5-hour chart:
Daily chart:
Friday, December 31, 2010
Thursday, December 23, 2010
David Rosenberg's - TEN REASONS TO BE CAUTIOUS FOR THE 2011 MARKET OUTLOOK
Source: https://ems.gluskinsheff.net/Articles/Breakfast_with_Dave_122310.pdf
1. In Barron’s look-ahead piece, not one strategist sees the prospect for a
market decline. This is called group-think. Moreover, the percentage of
brokerage house analysts and economists to raise their 2011 GDP
forecasts has risen substantially. Out of 49 economists surveyed, 35 say
the U.S. economy will outperform the already upwardly revised GDP
forecasts, only 14 say we will underperform. This is capitulation of
historical proportions.
2. The weekly fund flow data from the ICI showed not only massive outflows, but in aggregate, retail investors withdrew a RECORD net $8.6 billion from
bond funds during the week ended December 15 (on top of the $1.7 billion
of outflows in the prior week). Maybe now all the bond bears will shut their
traps over this “bond-bubble” nonsense.
3. Investors Intelligence now shows the bull share heading up to 58.8% from
55.8% a week ago, and the bear share is up to 20.6% from 20.5%. So
bullish sentiment has now reached a new high for the year and is now the
highest since 2007 ― just ahead of the market slide.
4. It may pay to have a look at Dow 1929-1949 analog lined up with January
2000. We are getting very close to the May 1940 sell-off when Germany
invaded France. As a loyal reader and trusted friend notified us yesterday,
“fighting” war may be similar to the sovereign debt war raging in Europe
today. (Have a look at the jarring article on page 20 of today’s FT —
Germany is not immune to the contagion gripping Europe.)
5. What about the S&P 500 dividend yield, and this comes courtesy of an old pal from Merrill Lynch who is currently an investment advisor. Over the
course of 2010, numerous analysts were saying that people must own
stocks because the dividend yields will be more than that of the 10-year
Treasury. But alas, here we are today with the S&P 500 dividend yield at
2% and the 10-year T-note yield at 3.3%.
From a historical standpoint, the yield on the S&P 500 is very low ― too low, in fact. This smacks of a market top and underscores the point that the
market is too optimistic in the sense that investors are willing to forgo yield
because they assume that they will get the return via the capital gain. In
essence, dividend yields are supposed to be higher than the risk free yield
in a fairly valued market because the higher yield is “supposed to”
compensate the investor for taking on extra risk. The last time S&P yieldswere around this level was in the summer of 2000, and we know what
happened shortly after that. When the S&P yield gets to its long-term
average of 4.35%, maybe even a little higher, then stocks will likely be a
long-term buy.
6. The equity market in gold terms has been plummeting for about a decade
and will continue to do so. When measured in Federal Reserve Notes, the
Dow has done great. But there has been no market recovery when
benchmarked against the most reliable currency in the world. Back in
2000, it took over 40oz of gold to buy the Dow; now it takes a little more
than 8oz. This is typical of secular bear markets and this ends when the
Dow can be bought with less than 2oz of gold. Even then, an undershoot
could very well take the ratio to 1:1.
7. As Bob Farrell is clearly indicating in his work, momentum and market
breadth have been lacking. The number of stocks in the S&P 500 that are
making 52-week highs is declining even though the index continues to
make new 52-week highs.
8. Stocks are overvalued at the present levels. For December, the Shiller P/E
ratio says stocks are now trading at a whopping 22.7 times earnings! In
normal economic periods, the Shiller P/E is between 14 and 16 times
earnings. Coming out of the bursting of a credit bubble, the P/E ratio
historically is 12. Coming out of a credit bubble of the magnitude we just
had, the P/E should be at single digits.
9. The potential for a significant down-leg in home prices is being
underestimated. The unsold existing inventory is still 80% above the
historical norm, at 3.7 million. And that does not include the ‘shadow’
foreclosed inventory. According to some superb research conducted by the
Dallas Fed, completing the mean-reversion process would entail a further
23% decline in real home prices from here. In a near zero percent inflation
environment, that is one massive decline in nominal terms. Prices may not
hit their ultimate bottom until some point in 2015.
10.Arguably the most understated, yet significant, issue facing both U.S.
economy and U.S. markets is the escalating fiscal strains at the state and
local government levels, particularly those jurisdictions with uncomfortably
high pension liabilities. Have a look at Alabama town shows the cost of
neglecting a pension fund on the front page of the NYT as well as Chapter
9 weighed in pension woes on page C1 on WSJ.
1. In Barron’s look-ahead piece, not one strategist sees the prospect for a
market decline. This is called group-think. Moreover, the percentage of
brokerage house analysts and economists to raise their 2011 GDP
forecasts has risen substantially. Out of 49 economists surveyed, 35 say
the U.S. economy will outperform the already upwardly revised GDP
forecasts, only 14 say we will underperform. This is capitulation of
historical proportions.
2. The weekly fund flow data from the ICI showed not only massive outflows, but in aggregate, retail investors withdrew a RECORD net $8.6 billion from
bond funds during the week ended December 15 (on top of the $1.7 billion
of outflows in the prior week). Maybe now all the bond bears will shut their
traps over this “bond-bubble” nonsense.
3. Investors Intelligence now shows the bull share heading up to 58.8% from
55.8% a week ago, and the bear share is up to 20.6% from 20.5%. So
bullish sentiment has now reached a new high for the year and is now the
highest since 2007 ― just ahead of the market slide.
4. It may pay to have a look at Dow 1929-1949 analog lined up with January
2000. We are getting very close to the May 1940 sell-off when Germany
invaded France. As a loyal reader and trusted friend notified us yesterday,
“fighting” war may be similar to the sovereign debt war raging in Europe
today. (Have a look at the jarring article on page 20 of today’s FT —
Germany is not immune to the contagion gripping Europe.)
5. What about the S&P 500 dividend yield, and this comes courtesy of an old pal from Merrill Lynch who is currently an investment advisor. Over the
course of 2010, numerous analysts were saying that people must own
stocks because the dividend yields will be more than that of the 10-year
Treasury. But alas, here we are today with the S&P 500 dividend yield at
2% and the 10-year T-note yield at 3.3%.
From a historical standpoint, the yield on the S&P 500 is very low ― too low, in fact. This smacks of a market top and underscores the point that the
market is too optimistic in the sense that investors are willing to forgo yield
because they assume that they will get the return via the capital gain. In
essence, dividend yields are supposed to be higher than the risk free yield
in a fairly valued market because the higher yield is “supposed to”
compensate the investor for taking on extra risk. The last time S&P yieldswere around this level was in the summer of 2000, and we know what
happened shortly after that. When the S&P yield gets to its long-term
average of 4.35%, maybe even a little higher, then stocks will likely be a
long-term buy.
6. The equity market in gold terms has been plummeting for about a decade
and will continue to do so. When measured in Federal Reserve Notes, the
Dow has done great. But there has been no market recovery when
benchmarked against the most reliable currency in the world. Back in
2000, it took over 40oz of gold to buy the Dow; now it takes a little more
than 8oz. This is typical of secular bear markets and this ends when the
Dow can be bought with less than 2oz of gold. Even then, an undershoot
could very well take the ratio to 1:1.
7. As Bob Farrell is clearly indicating in his work, momentum and market
breadth have been lacking. The number of stocks in the S&P 500 that are
making 52-week highs is declining even though the index continues to
make new 52-week highs.
8. Stocks are overvalued at the present levels. For December, the Shiller P/E
ratio says stocks are now trading at a whopping 22.7 times earnings! In
normal economic periods, the Shiller P/E is between 14 and 16 times
earnings. Coming out of the bursting of a credit bubble, the P/E ratio
historically is 12. Coming out of a credit bubble of the magnitude we just
had, the P/E should be at single digits.
9. The potential for a significant down-leg in home prices is being
underestimated. The unsold existing inventory is still 80% above the
historical norm, at 3.7 million. And that does not include the ‘shadow’
foreclosed inventory. According to some superb research conducted by the
Dallas Fed, completing the mean-reversion process would entail a further
23% decline in real home prices from here. In a near zero percent inflation
environment, that is one massive decline in nominal terms. Prices may not
hit their ultimate bottom until some point in 2015.
10.Arguably the most understated, yet significant, issue facing both U.S.
economy and U.S. markets is the escalating fiscal strains at the state and
local government levels, particularly those jurisdictions with uncomfortably
high pension liabilities. Have a look at Alabama town shows the cost of
neglecting a pension fund on the front page of the NYT as well as Chapter
9 weighed in pension woes on page C1 on WSJ.
A very thought provoking & straight from the heart post from Dr. John Hussman (A good Christmas read)
For starters Dr. John Hussman is a long/short hedge fund manager who is both geographically and intellectually far away from any cheap Wall Street Fund managers/analysts.
His claim to fame?
He has called last few major/crashes to almost the last day/week. And not just that - he has beaten 99% of Fund managers over the last 5 years as per Bloomberg (http://www.thecapitalgoldgroup.com/2010/11/u-s-stocks-drop-amid-irish-bailout-fund-raids-in-insider-trading-probe/)
Here's a year end post from Dr. John Hussman
http://www.hussmanfunds.com/wmc/wmc101220.htm
Its somewhat complicated read - esp if you are reading Hussman's post for the first time but if you make it a habit of reading his every Monday evening (IST) post, this summary would be a very good guide to what could come in 2011.
His claim to fame?
He has called last few major/crashes to almost the last day/week. And not just that - he has beaten 99% of Fund managers over the last 5 years as per Bloomberg (http://www.thecapitalgoldgroup.com/2010/11/u-s-stocks-drop-amid-irish-bailout-fund-raids-in-insider-trading-probe/)
Here's a year end post from Dr. John Hussman
http://www.hussmanfunds.com/wmc/wmc101220.htm
Its somewhat complicated read - esp if you are reading Hussman's post for the first time but if you make it a habit of reading his every Monday evening (IST) post, this summary would be a very good guide to what could come in 2011.
Sunday, December 19, 2010
If you are looking for a topping out of world markets -- two very important indices to watch for
You got it right - the mother of all indices! US Banking Index. It never happens that world markets will top out without the US Banking index - where all the mess started off back in July 2007.
US Bank Index has underperformed S&P500 for the last few months and it has just started rallying - trying to take out resistance around 51. To me the writing is on the wall - If KBW Bank Index does manage to take out the resistance level then don't look for a top in S&P500 or any other world markets very soon!
The next one is Topix Japanese Banking Index, which is down 90% from its 1992 levels! It recently hit an all time low in November!
#############
Update on 22nd Dec
#############
One more picture -- the Japanese Index from 1984-2010
BTW -- As of this morning (22nd Dec) in US markets, US Bank index has made a 6 month high crossing the 51.XX resistance. It looks like it can go up another 7-8% before it meets next resistance at 56-57 range.
Wednesday, December 15, 2010
Saturday, December 11, 2010
Saturday, December 4, 2010
Patience Please - From BkForexAdvisors.com
Patience Please
Want to know what is the greatest enemy of most traders? Patience. Most of us simply get in and out of our trades way too quickly making our entries too early and taking our exits too fast. For those of us who trade on intra-day basis the problem is even worse as we are often tempted to trade just for the sake of trading and one impatient decision can erase half a days work.
As speculators we have only only one true edge in the market - selectivity. Investors have much more capital than we do and are able to weather wide swings in price. Market makers have much better information on flow and while making money from bid ask spreads. Both of those participants can remain in the market on near permanent basis. As traders we don't have such luxury. But we do have one serious advantage - we don't have to play the game when there is no meaningful activity. We can sit on the sidelines for as long as we want. Unfortunately, that's something that very few of us do.
I certainly can't do it very well. My need to be involved often trumps the good sense to be selective and I wind up paying for my impulsive actions over and over and over again. In fact I know that if I was more patient my P&L would improve markedly.
Depending on your time horizon trading requires two different types of patience. If you are a short term intra day trader patience in timing is much more important than getting an optimal price. Essentially you need great patience in entry since your targets are relatively close and will likely be hit if you are correct in your analysis of the price action but so will your stops if you are wrong. On the other hand longer term positional traders typically have much wider stops, so they can often survive the ebb and flow of intra day price action but have a difficult time in holding their position to the target profit. Basically short term traders needs patience with their entries, while longer term traders need patience with their exits.
One of the great ironies of trading is that we often focus all of our energy on money management and never consider the importance of patience to our overall success. After a while almost all of us learn to take stops, to avoid doubling down into losing positions and to control our leverage, Yet few of us work on learning how to be more patient which ultimately may be the true key to long term success.
As speculators we have only only one true edge in the market - selectivity. Investors have much more capital than we do and are able to weather wide swings in price. Market makers have much better information on flow and while making money from bid ask spreads. Both of those participants can remain in the market on near permanent basis. As traders we don't have such luxury. But we do have one serious advantage - we don't have to play the game when there is no meaningful activity. We can sit on the sidelines for as long as we want. Unfortunately, that's something that very few of us do.
I certainly can't do it very well. My need to be involved often trumps the good sense to be selective and I wind up paying for my impulsive actions over and over and over again. In fact I know that if I was more patient my P&L would improve markedly.
Depending on your time horizon trading requires two different types of patience. If you are a short term intra day trader patience in timing is much more important than getting an optimal price. Essentially you need great patience in entry since your targets are relatively close and will likely be hit if you are correct in your analysis of the price action but so will your stops if you are wrong. On the other hand longer term positional traders typically have much wider stops, so they can often survive the ebb and flow of intra day price action but have a difficult time in holding their position to the target profit. Basically short term traders needs patience with their entries, while longer term traders need patience with their exits.
One of the great ironies of trading is that we often focus all of our energy on money management and never consider the importance of patience to our overall success. After a while almost all of us learn to take stops, to avoid doubling down into losing positions and to control our leverage, Yet few of us work on learning how to be more patient which ultimately may be the true key to long term success.
Thursday, December 2, 2010
Sunday, November 28, 2010
Options/futures data for 26th Nov (EOD)
Summary:
1. Again as we saw on Thursday, the DEC Options data is not displaying that bearishness we have seen on the screen in the last few days. Just take 5800PE vs 5800CEs - the 5800PEs are massive 51L vs 24L 5800CEs (even after a 100% increase in 5800CE OI on Friday).
2. 5900 seems to be balanced level with a negative bias. Given that there is only 9L difference between PE/CE, it could go either way depending on whether buyer or seller is strong
3. As of now, 5800 is the support and the 6000 is the resistance. Below 5800 there are good supports at 5700 & 5600
4. PCR dipped on Friday from 1.32 to 1.26 - but these are still much higher numbers than what we saw in last few days of Nov expiry (around 0.97-1.08)
Nifty Futures:
2.49Cr OI down 3.87% (10L shares cut)
Banknifty Futures:
14L OI flat
Wednesday, November 24, 2010
Sunday, November 21, 2010
BHEL - Will the real culprit for the fall in this stock please stand up?
I have no freakin idea why BHEL is falling. It did report decent results (despite bad overall IIP numbers). A tank in futures from, 2712 to 2235 is almost 17% fall!!
Daily chart:
Daily chart:
On daily charts BHEL has already reached the lows seen during 25th May (when Nifty nit 4800 level). When all major EMAs don't provide any support, I am looking for POC from march 2009 (@2255) and VWAP @2165 to provide support.
An interesting thing is the BHEL was the first one to bottom out in September 2008 and by March 2009 when Nifty revisited 2500 levels, BHEL didn't revisit the lows. Now BHEL seems to be the first one to fall. Déjà vu?
Monthly MP monthly chart:
Monthly chart shows that any bounce to 2378 might be sold into and next big resistance will be 2450-2465 (monthly VWAP/VAL of previous 2 months)
OI Story: OI has gone down more than 20% from the time it reached 2700+. OI that got added from tank day of 2490+ to 2434 immediately got cut in next two days. Now DEC futures have seen much bigger OI addition (almost 7m) from 2420 levels. Shorts are getting rolled over now.
If Nifty tanks badly from here, BHEL could relly head to 2185-2165 range because those shorts will not go without making money!
Sentiment:
Karvy recommending a short in it from 2265-2260 for target of 2185-2200. Brokerages recommending short after 18% fall from peak ==> may be its a sign of bottoming?
What's the Risk?
The Government is acting like a sucker and announcing FPOs for any PSU that it can given investor appetite shown for COALINDIA. So even though everything about BHEL might be good but if Govt announces some stake sale (which typically market makers will already know) one might get screwed buying the dip!
Examples are - SCI, MNDC ..
What's the Risk?
The Government is acting like a sucker and announcing FPOs for any PSU that it can given investor appetite shown for COALINDIA. So even though everything about BHEL might be good but if Govt announces some stake sale (which typically market makers will already know) one might get screwed buying the dip!
Examples are - SCI, MNDC ..
APOLLOTYRE - the darling of brokerages in last 2 months has experienced a Flat tyre now - What next?
Even POC is not able to support. Now looking for Daily VWAP @59.3 for support. And probably over the next couple of months, the low volume zone of 55-65 would be filled with may be another shot at its April highs of 81-82 could be eventually attempted if Nifty ever makes to new highs!
But it can't just keep falling and the shorts will have to cover somewhere and a bounce should come to give hopes to longs esp around expiry? The targets for bounce could be previous week's VWAP 65.4/VAH 67.6/Monthly VWAP 70.6
OI story: Amazing OI addition during rally! OI almost doubled from 70s to 85/89 and during the tank from 80 to 65, OI has doubled again! Massive shorts in. It almost seems like the during the entire rally, the market makers bought in cash and kept on selling in futures!
NOV OI is now down 21% from its 76 price level with price down to 62 - but rollovers also have been strong with only 5% real OI cut. Existence of so many shorts is good because if we get a strong rally in Nifty based on global cues, this stock will rise very fast - at least to its next resistance levels @73-76.
Saturday, November 20, 2010
Wednesday, November 17, 2010
testing google gadget for OI
In the spirit of being a bit sophisticated than just having a vanilla options table, I have tried to add a google gadget with link to the options table from my google doc
Steps to view the Interactive OI table:
Steps to view the Interactive OI table:
1. Click Finish (No selection of fields required)
2. Select the "Show Only Chart" option as shown in the snapshot below
2. Select the "Show Only Chart" option as shown in the snapshot below
3. Select "Show Chart Legend on Top" from the second set of selections as shown below
Sunday, November 14, 2010
I don't understand much of EW but .. here's an interesting view from a respected EW guy
ORIGINAL link with thanks to the owner - http://www.tradeyourwayout.com/2010/08/elliott-wave-view-on-india.html
And amazingly, this was posted couple of months back, much before the breakout from 5450-5500 region came!
And amazingly, this was posted couple of months back, much before the breakout from 5450-5500 region came!
ONMOBILE - Worth buying?
Chart from march 2009
OI story:
Studied OI pattern from May 25th. OI went up in the phase from 290-330 and then 60%+ longs got squared off on Left Shoulder (350-330). Head (340-390) of was achieved with minimal OI addition and once it started falling from 380s OI has gone up 150%. Shorts galore!! But existence of shorts is good for fast moves.
Supports:
Recent quarter results:
Studied OI pattern from May 25th. OI went up in the phase from 290-330 and then 60%+ longs got squared off on Left Shoulder (350-330). Head (340-390) of was achieved with minimal OI addition and once it started falling from 380s OI has gone up 150%. Shorts galore!! But existence of shorts is good for fast moves.
Supports:
Trendline support @296-297. 289 POC from March 2009 in CASH market. 277 is VAL from march 2009.
What brokerages are saying?
Morgan Stanley: We see favorable risk-reward in OnMobile, underpinned by:
1) Leading position in the growing domestic value-added services (VAS) market;
2) increased global opportunities through agreements with Vodafone and Telefonica;
3) undervaluation – on P/E to two-year forward earnings growth, the stock trades at 0.7x. Our price target of Rs466 implies 24% upside from current levels.
IIFL: Not able to find the link but the target given by them is 477 for next 1 year
Recommendation from me: buy 1/3rd qty @295-300 and if it dips to 285 but next 1/3rd and buy the last 1/3rd qty above 314 - SL for 2/3rd qty bought 270. Below 270 next stop will be 250 for a double bottom. If you are very long term investor then hold on to the stock even if it falls below 270.
Recent quarter results:
OnMobile Global has announced its results for the quarter ended September 2010. It has reported net profit at Rs 25 crore as against Rs 11.5 crore, a growt of 117.4% on year-on-year basis (YoY).
Net sales shot up 37.9% to Rs 115 crore from Rs 83.4 crore (YoY).
Who's buying this stock for last 1 year?
There was a stake sale by the management to SBI/IDFC/BIRLA SUNLIFE Insurance companies. And ICICI PRUDENTIAL amazingly bought it at almost lows during May fall to 4800s in Nifty!
Saturday, November 13, 2010
What is QE2? Wanna know? Watch this ... its hilarious and can't be more true
This Video has been taken from youtube and the original link is http://www.creditwritedowns.com/2010/11/video-quantitative-easing-explained.html
Monday, November 1, 2010
TITAN - getting close to parabolic blow off
Amazing rally in TITAN right?
I am quoting a reference from Karl Denninger about parabolic blow offs:
http://market-ticker.org/akcs-www?singlepost=2183011
There's a classical "3-wave" parabolic blow-off pattern that I've repeatedly noted in certain "high flying" stocks. It showed up in 1998 and 1999 too, and in virtually every case it leads to a crash in that stock's price. In most of these cases we can measure the depth of the collapse (at minimum) too.
Example AAPL during Nasdaq crash of 1999:
Some important points here on this pattern and making sure you're looking at it correctly. The rules are.
Another expample - CSCO
And how does Titan look like?
What about Valuations?
At the current price of Rs 3,540, the stock is trading at a multiple of 46.4 times its trailing 12-months earnings and 32 times our estimated FY13 earnings. However despite the fact that we would now have to revise these estimates upwards, we believe the stock does not present a profit potential even from a 2-3 years perspective. As such, we have a cautious view on the same. - Equitymaster.com
Right now I am watching the parabolic phase 3 blow off to break that trendline. And I have no doubt in my mind that this will crash 20-30% from here once the operators are done with their bullshit.
I am quoting a reference from Karl Denninger about parabolic blow offs:
http://market-ticker.org/akcs-www?singlepost=2183011
There's a classical "3-wave" parabolic blow-off pattern that I've repeatedly noted in certain "high flying" stocks. It showed up in 1998 and 1999 too, and in virtually every case it leads to a crash in that stock's price. In most of these cases we can measure the depth of the collapse (at minimum) too.
Example AAPL during Nasdaq crash of 1999:
- Each move higher must come at a higher slope.
- Each move higher must retrace below the trendline before the next spike higher occurs.
- It is permissible for the price to consolidate in some sort of flat, or even move higher at a lower slope, between moves.
- There should be three such moves. Not two, four or more, three.
You short the break of the third one with a stop at whatever your pain threshold is if you're wrong.
The target on the short is the base of the first move higher.
Another expample - CSCO
And how does Titan look like?
What about Valuations?
At the current price of Rs 3,540, the stock is trading at a multiple of 46.4 times its trailing 12-months earnings and 32 times our estimated FY13 earnings. However despite the fact that we would now have to revise these estimates upwards, we believe the stock does not present a profit potential even from a 2-3 years perspective. As such, we have a cautious view on the same. - Equitymaster.com
Right now I am watching the parabolic phase 3 blow off to break that trendline. And I have no doubt in my mind that this will crash 20-30% from here once the operators are done with their bullshit.
Sunday, October 31, 2010
How one can get screwed listening to TV analysts
I read somewhere that the best way to watch CNBCTV18 is to put it on mute.
Here's just one example why that advice may be really true -
http://www.moneycontrol.com/news/stocksviews/tatachemicalscantestrs460470thacker_494884.html
This recommendation came just one day before the big fall! And here is how the chart looked on the day this recommendation came
Here's just one example why that advice may be really true -
http://www.moneycontrol.com/news/stocksviews/tatachemicalscantestrs460470thacker_494884.html
Published on Thu, Oct 28, 2010 at 11:12 | Updated at Thu, Oct 28, 2010 at 11:32 | Source : CNBC-TV18
Thacker told CNBC-TV18, "We have liked Tata Chemicals for some time now; it’s just broken out of what we call as bullish cup and hand formation. I think this would do very well for the next few days for the stock price. I expect the stock to head towards targets of about Rs 460-470 in the short-term and long positions can be taken with a stop loss below Rs 425."
This recommendation came just one day before the big fall! And here is how the chart looked on the day this recommendation came
And what happened next? - cup and handle breakdown!
Here's a quick look at Open Interest table for TATACHEM from start of the series --
So either that analyst doesn't understand what Open Interest is - or its a deliberate attempt by TV folks to mislead 'aam admi'
From OI table even an average trader like me would have suspected that the rally was running on tired legs or no legs!
Saturday, October 30, 2010
TCS & WIPRO - correlation horribly broken in last 10 days!
I have to admit that this correlation is broken for a good reason. Wipro gave bad results and TCS gave good results. But do results really matter more in trading or patterns & technicals?
TCS & Wipro daily chart for last 3 months. They were pretty decently correlated but in last 10 days they have diverged almost 25%.
So a pair trade possible with short of TCS and long WIPRO. Just need to adjust for lotsizes because TCS lotsize is 250 and Wipro is 833
TCS & Wipro daily chart for last 3 months. They were pretty decently correlated but in last 10 days they have diverged almost 25%.
So a pair trade possible with short of TCS and long WIPRO. Just need to adjust for lotsizes because TCS lotsize is 250 and Wipro is 833
Although 1 day of data is missing here the divergence is very clear on a 30-min, 10 day chart. Even if the results of TCS are great and Wipro is bad - there's got to be some profit booking in both - I mean shorts will book profits and Wipro might rise and TCS might fall when longs book out.
Thursday, October 28, 2010
PNB & HDFCBANK correlation - 15-min chart for last 10 days
UPDATE: I finally closed the PNB short + HDFCBANK long trade on Friday morning:
1. PNB Short initiated at 1351 - covered at 1288 - total gain was 250*63 = 15750 profit
2. HDFCBANK long initiated at 2354 - covered with loss at 2293 - total loss was 125*61 = 7625
Net gain = 15750-7625 = 8125 -- But I am not satisfied with the exit. It may happen that HDFCBANK will rise about 3-4% next week. But I was not sure if PNB will fall more.
Monday, October 25, 2010
BANKBARODA & AXISBANK - inverse pair trade possible?
First 2 are charts of AXIS & BoB.
Third one is a relative chart with base as BANKBARODA and AXISBANK overlayed on it. Most of the times AXISBANK has led the moves in BANKBARODA and correlation wise AXIS is ahead of BANKBARODA while recently it has fallen behind BANKBARODA.
For this correlation to correct - could the trade be long AXISBANK & Short BANKBARODA?
Sunday, October 24, 2010
Top 4 banks that I track almost every few minutes - because they account for 70% of the Index I trade
Of the 4 charts shown below - AXISBANK & HDFCBANK can be traded for a bounce to Monthly VWAP. More than HDFCBANK, I like AXISBANk for a bounce
Neutral on SBI - although if it bounces to 3266-3284 it could be a good one to try @short position
ICICIBANK:
I don't like this crap bank - neither for trading nor for doing business!
Anyway its stuck in a range. Results to be announced on 29th Oct
SBIN:
HDFCBANK:
Although HDFCBANK has got 2 rejection of VWAPs already - so if it fails to cross Monthly VAL of 2374 (well give it +/-8 points), it could correct all the way to 2268 - previous month's VAL
I don't like this crap bank - neither for trading nor for doing business!
Anyway its stuck in a range. Results to be announced on 29th Oct
AXISBANK:
The chart looks very good to play for a bounce. Target can be VWAP @1545 - SL can be close to 1460 - below that it can be an easy short for target of 1422 (prev month's VAL)
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