And the bottomline is.....

There was a man who loved fine art. He loved it so much he lived for it. It had become his whole life, and had literally engulfed him. He would work really hard to save up some money, just so he could buy another piece of fine art. He would buy Rembrandt's and Picasso's and many others works of fine art.

The man had been widowed some years before but he had a son. As he raised his son, he included him in his hobby of collecting art. As his son grew, he also became a great art collector. His dad was very proud of him. Collecting fine art was something that they both loved to do and it brought them very close together.

Some time passed by and their country suddenly became engulfed in a war. The son, like so many other young men, enlisted and went off to serve his country. He had been gone for some time, and then it happened.

One day the father received a letter. It said, we regret to inform you that your son is missing in action. The father's heart was broken. He loved his son so dearly and now he truly realized how much his son meant to him. It hurt so badly not knowing what had happened to him.

A few weeks passed, and then another letter came. This letter just ripped his heart in two. It said, we regret to inform you that your son has been killed in action. The father could hardly bear to read on, but as he did he discovered the circumstances that his son had died under. The letter said that his son had made it back to safety. But that he had seen wounded soldiers out on the battlefield. And one by one, he would go back onto the battlefield and carry them to safety. As he was carrying in the last wounded soldier, a bullet struck him and killed him. A month passed by and it was now Christmas Day. The father didn't even want to get up out of bed. He just couldn't imagine spending Christmas without his son. Then he heard the doorbell ring so he went downstairs to see who was there. When he opened the door he found a young man standing there holding a package.

The young man said, Sir you don't know me. But I was the wounded soldier that your son was carrying when he was killed.

He said, "I'm not a wealthy man. I don't have anything of value that I can give you for what your son did for me. Your son had told me of your love for art, and although I'm not much of an artist, I painted a portrait of your son, and I'd like for you to have it."

The father took the package into the house and opened it. Then he went into the drawing room and took down the Rembrandt that was hanging over the fireplace. In its place he hung up the portrait of his son.

Then with tears streaming down on his face he told the young man, "This is my most prized possession. It is more valuable to me than any other work of art in my house."

The father and the young man shared a meal and Christmas Day together and then the young man left. A few years later, the father became very ill. A short time later he died. News of his death spread far and wide. Everyone was in anticipation of the great auction that was to take place for all the pieces of art the man had collected.

Finally it was announced that the auction would be held on Christmas Day. Museum curators and collectors came from all around the world.

They were all eager for the chance to bid on the fine art that was to be auctioned.

The house swelled full of people. Then the auctioneer stood up and said, "I'd like to thank you all for coming. The first piece up for auction will be the portrait behind me."

From the back of the room someone yelled out, "That's just a picture of the old man's kid! Why don't we just skip it, and get on to the real treasures?"

The auctioneer said, "We have to sell this portrait first, and then we can move on."

The auctioneer asked, "Who would start the bidding at $100?" No one answered so he asked, "Would anyone bid $50?"

Still no one answered so he asked, "Would any one bid $40?" Again no one would bid on the portrait. So the auctioneer asked, 'Will nobody bid on this portrait?"

An elderly man stood up and asked, "Would you take $10 for it? You see $10 is all that I have. I'm the neighbor from across the street and I knew the boy. I watched him grow up and I really liked him. I'd like to have the portrait. So, would you take $10 for it?" The auctioneer said, "$10 going once, going twice, and sold!" Immediately a cheer went up and the people said to each other,

"Oh boy, now we can get on to the real art."

The auctioneer then said, "I'd like to thank you all for coming. It's been a pleasure having you here today. That concludes our auction today."

The crowd grew very angry and asked, "What do you mean the auction is over? You haven't even begun to take bids on all these other works of art!"

The auctioneer said, "I'm sorry but the auction is closed. You see, according to the will of the father, WHOEVER TAKES THE SON GETS IT ALL!!! And that's the bottom line."

Nifty holds on to "4780"

Nifty-Intraday Update

At 2.50PM:-Break out after corrections...Above 4830

At 1.54PM:-SL
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Modified to 4780NS.
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Aggressive Trade: Bought @ 4808 SL 4795NF.


Chart uploaded @ 1.00PM

Nifty-Intraday Update

At 12.03PM: For "Conservative Trade" the SL @ 4783 NS.
Aggressive Trade: Book Profits @ 4860-4870 & SL now @ 4830NF.
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At 11.33 AM: SL for Long @ 4825 NF(Aggressive)
**********************************************
Bought @ 4822

Trader's insight

Mostly the posts are on Nifty behaviour based on Elliott wave principles and some technical indicators mostly the macd(Moving average convergence & divergence)and the tech & Pivot table for trading levels.

A. Elliott wave: Read the simple presentation and a small free tutorial given in "Elliott wave" link under the title "Education-TA/ EW" at the right bottom of my blog.You can learn Elliott waves from "Elliott waves lives on" - Tony's blog from my blog list. He has given very simple presentation. Once you start liking it, then go for "Elliott wave Principle" by Prechter & Frost.

B. Technical Analysis: Read the various studies given in "Swing trade charts", "StockCharts", "Icharts" links under the title "Education-TA/ EW" at the right bottom of my blog.

No:1.
Sector study: Watch everyday either at Bse or Nse for the sectoral index gainer/ losers that tells you of the outperforming sector.This helps to focus on a good stock in that sector to play to get higher returns.
There is also a rotational play among sectors during an uptrend. By keeping a simple watch on the sectoral indices(Bse has more detailed sectoral indices) during mkt hours , our focus remains centered in the thick of the action.

Market Internals: If during an uptrend, one sector starts to turn down/ signal a downtrend...that is internal weakness for you. And it helps to have a cautious approach to the overall market.

Stock to Buy: I use a combination of the following...In an uptrend, after an "abc" correction and during a downtrend, after a 5 wave completion or after a larger "ABC" completion...EW.

2-Day swing reversal..i.e. when the stock goes above two day high, coupled with closing above 5 ema or Dma. Also the macd turning up & triggering the 9 sma line coupled with the stochastics turning up from the bottom.

Best trades are effected after a good positive divergences. Same goes for Negative divergences too. You need to have the patience & calmness of mind to wait for that opportunity and grab it promptly without confusing our mind with the conflicting thoughts that go through after a devastating decline or an euphoric rise. An analogy here would be like the person going for a fishing trip..

Any further upsides left: Except for a "V" shape reversal, other reversals have topping out patterns(Head & Shoulder, double & triple bottoms, candle reversals like evening star, gravestone doji, etc) with negative divergences in larger time scale like weekly.Until that happens, one can book partial profits with daily topping outs and reenter to ride the upmoves till the weekly reversals.

More time you expose yourself to market actions and your willingness & honesty to evaluate your own trading reasons and adapting & changing your approach as it deemed fit with changing situations will eventually make you a better trader because of your level of consciousness improving with more exposure.

A sportsman/woman does not take the sport seriously but plays it with full dedication & application inside the field and gets back to normalcy once the game is over. But a trader keeps on hanging on to that experience for many days even after a new trading day commences.This clouds his/her judgement as well as focus.So develop that sporting attitude.

There is always some uncertainity in trading/ investments but a disciplined and some methodical approach will eliminate a lot of that guesswork. This way, you will come a winner 80% of the time.

Keep studying. applying what you study and raise the level of consciouness to feel "what the mkt is doing" during trading hours.

I will leave you with a blog which I found interesting cos she seems to be applying what she has learnt to good use.
http://www.chartreader.co.in/

No:2.

How to read the Tech & Pivot Table: As you observe the 5day High ema and 5 day low ema, you will observe that when the market is trying to reverse while trading below 5 day low ema, it will first attempt to close above that low ema and then it will attempt the 5 high ema. Once closes above the high ema, the momentum picks up and it will make new highs and stay above this 5 high ema. Once it becomes overbought, it will not be able to continue to make much highs, thereby starts loosing momentum which will reflect in closing below high ema. Depending on the weakness, it will test the low ema.These emas are to be used in conjunction with other technical tools, etc. It gives you an idea of the internal strength or weakness or momentum (up / down) of the market..

As you study it daily, you will find a pattern.

Most Important:-As long as Nifty closes above 5-Ema (That appears just after the close in my table), it is in uptrend & vice versa. At times it gives whipsaws too. Combine all time frames & trade.

Stochastics will indicate overbought above 80 mark.It can stay above 70 in most bullish times.And below 20-30 in most bearish times. Once they reach the top or bottom, expect the macd to turn down or up, followed by Nifty closing below or above the emas..

I try to stay long above 5-ema and short below 5-ema with due consideration to "OB" & "OS" and +ve & -ve readings. That is how simple you can filter it down & play without much complexity.

Whenever a 2 day low or high is broken, the colour changes for the highs/ lows to alert us for a swing trade.

For daily trading, keep the pivot point along with the s1,s2 & R1 , R2.
Combine this with daily Pivot & S & R and "ORB(Opening Range Breakout), you will do well.

No:3.

Market teaches you so much. So keep in touch by doing positional trading and some investing & disinvesting based on "Divergence Play" - one of the most potent way of earning big. A recent example(March.2009) is of the persistent +ve divergences in so many stocks & indices and our mkts refusing to go down in line with world mkts was an indication that weaker hands are in the "Shorts"..So going long and staying invested would have fetched an instant success. Patience....to wait for those opportunities...belief/faith in acting on those observations is the simplest approach.

Let me say this...Get rich slowly and.....quietly.

For excitement, go to a movie in suburban theatres or to a bar or simply walk thru..a crowded mkt place.
With money, play seriously but effortlessly...It is in the mind..Keep it alert to the subtle changes that are developing in the mkt..All the noises should only make you wary of the source...that is the weak hands. Strong money never makes noise but you can detect them in the prices v/s volume & oscillators.

No:4.

Smart traders are those who will patiently wait to initiate the high-probability trade instead of compulsively trade all the time. Market gives you some very perfect trades, if only you are patient.

If you are a disciplined trader and your systems are good, why the low success rate? Ask your self..Are you not following it diligently or letting your emotions/ heresay/ media news, etc to change your views.

Let me give you some tips.
1.Trade the positive divergences to go long in the market. Sometimes it can fail too. And sometimes it may take a while before prices may start to move up. So you can't rush into buy the moment you see a +ve div. Wait for the price to move above 5 day ema/ average.
2. Trade the negative divergences to go short..The rest is same as above.
3.When weekly is down and the daily is turning down from the top(Like the stochastics, macd), sell. But reduce your selling positions once the daily becomes oversold and start to show +ve div..like our mkts now.
4.Play Nifty futures more than the stock futures. And play less of options unless you are sure of the direction and also only in a trending mkt.

These are some of the replies to reader quieries that I am posting here for the benefit of all.

Nifty - Premarket view.

It is correction time now. Difficult to figure out. So sell on rallies with SL @ 4920 and also buy at the lower levels for the day around 4790-4815 ...
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Nifty reverses from channel top after -ve div.

Selling @ higher levels continues.

It does look like an "abc" completion if you take into a/c the "OB" and some minor hourly negative divergences.

If world cues are +ve, it may attempt to go higher but may not sustain with this "OB" set up.

I still see an " ending diagonal/ bearish wedge" scenario with one move dn(may be the current one towards 4670-4710) & one move up(above 4900 or Could be a truncation too) in co-relation to the dollar index "ending diagonal/ bullish wedge" with one move up & a last move dn left.

On the contrary if it corrects only upto 4700-4740(Break out point) and reverses up, more upsides possible as in an ascending triangle scenario.The moves are quite sluggish and kind of "distributive"..So being quite watchful...
A clear sell signal when it closed below 4865 @ 12.00Noon. Ended the day below both "High & Low ema". Supports @ 4778 - 4745. Resistances @4835 & >4852.


A clear negative divergence in hour chart. Likely to correct to 4780 or lower depending on world mkts.

Nifty Intra day Update.

"OB" hourly getting corrected..
Aggressive Trade: SELL @ 4860 - 4875 SL 4900

If it is a rising wedge, the following path it may take and "C" can still go higher too..

Nifty-Intra day Update

Aggressive Trade : Exited @ 4885.
Conservative Trade: SL @ 4840NF.
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Nifty after this small consolidation @ 4862-4882, may move higher to 4900-4920 zone.
BOOK Profits in Aggressive Trade.

Nifty-Premarket View

Positive Asian cues will have a good gap-up opening.<4780-4842> range will break out on the upsides targeting 4880 to 4900+.
Book profits in Aggressive trade(Optional only) or trail it up.
Watch for participation by the stocks that consolidated in the last 2 days when RIL was moving higher which will indicate continuation by the broader mkt. Watch also AD ratio.

Nifty's sideways correction continues

Two days of pause/ consolidation during which time, the bigger stocks have started trending up and the others taking profits..Hourly chart shows "cooling off" from the "OB" area without any -ve div. daily is in firm ground. Any correction upto the 5 day avg/ ema(4750-4760) is good. Except for US markets, all the other prominent mkts are making new highs.

Closing above 4780 will continue this upward momentum.

Depending on the world markets, the corrections will end/ continue & end and the next upmove will unfold. So far the correction has held the 23.6% retracement for 4580-4842 which comes @ 4780. Deeper correction can go down upto 4742(38%) which is the break out point.
US Dollar index is in its terminal stage, either as an ending diagonal or as an impulsive 5th down. Next few days will answer that. It will have big impact on the markets. Read more here.

Chart Courtesy: "Evilspeculator.com".

Below is our "Nifty chart" to match the dollar action.

Nifty-Premarket view.

A. If it is a "5" wave upmove, it should not fall much below 4770-4760 and reverse from there to new highs to develop some -ve div in hourly charts for bigger corrections ahead.(So buy on dips around 4760-4770 with SL @ 4740 & Book out @ new highs)

B. If it is an "abc" structure, then the correction can go lower upto 4700-4740 levels with rallies in between.(So Sell on rallies around 4830-4845 with SL 4855)

Both have 50/50 possibilities. So trade these ranges of "Buying near the lower range 4750(+/-20) and Selling near 4850(+/-20) for the day.

Nifty's comes off highs after short term "OB"....

A mild profit booking ended the day off the highs but in positive zone. As expected, the "Big Stocks" such as RIL, SBI, Tata Steel moved up with good volumes. US markets' action today will set the momentum factor.
Nifty stayed above the pivot but profit booking came exactly @ the R2(4844). Profit booking may continue @ higher levels of 4835-4860. Supports are likely to be @ 4780-4760.

Nifty- Premarket View

FII "Buy" figures point to continuation of uptrend. Corrections, if comes(Will come)should be used to buy into. Momentum is carrying the market and I cannot speculate exactly where it is likely to meet with some profit booking. Some levels are mentioned to the best of my observations. Patience in holding your position will decide your quantum of winnings.

Nifty breaks out of the ascending triangle.

Nifty breaks out of an "Ascending Triangle"(Read about it here also). Follow it up with the rising trendline.
Momentum returns to the "daily cycle" with a close above the "High ema".

After a breakout, a good follow up upmove.
Another type of corrective scenario(7 legged Bow tie diametric) in its "last leg-G"..

Nifty-Premarket View

A clear break out after a week of corrections. It is always difficult to figure out the pattern of correction for trading purposes. Sometimes it just clicks. Now a break out in place, holding the longs for a few days will be good.
However, in "Aggressive trade", it is suggested to book profits to reenter @ lower levels. If Nifty does "running correction", then the lower level may not come. So if lower levels don't come, reenter at higher levels to keep the long position for tomorrow.