays, and that’s probably because many expect a bounce in it. Technically yes, but then we never know if this is the low! As followers of Technical Analysis we must not be predictive but be reactive.
From the USD Index chart we know we have a probable DB. Period that’s it; a probability of a DB and along with it we have a logical SL a few pips below the DB (that is if you decide to play long) and of course the target above (77.5 and approx 79 to begin with).
Technical Analysis doesn’t fail coz it always gives you the escape route (the STOP LOSS) its us traders who fail when we just fail to use the STOPS!
While you are at it I would suggest you read my last weeks post on Dollar here and a very good write-up by noted analyst A.K. Prabhakar here!
While a man was polishing his new car, his 4 yr old son picked up stone and scratched lines on the side of the car.
In anger, the man took the child's hand and hit it many times not realizing he was using a wrench.
At the hospital, the child lost all his fingers due to multiple fractures.
When the child saw his father..... with painful eyes he asked, 'Dad when will my fingers grow back?' The man was so hurt and speechless; he went back to his car and kicked it a lot of times.
Devastated by his own actions..... . sitting in front of that car he looked at the scratches; the child had written 'LOVE YOU DAD'.
The next day that man committed suicide. . .
Anger and Love have no limits; choose the latter to have a beautiful, lovely life & remember this:
Things are to be used and people are to be loved.
The problem in today's world is that people are used while things are loved.
Let's try always to keep this thought in mind:
Things are to be used,
People are to be loved.
Watch your thoughts; they become words.
Watch your words; they become actions.
Watch your actions; they become habits.
Watch your habits; they become character;
Watch your character; it becomes your destiny.
I'm glad a friend forwarded this to me as a reminder..
I hope you have a good day no matter what problems you may face
it's the only day you'll have before it's over.
When the lamp is shattered,
The light in the dust lies dead;
When the cloud is scattered,
The rainbow's glory is shed;
When the lute is broken,
Sweet tones are remembered not;
When the lips have spoken,
Loved accents are soon forgot.
As music and splendor
Survive not the lamp and the lute,
The heart's echoes render
No song when the spirit is mute:--
No song but sad dirges,
Like the wind through a ruined cell,
Or the mournful surges
That ring the dead seaman's knell.
When hearts have once mingled,
Love first leaves the well-built nest;
The weak one is singled
To endure what it once possessed.
O Love! who bewailest
The frailty of all things here,
Why choose you the frailest
For your cradle, your home, and your bier?
Its passions will rock thee,
As the storms rock the ravens on high;
Bright reason will mock thee,
Like the sun from a wintry sky.
From thy nest every rafter
Will rot, and thine eagle home
Leave thee naked to laughter,
When leaves fall and cold winds come.
Once you are on the road to trading, there will be a time, when you will need to ask your self this question “What’s Your Edge?” Infact you even need to ask this question to anyone whose services you have subscribed to or would want to subscribe in the near future or when buying a trading system.
So what’s the Edge? Edge or as some say Expectancy is mathematically calculated using the following formula;
E= (PW*AW) – (PL*
Where:
E= Expectation or THE EDGE
PW= Winning Percent
Aw= Average Winner
PL= Losing Percent
To make it more lucid, let us assume that you have a trading system which has 50 percent winning trades and average winning trade is for Rs 500 and the average losing trade is for Rs 350. Then using the above formula we can calculate your Edge;
E= (PW*AW) – (PL*
Edge= (.50*500) – (.50*350),
Edge= 250-175,
Edge= Rs 75 on an average per gain per trade.
This means over a time you would expect to earn Rs 75 for each trade placed. Now assuming that you are approached by an analyst or a system vendor, who offers you his services for a fee, but has a system, which has only 40 percent winners, with an average win of 900 bucks and an average loser of 350 bucks. What would be his Edge be? Again using the above formula we get;
Edge= (.40*900) – (.60*350),
Edge= 360 – 210,
Edge= Rs 150 on an average per gain per trade.
So it seems your so called analyst has almost 2 times the Edge and you would be better off trading with him or at least would agree that his system is better placed even though his winning percent is much lower!
Therefore next time you see someone screaming that they give “90 percent or for that matter 99 percent winning trades” don’t get excited, but very quietly ask the gentleman “So What’s Your Edge?”
"October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February." - Mark Twain
October lived up to its reputation and Yes Halloween did scare or rather spook the markets the world over! Lets see where are Nifty stands this we(a)k! So far a nice 13 week rally is followed by a two week downfall. From the daily chart below (left) one can see we are at where it matters the most; the previous highs (old resi’s turn to supports) and a short term TL support, the hitch, unfortunately we are also below, both the 20 and the 50 periods MA’s. The market is turned OS, so a bounce back from here is not ruled out!
The chart above to the right is the hourly; Nifty can give a good intraday bounce, if it consistently infact let me add convincingly trades above 4750, to head for 4810/4850!
No wonder they say “a picture is worth a thousand words”!!!
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A look at the Shanghai Composite weekly chart below reveals that the price is nesting between the confluences of all the three moving averages on the weekly chart! The 20/50/200 are all between 2894 and 2720. I have also enlarged the last few weeks of the price action in candle stick form. Something strange here what looked like a morning start (see the firs three candles) is now morphing into an evening star (see last three candles). Na, not intending to confuse anyone here but only putting forth a point here; price is dynamic and so are patterns. Therefore it is always wise to wait for confirmation from the price action before getting all bullish or bearish about a pattern! A break and a close below the 200 MA (2700 approx), will straight lead to a testing the 2500 and trend line support below.
Ok letting some fantasies run wild here (anyways fantasies are meant to be wild!), the daily chart below shows price taking support at the 200 periods MA. Infact it’s just about managing to hang in there (last bar is an Inside Bar) and that to In the Down channel! A break from here can aggravate the fall to perhaps testing the channel support below. Whereas a rise from here and then overcoming the 3000/50 would put the inverse H&S shoulder into play (their you have it- A fantasy till proven true!) and also negate the falling channel.
The weekly chart of SnP 500 below shows, a two bar reversal signifying a lil change in short term trend! But the bigger picture is still bullish! Well for starters we are still nicely advancing in a rising channel. We have a nice support happening at 980 odd levels where the 20 and the 50 periods MA are giving a crossover. More important is the level lat 935/50 which is likely to play a key role; Old Highs turn to Supports! And last but not the least we are yet to get the most important Dow Theory Signal; Failure to make a new high and then making a new lower low! Till these conditions hold we can safely assume the trend to be bullish on weekly chart. Period.
On the daily chart what now looks like a wedge is at important triple support zone;
Breaking and giving a close below these, means testing times for the 50 and the 200 periods MA’s below. By the way 200 MA on the daily is approximately at the same level where we have the 20/50 periods MA crossover happening on the weekly chart.
Bottom-line? Well 950/980 looks a good support for now and 1100/1150 a good resistance for the time being!
