- trend is down on monthly charts
- expect support around 13300
- expect support around 13300
February 29, 2016
Market outlook
Daily charts
- trend is down on daily charts
- today, NF closed in negative; AD was flat
- NF forms a large candle with a long tail
- discarding triangle formation as recent low was violated\
- holding above 7100 will be bullish
- trend is down on daily charts
- today, NF closed in negative; AD was flat
- NF forms a large candle with a long tail
- discarding triangle formation as recent low was violated\
- holding above 7100 will be bullish
This is really funny
>>>
We identified the 1st Corrective as a Diamond-Shaped Diametric. The 1st x-wave was found to be a 9-legged Symmetrical formation, which retraced the 1st Corrective exactly by 61.8%.
The 2nd Corrective was identified as a Bow-Tie-Shaped Diametric, which ended exactly at the lower end of the Yellow channel and “political 0-point” (the low of 16th May’2014 when the new Govt was elected).
We identified the 1st Corrective as a Diamond-Shaped Diametric. The 1st x-wave was found to be a 9-legged Symmetrical formation, which retraced the 1st Corrective exactly by 61.8%.
The 2nd Corrective was identified as a Bow-Tie-Shaped Diametric, which ended exactly at the lower end of the Yellow channel and “political 0-point” (the low of 16th May’2014 when the new Govt was elected).
The 2nd x-wave was identified as an Extracting Triangle, but its size remained miniscule as compared to the size of 2ndCorrective, in terms of price as well as time.
By NEoWave, x-wave can be so miniscule. Indeed, NEoWave even talks about “missing-x” wherein you can’t actually see the “x-wave”, but assume its existence in context of the structure around it.
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Source: http://content.icicidirect.com/ULFiles/UploadFile_2016229102421.asp
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Source: http://content.icicidirect.com/ULFiles/UploadFile_2016229102421.asp
February 27, 2016
Negative Interest Rate Policy (NIRP)
What is a 'Negative Interest Rate Policy (NIRP)'
A negative interest rate policy (NIRP) is an unconventional monetary policy tool whereby nominal target interest rates are set with a negative value, below the theoretical lower bound of zero percent.
BREAKING DOWN 'Negative Interest Rate Policy (NIRP)'
During deflationary periods, people and businesses hoard money instead of spending and investing. The result is a collapse in aggregate demand which leads to prices falling even farther, a slowdown or halt in real production and output, and an increase in unemployment. A loose or expansionary monetary policy is usually employed to deal with such economic stagnation. However, if deflationary forces are strong enough, simply cutting the central bank's interest rate to zero may not be sufficient to stimulate borrowing and lending. (See also: How Interest Rates Can Go Negative.)
Read more: Negative Interest Rate Policy (NIRP) Definition | Investopedia http://www.investopedia.com/terms/n/negative-interest-rate-policy-nirp.asp
February 26, 2016
Market outlook + weekly charts
Weekly charts
- trend is down on weekly charts
- next support around 6400 levels
- trend is down on weekly charts
- next support around 6400 levels
Losses are inevitable in trading
The great traders fully realize that losing is an intrinsic element in the game of trading.
This attitude seems linked to confidence.
Because exceptional traders are confident that they will win over the long run, individual losing trades no longer seem horrible; they simply appear inevitable-which is what they are.
This attitude seems linked to confidence.
Because exceptional traders are confident that they will win over the long run, individual losing trades no longer seem horrible; they simply appear inevitable-which is what they are.
Over long term, large caps look as ordinary as FDs
The compound annual returns from equity mutual fund (MF) schemes which invest in large-cap companies are often considered safest bets for investors. However, these have dipped to single digit in the past 10-year investment period.
Equities are considered an inflation-beating asset class from a long-term horizon. However, the past decade's trend depicts an opposite picture. Worse, in a five-year period, large-cap funds made less money for investors than basic bank FDs.
Read more at http://www.business-standard.com/article/markets/over-long-term-large-caps-look-as-ordinary-as-fds-116022500855_1.html
Equities are considered an inflation-beating asset class from a long-term horizon. However, the past decade's trend depicts an opposite picture. Worse, in a five-year period, large-cap funds made less money for investors than basic bank FDs.
Read more at http://www.business-standard.com/article/markets/over-long-term-large-caps-look-as-ordinary-as-fds-116022500855_1.html
RELIANCE multiple time frame charts
EOD charts
- trend is down on daily charts
- immediate support 910 levels
- bullish if stock can sustain above 970
- trend is down on daily charts
- immediate support 910 levels
- bullish if stock can sustain above 970
INDUSIND BANK monthly charts
- one of the few stocks which has hardly corrected in this market
- immediate support 780
- next support 520-600 region
- immediate support 780
- next support 520-600 region
February 25, 2016
BANK NIFTY technicals
- trend is down on daily, weekly and monthly charts
- this year, index lost 20%
- strong support around 13300 on monthly charts
- this year, index lost 20%
- strong support around 13300 on monthly charts
Market outlook + my trades
Daily charts
- trend is down on daily charts
- today, NF closed in negative; VIX was flat
- I am expecting a 5 legged triangle of which 3rd leg is in process
- condition is recent lows should not break
- breakout from triangle will be bullish
- trend is down on daily charts
- today, NF closed in negative; VIX was flat
- I am expecting a 5 legged triangle of which 3rd leg is in process
- condition is recent lows should not break
- breakout from triangle will be bullish
February 24, 2016
ITC monthly charts
- stock breaks support at 300
- this level can also be interpreted as neckline of H&S
- this level can also be interpreted as neckline of H&S
Market outlook
- trend is down on daily charts
- today, NF closed 1.3% in negative; VIX down 3%
- I am expecting a 5 legged triangle of which 3rd leg is in process
- condition is recent lows should not break
- breakout from triangle will be bullish
Now, NIFTY 50 to have 51 stocks???
NSE exchange to add 4 companies, drop Cairn India, Vedanta, PNB from index
Deccan Herald - 1 day ago
Cairn India, PNB, Vedanta to exit from NSE Nifty 50 on April 1
Cairn India, PNB, Vedanta to exit from NSE Nifty 50 on April 1
Deccan Herald-22-Feb-2016
The Fatal Flaw That Has Doomed Our Economy
Let’s begin with a question. After the invention of the internal combustion engine, people in Europe… and then the Americas… got richer, almost every year. Earnings rose. Wealth increased.
Then in the 1970s, after two centuries, American men ceased making progress.
Then in the 1970s, after two centuries, American men ceased making progress.
Despite more PhDs than ever… more scientists… more engineers… more capital… more knowledge… more Nobel Prizes… more college graduates… more machines… more factories… more patents… and the invention of the Internet… after adjusting for inflation, the typical American man earned no more in 2015 than he had 40 years before.
Why? What went wrong? No one knows. But we have a hypothesis. Not one person in 1,000 realizes it, but America’s money changed on August 15, 1971. After that, not even foreign governments could exchange their dollars for gold at a fixed rate.
The dollar still looked the same. It still acted the same. It still could be used to buy booze and cigarettes. But it was flawed money. And it changed the whole world economy in a fundamental way… a way that is just now coming into focus.
I'm down 200k and pretty much suicidal right now
"Suicidal" Trader Loses Everything, Launches Online Begging Site
Here is his narrative as documented last night on the momentum trading website StockTwits:
- I'm down 200k aka basically everything and pretty much suicidal right now
- kept buying on margins as it went up. Held too long as it went down
- started small then after it did well I took figured why not put more in. Got behind kept trying to break even. Never did
- Put just about what I had left in 15.5 calls here...my life is totally fucked right no; what I have left is fit 15.5 calls which will most likely be worthless on the open tomorrow
- wasn't hoping for a huge return just quick return to get lost money back but yes I learned the hard way about how they're toxic
- I went wrong by using margins and I don't think I'll be back in it to bounce back
- I was doing great which is how I got onto margin. Got greedy but then January came and it got bad fast
- May seem like a joke but I'm fucked
- Last hope was calls so I doubt they'll be worth anything by Friday
- Worked 4 jobs the past few year to save up. Sucks seeing my life savings disappear in a little over a month
- Thinking what I was at in December vs now just makes me sick, and I'm still working multiple jobs. As you can see this isn't my calling
- it was purely my fault for being too risky with margins and trying to quick flip during a bad month
- This was a hard lesson to learn but must be a sign that I should never put my money into the stocks
- I'd say learning about margins was the worst possible thing to ever happen to me. If I didn't then I'd be up 50k right now
The bottom line:
- I've had a realized loss of 180k this year.
- no do over for me...I'm outta the stocks. Clearly not for me
Good luck. For now, however, online begging does not seem to be the best recourse for all those who chased momentum in a rigged market, and found themselves on the receiving end of a massive margin call. As of this moment, nobody has donated a single penny to the 24 year old now former trader.
February 23, 2016
BPCL, HPCL have highest loss on monthly charts in 2 years
BPCL
HPCL - this stock is closer to its long term supports as compared to BPCL
HPCL - this stock is closer to its long term supports as compared to BPCL
BHEL monthly charts
- stock closes at 2013 swing low
- current level is also 10 year low
- stock is trading 80% off lifetime highs
Market outlook + my trades
Daily charts
- trend is down on daily charts
- today, NF closed 1.7% in negative; VIX up 14%
- we had a hint of this correction as per hourly charts
- I am expecting a 5 legged triangle of which 2nd is in process
- condition is recent lows should not break
- breakout from triangle will be bullish
- trend is down on daily charts
- today, NF closed 1.7% in negative; VIX up 14%
- we had a hint of this correction as per hourly charts
- I am expecting a 5 legged triangle of which 2nd is in process
- condition is recent lows should not break
- breakout from triangle will be bullish
Chart: Nifty Adjusted For Inflation Shows Us The Lost Decade In Indian Stocks
Chart: Nifty Adjusted For Inflation Shows Us The Lost Decade In Indian Stocks
Stocks are great for long term investment but the returns should beat inflation. Inflation is essentially a drop in purchasing power – so what you buy in 2007 for Rs. 100 will cost you Rs. 200 today at an average of 8% inflation each year. So your stocks need to be going up by at least 2x since 2007, which is just about meeting inflation. Anything more than that is your “real” return.
We take the Nifty – and to be fair, we add the impact of dividends (the concept is: when you get dividends you reinvest it back into the Nifty) – and then use the CPI (Consumer Price Index) to “deflate” it to have a constant purchasing power back to 1999.
This tells us how much the Nifty has returned, net of inflation.
Nifty Indicating Cautions for Decline Below 6869 Again – EW Analysis for 22 Feb Onwards
Nifty Indicating Cautions for Decline Below 6869 Again – EW Analysis for 22 Feb Onwards
Nifty opened mild gap down on Friday at 7170 and declined till 7145 but bounced again from lower levels to register day’s high of 7226 before closing 19 points up at 7210.
Friday I mentioned that Nifty is in the middle of a wave. Either we can sell in 7284-7291 range or we can buy around 7117 for target above 7224. Nifty didn’t achieve any of the entry range, though achieved target 7224. Let’s analyze latest charts to conclude further scenario.
Today I am showing wave counts of Nifty from Sep 2012 low 5118 as read my all time frame report for previous counts. This is the same weekly chart with explanation which I posted in my Friday’s report as there is no change in it.
Why Negative Rates Can't Stop the Coming Depression
Negative rates - Lenders give their money to governments… who swear up and down, no fingers crossed, that they’ll give them back less money sometime in the future.
Is that weird or what?
At least one reader didn’t think it was so odd.
“You pay someone to store your boat or even to park your car,” he declared.
“Why not pay someone to look out for your money?”
Ah… we thought he had a point. But then, we realized that the borrower isn’t looking out for your money; he’s taking it… and using it as he sees fit.
It is as though you gave a valet the keys to your car. Then he drove it to Vegas or sold it on eBay.
A borrower takes your money and uses it. He doesn’t just store it for you; that is what safe deposit boxes are for.
When you deposit your money in a bank, it’s the same thing. You are making a loan to the bank. The bank doesn’t store your money in a safe on your behalf; it uses it to balance its books.
Read more at http://dailyreckoning.com/why-negative-rates-cant-stop-the-coming-depression
Is that weird or what?
At least one reader didn’t think it was so odd.
“You pay someone to store your boat or even to park your car,” he declared.
“Why not pay someone to look out for your money?”
Ah… we thought he had a point. But then, we realized that the borrower isn’t looking out for your money; he’s taking it… and using it as he sees fit.
It is as though you gave a valet the keys to your car. Then he drove it to Vegas or sold it on eBay.
A borrower takes your money and uses it. He doesn’t just store it for you; that is what safe deposit boxes are for.
When you deposit your money in a bank, it’s the same thing. You are making a loan to the bank. The bank doesn’t store your money in a safe on your behalf; it uses it to balance its books.
Read more at http://dailyreckoning.com/why-negative-rates-cant-stop-the-coming-depression
February 22, 2016
SNOWMAN LOGISTICS well below listing price
Did not get allotment in the recent IPO ?
Worry not.
The stock is now trading around 50 and is well below the listing price of 75.
Since nothing has changed much pre IPO and today, I wonder if investors who missed the chance will now get in specially that the stock is so cheap!
Technically, I have a simple rule... consider a buy when stock closes above last month's high. As of now, this is some distance away.
Worry not.
The stock is now trading around 50 and is well below the listing price of 75.
Since nothing has changed much pre IPO and today, I wonder if investors who missed the chance will now get in specially that the stock is so cheap!
Technically, I have a simple rule... consider a buy when stock closes above last month's high. As of now, this is some distance away.
Some signals
LAST updated: 22-FEB-2016
- Computer generated BUY and SELL signals.
- Signals are for your study only and are completely unsuitable for trading.
- Golden stoploss: min 10% or last month's low (long position).
- Do not risk more than 1% of your capital on any trade.
- All charts are provided by icharts.in
FEDERAL BANK BUY signal
Market outlook + my trades
Daily charts
- trend is down on daily charts
- today markets closed marginally in positive; AD was positive
- there is gradual compression of trading range
- expecting a correction to form a higher swing low
- trend is down on daily charts
- today markets closed marginally in positive; AD was positive
- there is gradual compression of trading range
- expecting a correction to form a higher swing low
Swedroe: Don’t Buy Winners
For almost five decades, the literature on the investment performance of mutual funds has found that very few managers possess sufficient stock-picking or market-timing talent to allow them to consistently and reliably produce positive risk-adjusted performance after considering their fees. In other words, there’s little to no evidence of outperformance beyond the randomly expected.
As my co-author Andrew Berkin and I discuss in our book, “The Incredible Shrinking Alpha,” while perhaps disheartening, this result shouldn’t be surprising given the very high skill level of active managers competing fiercely in a zero-sum game, even before expenses. Thus, investors shouldn’t expect there to be many opportunities for a free lunch.
In addition, because we should expect the scarce resource to earn any “excess returns” that occur (and the ability to generate alpha is far more scarce than investment capital), it is naive to expect that mutual fund managers won’t charge sufficient fees or attract a sufficiently large amount of assets to effectively capture any alpha they generate. Said another way, investors should not expect to be the beneficiaries of the manager’s skill.
Despite the large body of evidence demonstrating that it’s a loser’s game (one that, while possible to win, has odds so poor that it’s not prudent to try), the most common strategy used by both institutional (such as pension plans and endowments) and individual investors to select a fund manager involves hiring outperforming managers and firing underperforming ones.
Read more at http://www.etf.com/sections/index-investor-corner/swedroe-dont-buy-winners
As my co-author Andrew Berkin and I discuss in our book, “The Incredible Shrinking Alpha,” while perhaps disheartening, this result shouldn’t be surprising given the very high skill level of active managers competing fiercely in a zero-sum game, even before expenses. Thus, investors shouldn’t expect there to be many opportunities for a free lunch.
In addition, because we should expect the scarce resource to earn any “excess returns” that occur (and the ability to generate alpha is far more scarce than investment capital), it is naive to expect that mutual fund managers won’t charge sufficient fees or attract a sufficiently large amount of assets to effectively capture any alpha they generate. Said another way, investors should not expect to be the beneficiaries of the manager’s skill.
Despite the large body of evidence demonstrating that it’s a loser’s game (one that, while possible to win, has odds so poor that it’s not prudent to try), the most common strategy used by both institutional (such as pension plans and endowments) and individual investors to select a fund manager involves hiring outperforming managers and firing underperforming ones.
Read more at http://www.etf.com/sections/index-investor-corner/swedroe-dont-buy-winners
Are equities always the best investment for the long run?
Are equities always the best investment for the long run? It is the message that is usually sold to individual investors. The message is based on theory; equities are riskier than government bonds so should offer a higher return (the equity risk premium, in the jargon) to compensate investors. And the message seems to be borne out in practice, most of the time.
But there is an important caveat. Much of the data quoted by investment advisers is based on America, which is something of an outlier; it turned out to be the most successful economy of the 20th century but that was not guaranteed in advance. An investor in 1900 might have picked Germany as a rising power, only to see their assets wiped out in the 1920s hyperinflation and the Second World War; they might have picked Argentina, which was a perpetual disappointment. In other countries, there have been very long periods in which equities have not been a great investment.
Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School are the acknowledged experts on global investment returns, having compiled data covering 22 countries over more than a century. As of February 2013, the longest period of negative real returns from US equities was 16 years. But it was 19 years for global equities (and 37 for world ex-US), 22 for Britain, 51 for Japan, 55 for Germany and 66 for France. Such periods are much longer than most small investors would have the patience to wait.
Read complete post at http://www.economist.com/blogs/buttonwood/2016/01/investing
But there is an important caveat. Much of the data quoted by investment advisers is based on America, which is something of an outlier; it turned out to be the most successful economy of the 20th century but that was not guaranteed in advance. An investor in 1900 might have picked Germany as a rising power, only to see their assets wiped out in the 1920s hyperinflation and the Second World War; they might have picked Argentina, which was a perpetual disappointment. In other countries, there have been very long periods in which equities have not been a great investment.
Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School are the acknowledged experts on global investment returns, having compiled data covering 22 countries over more than a century. As of February 2013, the longest period of negative real returns from US equities was 16 years. But it was 19 years for global equities (and 37 for world ex-US), 22 for Britain, 51 for Japan, 55 for Germany and 66 for France. Such periods are much longer than most small investors would have the patience to wait.
Read complete post at http://www.economist.com/blogs/buttonwood/2016/01/investing
February 20, 2016
Why 75% drop in global oil prices isn't reaching you
Record production in the United States, weakened demand from the Eurozone and emerging economies like China and Brazil, and Iran’s entry into the international market have effectively slashed the price of crude oil for India, from $106 per barrel in July 2014 to $26 in January 2016 - a 75 per cent drop over 15 months.
So, why are you not seeing evidence of this price-cut at your local petrol and diesel station?
The answer: As global crude prices reach a 11-year low, the Centre and state governments steadily increase excise duties and value-added tax, shoring up their revenues and keeping fuel prices high for retail consumers.
Although India imports more than 80% of its fuel requirement, which means declining global prices should, theoretically, have seen sharp declines in retail petrol and diesel prices, Indian consumers of petrol and diesel now pay about double the global rate.
Read more at http://www.rediff.com/business/report/special-why-75-drop-in-global-oil-prices-isnt-reaching-you/20160207.htm
So, why are you not seeing evidence of this price-cut at your local petrol and diesel station?
The answer: As global crude prices reach a 11-year low, the Centre and state governments steadily increase excise duties and value-added tax, shoring up their revenues and keeping fuel prices high for retail consumers.
Although India imports more than 80% of its fuel requirement, which means declining global prices should, theoretically, have seen sharp declines in retail petrol and diesel prices, Indian consumers of petrol and diesel now pay about double the global rate.
Read more at http://www.rediff.com/business/report/special-why-75-drop-in-global-oil-prices-isnt-reaching-you/20160207.htm
Currency And The Collapse Of The Roman Empire
At its peak, the Roman Empire held up to 130 million people over a span of 1.5 million square miles.
Rome had conquered much of the known world. The Empire built 50,000 miles of roads, as well as many aqueducts, amphitheatres, and other works that are still in use today.
Our alphabet, calendar, languages, literature, and architecture borrow much from the Romans. Even concepts of Roman justice still stand tall, such as being “innocent until proven guilty”.
So how could such a powerful empire collapse?
See this infographic
Rome had conquered much of the known world. The Empire built 50,000 miles of roads, as well as many aqueducts, amphitheatres, and other works that are still in use today.
Our alphabet, calendar, languages, literature, and architecture borrow much from the Romans. Even concepts of Roman justice still stand tall, such as being “innocent until proven guilty”.
So how could such a powerful empire collapse?
See this infographic
February 19, 2016
Weekend update
Weekly charts
- trend is down on daily charts
- NF trading within range of last week's big down bar
- trend is down on daily charts
- NF trading within range of last week's big down bar
February 18, 2016
Monthly Hi-Lo breakout strategy
This is an extremely simple trading strategy using no indicators and which can still generate good returns.
RULE: buy on close above last month's high with previous month's low as SL.
Risk management: Limit risk per trade to 1% of your trading capital.
Returns: is whatever the market gives. You cannot quantify this in advance.
Here is a sample chart for SIEMENS.
RULE: buy on close above last month's high with previous month's low as SL.
Risk management: Limit risk per trade to 1% of your trading capital.
Returns: is whatever the market gives. You cannot quantify this in advance.
Here is a sample chart for SIEMENS.
Market outlook
Daily charts
- trend is down on daily charts
- lower swing high developed around 7250 spot
- sustaining above this will be bullish
- trend is down on daily charts
- lower swing high developed around 7250 spot
- sustaining above this will be bullish
February 17, 2016
Market outlook + my trades
Daily charts
- trend is down on daily charts
- swing level has developed around 7200 levels
- today NF closed in positive
- AD was negative; VIX dropped 5%
- option writing support 7000 level
- trend is down on daily charts
- swing level has developed around 7200 levels
- today NF closed in positive
- AD was negative; VIX dropped 5%
- option writing support 7000 level
February 16, 2016
Market outlook
Daily charts
- trend is down on daily charts
- complete reversal of yesterday's rally
- markets erase all of yesterday's gains
- AD negative; VIX up 3%
- trend is down on daily charts
- complete reversal of yesterday's rally
- markets erase all of yesterday's gains
- AD negative; VIX up 3%
February 15, 2016
Signals
LAST updated: 15-FEB-2016
- Computer generated BUY and SELL signals.
- Signals are for your study only and are completely unsuitable for trading.
- Golden stoploss: min 10% or last month's low (long position).
- Do not risk more than 1% of your capital on any trade.
- All charts are provided by icharts.in
AIA ENGINEERING SELL signal
Market outlook + my trades
Daily charts
I am expecting triangle development - this means 4-5 legs will form without breaking recent low. One min condition for this is the recent lows should not break for 1-2 months.
- trend is down on daily charts
- today, NF closed >2% in positive
- AD strongly positive, VIX down 10%
- option writing clues show resistance at 7500 levels.
- option writing clues show resistance at 7500 levels.
I am expecting triangle development - this means 4-5 legs will form without breaking recent low. One min condition for this is the recent lows should not break for 1-2 months.
February 14, 2016
Options and hedging
Question: Option spreads involves going short and going long to cover the short and is called hedging. I am trying to find a material which can tell me how to calculate the hedge strike. On website hedge is entered on next strike price where as some websites where spreads are played with deep OTM options position is hedged with a strike price skipping next strike. eg: for Nifty 6600 instead of hedging with 6500, it is advised to hedge with 6400. By following this strategy I can get only 50 points as net credit but hedge is away by 200 points. This type of hedge does not help me, in that case why at all hedge is required when we are required to square-off once the index moves down to 6550. Can you help me in understanding requirement of hedging.
S Lokanath
Answer:
S Lokanath
Answer:
February 12, 2016
Market outlook with weekly charts
Weekly charts
- trend is down on weekly charts
- this week, nifty broke / closed below the lower trendline
- because of this violation, I am dropping the channel from now on
- the channel provided excellent turning levels in the past but now has no utility.
- trend is down on weekly charts
- this week, nifty broke / closed below the lower trendline
- because of this violation, I am dropping the channel from now on
- the channel provided excellent turning levels in the past but now has no utility.
February 11, 2016
Market outlook
Daily charts
- trend is down on daily charts
- NF breaks 7200 and loses 3% in a day
- AD negative; VIX up 15% - option writers happy
- option writing resistance 7500; no clear support
- support as per charts 6400
- trend is down on daily charts
- NF breaks 7200 and loses 3% in a day
- AD negative; VIX up 15% - option writers happy
- option writing resistance 7500; no clear support
- support as per charts 6400
February 10, 2016
Market outlook
Daily charts
- trend is down on daily charts
- NF closes at new low for this year
- NF also closes at 52 week low
- AD negative; VIX up 3%
- trend is down on daily charts
- NF closes at new low for this year
- NF also closes at 52 week low
- AD negative; VIX up 3%
World stocks enters technical 'bear market', down 20 percent from 2015 peak
MSCI's benchmark global stock index, which covers 46 countries, entered a technical 'bear market' on Wednesday, as its fall since an all-time peak back in April 2015 reached 20 percent.
The All-Country World Index as it is formally known has dropped more than 12 percent since the start of the 2016 alone, driven by fears about a slump in oil markets and a slowdown in economic growth in countries such as China.
Analysts traditional term a 20 percent drop in assets like equities a 'bear market' reflecting a view that the dominate trend in the market is downwards, rather than simply a correction during a longer-term upward move.
The All-Country World Index as it is formally known has dropped more than 12 percent since the start of the 2016 alone, driven by fears about a slump in oil markets and a slowdown in economic growth in countries such as China.
Analysts traditional term a 20 percent drop in assets like equities a 'bear market' reflecting a view that the dominate trend in the market is downwards, rather than simply a correction during a longer-term upward move.
NIFTY in bear market?
Popular accepted definition of a bear market is when the major indices lose more than 20% off their highs.NIFTY has lost 20% from its all time high of 9120 spot.
So going by this logic, NF has officially entered bear market territory. Or it hasn't?
I have a slightly different view on this. I like to look at the intensity of the correction and how fast it has happened. Typically after a euphoric bull run, the 20% drop should ideally happen within 1-2 months and not after 1-2 years.
Our weekly charts show a channeled down move - any channeled move is usually a corrective to the previous move. By this logic, as long as NF trades within the falling channel, it is fine.
FIIs pull out $2 bn this year
According to data provided by the Securities and Exchange Board of India, foreign institutional investors (FIIs) pulled out $1.8 billion (or Rs 12,775 crore) from the Indian market between January 1 and February 5. They had taken out another $100 million (Rs 680 crore) from the markets this week, taking the selling tally to $1.9 billion.FIIs had pulled out nearly $3 billion (Rs 11,805 crore) in the same period of 2008. In rupee terms, this is the worst-ever FII selling for the Indian markets during the start of a new year.
Risk aversion has seen global investors pull out money from across emerging markets, but the intensity of selling has been one of the highest in India. According to Bloomberg data, FII selling in other regional markets such as Indonesia, the Philippines and Taiwan has been relatively subdued at less than $500 million
Source: http://www.business-standard.com/article/markets/fiis-pull-out-2-bn-this-year-highest-since-2008-116020901307_1.html
Will ETFs crash hard?
This post relates to US markets - however over a period of time, this can happen in India also.
>>>
“Right now, hundreds of billions of dollars are being invested in the stock market by investors who don’t know anything about the companies they own.
“They buy exchange-traded funds [ETFs] – passively managed groups of stocks – that typically track the performance of a stock market index. These ETFs distort the market.
“Some well-known stocks are so heavily bought by ETFs that their prices are completely out of line with the real value of the company. And the ETFs are set up in such a way that there is no judgment at all involved.
“They are bought automatically, almost regardless of what is actually going on in the companies themselves.”
Chris believes that the opportunities for serious investors are increasing simply because there are so many unserious investors in the market.
ETFs favor the big companies in the big indexes, such as the S&P 500. That leaves the lesser known companies often unstudied and unbought.
“Even though stock prices are generally high,” said Chris, “there are many stocks that are actually cheap. You just have to look where the ETFs are not buying.”
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“Right now, hundreds of billions of dollars are being invested in the stock market by investors who don’t know anything about the companies they own.
“They buy exchange-traded funds [ETFs] – passively managed groups of stocks – that typically track the performance of a stock market index. These ETFs distort the market.
“Some well-known stocks are so heavily bought by ETFs that their prices are completely out of line with the real value of the company. And the ETFs are set up in such a way that there is no judgment at all involved.
“They are bought automatically, almost regardless of what is actually going on in the companies themselves.”
Chris believes that the opportunities for serious investors are increasing simply because there are so many unserious investors in the market.
ETFs favor the big companies in the big indexes, such as the S&P 500. That leaves the lesser known companies often unstudied and unbought.
“Even though stock prices are generally high,” said Chris, “there are many stocks that are actually cheap. You just have to look where the ETFs are not buying.”
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Long term capital gains to be taxed?
Read at interesting article at Value Research. The highlights:
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According to reports, the PM said (at the ET Global Business Summit) - 'Why is it that subsidies going to the well-off are portrayed in a positive manner? Let me give you an example. The total revenue loss from incentives to corporate taxpayers was overR62,000 crore.' He then elaborated, 'Dividends and long-term capital gains on shares traded in stock exchanges are totally exempt from income tax even though it is not the poor who earn them. Since it is exempt, it is not even counted in the R62,000 crore.'
Generally, no one in government comments on specific taxes in the period just before the budget, and that the PM did so may just indicate that this topic has been under serious discussion and was probably at the top of his mind.
>>>
According to reports, the PM said (at the ET Global Business Summit) - 'Why is it that subsidies going to the well-off are portrayed in a positive manner? Let me give you an example. The total revenue loss from incentives to corporate taxpayers was overR62,000 crore.' He then elaborated, 'Dividends and long-term capital gains on shares traded in stock exchanges are totally exempt from income tax even though it is not the poor who earn them. Since it is exempt, it is not even counted in the R62,000 crore.'
Generally, no one in government comments on specific taxes in the period just before the budget, and that the PM did so may just indicate that this topic has been under serious discussion and was probably at the top of his mind.
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NOTE: in most countries, capital gains are taxed so FIIs will initially threaten to leave India but will eventually not.
Read complete article at https://www.valueresearchonline.com/story/h2_storyview.asp
February 9, 2016
Market outlook
Daily charts
- markets taking support around 7200 levels
- despite gap down opening, there was no selling during the day
- AD negative; VIX up
- option writing resistance 7600
- markets taking support around 7200 levels
- despite gap down opening, there was no selling during the day
- AD negative; VIX up
- option writing resistance 7600
Paradox of skill and luck
Michael Mauboussin discusses a very interesting concept called the paradox of skill in his book 'The Success Equation'- Untangling Skill and Luck in Business, Sports, and Investing'. “As skill improves, performance becomes more consistent, and therefore luck becomes more important,” is how Mauboussin defines the paradox of skill.
The Olympic marathon is a very good example of the same. Men run the race today about 26 minutes faster than they did 80 years back. Also, in 1932, the difference between the man who won the race and the man who came in twentieth was 40 minutes. Now its less than 10 minutes.
Now the question is how does this apply to investing? “As the market is filled with participants who are smart and have access to information and computing power, the variance of skill will decline.
That means that stock price changes will be random and those investors who beat the market can chalk up their success to luck. And the evidence shows that the variance in mutual fund returns has shrunk over the past 60 years, just as the paradox of skill would suggest,” says Mauboussin. “I want to be clear that I believe that differential skill in investing remains, and that I don't believe that all results are from randomness. But there's little doubt that markets are highly competitive and that the basic sketch of the paradox of skill applies,” he adds.
Nassim Nicholas Taleb writes in 'Fooled by Randomness', “In real life, the larger the deviation from the norm, the larger the probability of it coming from luck rather than skills...The “reversion” for the large outliers is what has been observed in history and explained as regression to the mean. Note the larger the deviation, the more important its effect.”
Source: https://www.valueresearchonline.com/story/h2_storyView.asp?str=24177
The Olympic marathon is a very good example of the same. Men run the race today about 26 minutes faster than they did 80 years back. Also, in 1932, the difference between the man who won the race and the man who came in twentieth was 40 minutes. Now its less than 10 minutes.
Now the question is how does this apply to investing? “As the market is filled with participants who are smart and have access to information and computing power, the variance of skill will decline.
That means that stock price changes will be random and those investors who beat the market can chalk up their success to luck. And the evidence shows that the variance in mutual fund returns has shrunk over the past 60 years, just as the paradox of skill would suggest,” says Mauboussin. “I want to be clear that I believe that differential skill in investing remains, and that I don't believe that all results are from randomness. But there's little doubt that markets are highly competitive and that the basic sketch of the paradox of skill applies,” he adds.
Nassim Nicholas Taleb writes in 'Fooled by Randomness', “In real life, the larger the deviation from the norm, the larger the probability of it coming from luck rather than skills...The “reversion” for the large outliers is what has been observed in history and explained as regression to the mean. Note the larger the deviation, the more important its effect.”
Source: https://www.valueresearchonline.com/story/h2_storyView.asp?str=24177
February 8, 2016
Hot stocks
LAST updated: 08-FEB-2016
- Computer generated BUY and SELL signals.
- Signals are for your study only and are completely unsuitable for trading.
- Golden stoploss: min 10% or last month's low (long position).
- Do not risk more than 1% of your capital on any trade.
- All charts are provided by icharts.in
DEWAN HSG FIN SELL signal
Market outlook
Daily charts
- markets rangebound on EOD charts
- today, markets sold off from day's highs
- AD flat; VIX up 12%
- option writing resistance seen around 7600 levels
- markets rangebound on EOD charts
- today, markets sold off from day's highs
- AD flat; VIX up 12%
- option writing resistance seen around 7600 levels
Positional short trade in NF 7700 call and 7300 put with hedges
- sold 7300 put and bought 7200 put - max profit 16 points
- sold 7700 call and bought 7800 call - max profit 20 points
- position to be held till expiry
- max profit 33K if NF closes between 7300 and 7700
- max loss 58K if NF breaks 7200
- investment 8.2L plus some more kept in reserve for a naked long trade
- sold 7700 call and bought 7800 call - max profit 20 points
- position to be held till expiry
- max profit 33K if NF closes between 7300 and 7700
- max loss 58K if NF breaks 7200
- investment 8.2L plus some more kept in reserve for a naked long trade
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