Saturday, November 7, 2009

Who is the teacher..??

Dedicating this story to a persistent "Dinesh Rishi"
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As she stood in front of her 5th grade class on the very first day of school, she told the children an untruth. Like most teachers, she looked at her students and said that she loved them all the same. However, that was impossible, because there in the front row, slumped in his seat, was a little boy named Teddy Stoddard.

Mrs. Thompson had watched Teddy the year before and noticed that he did not play well with the other children, that his clothes were messy and that he constantly needed a bath. In addition, Teddy could be unpleasant. It got to the point where Mrs. Thompson would actually take delight in marking his papers with a broad red pen, making bold X's and then putting a big "F" at the top of his papers.

At the school where Mrs. Thompson taught, she was required to review each child's past records and she put Teddy's off until last. However, when she reviewed his file, she was in for a surprise.

Teddy's first grade teacher wrote, "Teddy is a bright child with a ready laugh. He does his work neatly and has good manners... he is a joy to be around.."

His second grade teacher wrote, "Teddy is an excellent student, well liked by his classmates, but he is troubled because his mother has a terminal illness and life at home must be a struggle."

His third grade teacher wrote, "His mother's death has been hard on him. He tries to do his best, but his father doesn't show much interest, and his home life will soon affect him if some steps aren't taken."

Teddy's fourth grade teacher wrote, "Teddy is withdrawn and doesn't show much interest in school. He doesn't have many friends and he sometimes sleeps in class."

By now, Mrs. Thompson realized the problem and she was ashamed of herself. She felt even worse when her students brought her Christmas presents, wrapped in beautiful ribbons and bright paper, except for Teddy's. His present was clumsily wrapped in the heavy, brown paper that he got from a grocery bag. Mrs. Thompson took pains to open it in the middle of the other presents. Some of the children started to laugh when she found a rhinestone bracelet with some of the stones missing, and a bottle that was one-quarter full of perfume . But she stifled the children's laughter when she exclaimed how pretty the bracelet was, putting it on, and dabbing some of the perfume on he r wrist. Teddy Stoddard stayed after school that day just long enough to say, "Mrs. Thompson, today you smelled just like my Mom used to."

After the children left, she cried for at least an hour. On that very day, she quit teaching reading, writing and arithmetic. Instead, she began to teach children. Mrs. Thompson paid particular attention to Teddy. As she worked with him, his mind seemed to come alive. The more she encouraged him, the faster he responded. By the end of the year, Teddy had become one of the smartest children in the class and, despite her lie that she would love all the children the same, Teddy became one of her "teacher's pets.."

A year later, she found a note under her door, from Teddy, telling her that she was the best teacher he ever had in his whole life.

Six years went by before she got another note from Teddy. He then wrote that he had finished high school, third in his class, and she was still the best teacher he ever had in life.

Four years after that, she got another letter, saying that while things had been tough at times, he'd stayed in school, had stuck with it, and would soon graduate from college with the highest of honors. He assured Mrs. Thompson that she was still the best and favorite teacher he had ever had in his whole life.

Then four more years passed and yet another letter came. This time he explained that after he got his bachelor's deg ree, he decided to go a little further. The letter explained that she was still the best and favorite teacher he ever had. But now his name was a little longer.... The letter was signed, Theodore F. Stoddard, MD.

The story does not end there. You see, there was yet another letter that spring. Teddy said he had met this girl and was going to be married. He explained that his father had died a couple of years ago and he was wondering if Mrs. Thompson might agree to sit at the wedding in the place that was usually reserved for the mother of the groom. Of course, Mrs. Thompson did. And guess what? She wore that bracelet, the one with several rhinestones missing. Moreover, she made sure she was wearing the perfume that Teddy remembered his mother wearing on their last Christmas together.

They hugged ea ch other, and Dr. Stoddard whispered in Mrs. Thompson's ear, "Thank you Mrs. Thompson for believing in me. Thank you so much for making me feel important and showing me that I could make a difference."

Mrs. Thompson, with tears in her eyes, whispered back. She said, "Teddy, you have it all wrong. You were the one who taught me that I could make a difference. I didn't know how to teach until I met you."

(For you that don't know, Teddy Stoddard is the Dr. at Iowa Methodist in Des Moines that has the Stoddard Cancer Wing.)

Warm someone's heart today. . . I love this story so very much, I cry every time I read it. Just try to make a difference in someone's life today? tomorrow? just "do it". Random acts of kindness, I think they call it!

May all of your days be filled with random acts of kindness.

Get Wiser laughing

The Turtles
A turtle family decided to go on a picnic. The turtles, being naturally slow about things, took seven years to prepare for their outing. Finally the turtle family left home looking for a suitable place. During the second year of their journey they found a place ideal for them at last!

For about six months they cleaned the area, unpacked the picnic basket, and completed the arrangements. Then they discovered they had forgotten the salt. A picnic without salt would be a disaster, they all agreed. After a lengthy discussion, the youngest turtle was chosen to retrieve the salt from home. Although he was the fastest of the slow moving turtles, the little turtle whined, cried, and wobbled in his shell. He agreed to go on one condition: that no one would eat until he returned. The family consented and the little turtle left.

Three years passed and the little turtle had not returned. Five years...six years... then on the seventh year of his absence, the oldest turtle could no longer contain his hunger. He announced that he was going to eat and begun to unwrap a sandwich. At that point the little turtle suddenly popped out from behind a tree shouting, 'See! I knew you wouldn't wait. Now I am not going to go get the salt.'

[Some of us waste our time waiting for people to live up to our expectations. We are so concerned about what others are doing that we do not do anything ourselves.]
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The Frogs

A farmer came into town and asked the owner of a restaurant if he could use a million frog legs. The restaurant owner was shocked and asked the man where he could get so many frog legs! The farmer replied, 'There is a pond near my house that is full of frogs -millions of them. They all croak all night long and they are about to make me crazy!' So the restaurant owner and the farmer made an agreement that the farmer would deliver frogs to the restaurant, five hundred at a time for the next several weeks.

The first week, the farmer returned to the restaurant looking rather sheepish, with two scrawny little frogs. The restaurant owner said, 'Well... where are all the frogs?'.
The farmer said, 'I was mistaken. There were only these two frogs in the pond. But they
sure were making a lot of noise!'

[ Next time you hear somebody criticizing or making fun of you, remember, it's probably just a couple of noisy frogs. Also remember that problems always seem bigger in the dark. Have you ever laid in your bed at night worrying about things which seem almost overwhelming like a million frogs croaking? Chances are pretty good that when the morning comes, and you take a closer look, you'll wonder what all the fuss was about.]

Friday, November 6, 2009

Nifty pauses below 5-wk avg..

Nifty pauses below the 5-week avg and likely to be choppy into the coming week in a range of 4700 - 4900. (Weekly Pivot is @ 4724.)
It is stuck between the 5 & 20 DMA..(Blue & Green)

Inability to close above both hour & day high ema suggests of short term corrections. During the week, depending on the supports holding (4710-4740), it may attempt to above week ema @ 4870..

Nifty's struggle @ 4810

Nifty PreMarket View

A possible Inverted H&S in the making if 4850-4870 resistance is held and a correction down follows and 4720-4740 holds in the next two days.
Exit the Conservative Shorts during corrections towards 4750-4740 if 4870 is not violated.

For the Bears: The Laxman Rekha is 4935-4950.
For the Bulls: The Laxman Rekha is 4450(+/ -)
After initiating my second trade yesterday, my computer kept hanging while Nifty was racing past 4700 and I exited quickly when it gave me an opportunity. While trying to execute the "Short", I faced again quite serious "hanging problem" and was literally fighting with it and finally managed to execute the "Short".
And my critic said..."Dheere Dheere Macchal..eh Dil-e-bekaraar"..
I was not only fighting the immediate trend(Up) but even the "Universal forces" that were trying to save me and others who are following me...
Another lesson learnt.

Thursday, November 5, 2009

Nifty's relief rally continues..

As suggested in the morning Nifty fell from 4690 to 4620 and then moved up. It was suggested to trail the longs. Nifty later overshot the resistance point of 4740 and moved to 4775.

Resistances of Weekly ema comes @ 4790 - 4850 depending on the close of "Friday"..
Nifty stopped exactly at the channel resistance.
Any persons uncomfortable with "Shorts" may exit during the corrective down move. The correct Sl for shorts is the 5 day high + 0.5% = 4877 or a bit higher.

I would prefer to exchange views , present the possibilities but can not manage micro movements & manage individual's positions..When you initiate a trade, have a plan of "Entry price", "Stop loss", "Target price" and most importantly the "Time" period within which the trade should "Close out" either reaching target or SL.

BTW, I used toothpaste instead of shaving cream in the morning and that is a sign that "too much is riding in my mind"..Take care..
It is possible the corrective rally can continue for 2-3 days more towards 4880 with intermittent down moves..The support lies @ 4718(Pivot) and deeper down @ 4660-4680. Plan your trades accordingly.


Day High ema @ 4793 & R1 @ 4821 are the immediate resistance.
Weekly Low ema & Day ema @ 4736 & 4718(Pivot) are the likely supports.

Nifty update

SOLD @ 4750
(Heading to 4780-38%)

Nifty update

At 1.55PM:
Trail your Longs..
Create shorts @ & above 4740.

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From 4690, fallen to 4665(Pivot), then to S1 @ 4611.
Now it is rising towards the Pivot 4665...
If it gets resisted, it may fall from there.
If it stays above 4660, more upsides.4680+.

Nifty PreMarket view.

It is a scary picture for November, for sure...
Immediate 3-5 days: A sideways move (See retracements)
Day traders: Make trading ranges for the day: 4620/4660/4680--4690/4720/4735.
Conservative: Sell one lot or write 4600 Call or Buy 4600Put.
Aggressive: Play the down first, then the up & then another down.
Only a Move above 4730 may lead to 4780/4810..etc..

Wednesday, November 4, 2009

Nifty reverses with a bullish engulfing price..



Nifty Update

At 2.27PM: There is a very minor negative divergence in the "intra chart" which might induce a "mild profit booking". Nifty may correct from 4705-4715.
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I expect the 4660..intra support to hold for further upmoves.
Below it is hour ema @ 4653.

Nifty update

Now we are looking for a 1.00PM close above 4660 to bring some momentum.
And then a daily close above 4664 to arrest the down fall for the short term.
And finally a test of 5 day ema @ 4702.

Nifty Intraday update.

At:10.55: Optional Profit booking at First res @ 4650. OR trail now with 4620 and raise it as the day progresses.
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At:10.43AM: Stop & Reverse above 4611
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SOLD @ 4611 SL 4625 ( Scenario:2)
If it reverses from 4570-4580, then Scenario:1..!!

Nifty PreMarket View.

Scenario.1: A gap up towards 4611(Pivot), a minor pull back to 4570-4580, to be followed by another rise to R1 @ 4681.(If it is a "V" shape recovery, it may head higher).
Scenario.2: A minor upmove is expected at the open towards 4595-4611 (Pivot) and then fall to another low which might attract buying around 4485-4525. Above 4611, the channel resistance would be around 4630-4640.

Nifty's Big fall explained.

As I was checking on the EW with Macd, I received a chart from "Renu" of "StockMarket Technicals" which will caution the bargain hunters to hold themselves back for a while. This is only the 2nd week of fall. I have also added a Reliance chart to support this view.
The trend, when it is down, wait patiently for dust to settle down and "disbelief" written on both "bulls & Bears".
Don't be a part of the joke: Value investing is "Buy low and sell lower".
Keep in mind that the role of a bull market is to keep you out all the way up until the top, whereas the role of a bear market is to keep you in all the way down until the bottom.
At such times, when you have any doubt, just take a few steps back and look at the bigger picture, say the week...you will be comfortable with the falls..
"Do you still listen to those fund managers who say "India is a long term story" and say after a week's fall in the index that" Prices are pricey..!!!"
With yesterday's fall, it looks like we might trade roughly in the "4400-4600" band for a week or so.
The fast indicator in the hour chart does not have +ve div after yesterday's move."Poye Pocchu..!!"..Its gone..

Renu's Chart:

Tuesday, November 3, 2009

Nifty extends in its 5th wave down..

The low that was seen in the morning was the first wave of the 5th down and the same was confirmed on a break below 4670. It is clear that the fall from 4853 is subdividing and we are in its 3rd down and it will pause around 4485 and after a brief pause/ bounce, will make another low to complete a "5" from the 4853 high. Till then "sell" on bounces..
"Pivot Trading" gave a clear sell below 4751, when it broke the morning channel at 4715..we did not sell there..!?. Break of "4670" confirmed a severe fall which is where the Long was stopped out. This is some serious fall. When you look at it relative to the prices you saw a week ago, you tend to go for bargain hunting..Wrong. Time aspect has to be completed.
As Mr.Deepak pointed out, the "Tech table" gave a false buy @ 12.00Noon and reversed to a sell at 1.00PM and confirmed the same at 2.00PM. In a trending market, mechanical systems work best. We may have to leave our "brains" back at home and act dumb..and follow the markets mechanically.

Nifty Intraday Update.

LONG @ 4685, Stopped out @ 4665.

5th wave down may be extending..

Nifty Intraday Update.

CLOSED Shorts @ 4685NF and LONG.

Nifty Premarket View

As per EW study and TA status and combining the weekly & daily Pivot points, the ideal level to end the 5th wave down is @ 4638-4648 and the same will come in the opening hour.
Strategy: Close the "Shorts" around there and initiate longs with SL., to be confirmed later by a "ORB" break on the upside and furthermore a move towards Daily Pivot @ 4751.
An alternative scenario could be a open flat and move higher to 4737 and fall towards 4668-4648-4638..and then a possible reversal.

If 4638 does not hold, then next reliable support would be 4585-4590.
A critical reversal day..Trend is down but maturing for the short term.
Positive div in hour but to be confirmed by price reversal.

Monday, November 2, 2009

Pivot Points Trading (The Most Basic)

Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. This was a nice simple way for floor traders to have some idea of where the market was heading during the course of the day with only a few simple calculations.

The pivot point is the level at which the market direction changes for the day. Using some simple arithmetic and the previous days high, low and close, a series of points are derived. These points can be critical support and resistance levels. The pivot level, support and resistance levels calculated from that are collectively known as pivot levels.

Every day the market you are following has an open, high, low and a close for the day. This information basically contains all the data you need to use pivot points.The reason pivot points are so popular is that they are predictive as opposed to lagging.

Because so many traders follow pivot points you will often find that the market reacts at these levels. This give you an opportunity to trade.

If the market opens above the pivot point then the bias for the day is long trades. If the market opens below the pivot point then the bias for the day is for short trades.

The three most important pivot points are R1, S1 and the actual pivot point.

The general idea behind trading pivot points are to look for a reversal or break of R1 or S1. By the time the market reaches R2,R3 or S2,S3 the market will already be overbought or oversold and these levels should be used for exits rather than entries.

A perfect set would be for the market to open above the pivot level and then stall slightly at R1 then go on to R2. You would enter on a break of R1 with a target of R2 and if the market was really strong close half at R2 and target R3 with the remainder of your position.

If, after starting the day above the Pivot, the Price crosses back through the Pivot, the Pivot will act as a Resistance area. Pivot Points and Support and Resistance levels behave exactly like any historical Support and Resistance level.

Unfortunately life is not that simple and we have to deal with each trading day the best way we can. Combine these with simple channeling, retracement levels, past critical supports & resistances, SAR will enhance the success rate.
Pivot Points - Trading Methodology:
To make the discussion a bit less abstract, let's take a most superficial look at some simple trading methodology employing Pivot Points.
Step 1
"In general, if the day's Price Action starts above the Pivot, it will tend to stay above the Pivot.
This simple observation provides the basic rules for two of the simplest Pivot trading systems.
System 1:
Open is above Pivot: Buy
Open is below Pivot: Sell
System 2:
Place Buy and Sell stops bracketing the Pivot. Whichever is not filled acts as safety stop for the other.
These "systems" are very much too raw for my tastes. Too much chance of getting whipsawed. Let's take it one step deeper. Let's refine these simple systems just a bit more:
Step 2
First Fundamental Of Pivot Trading After the opening range (first 15-30 min. to one hour), if price is above/below the Pivot, Price Action will strongly tend to remain above/below the Pivot for the session.
Although this rule bids us to wait out the Opening Range and thus avoid much of the wildness and whipsawing, overlooking the next Fundamental Of Pivot Trading could be disastrous:
Step 3
If the market opens, or later trades at the extremes (R2, R3 or S2, S3), it will exhibit a tendency to trade back toward the Pivot. Thus, the general rule, 'Avoid buying the High or selling the Low', becomes increasingly more stringent as price moves farther from the Pivot.

I have picked 5 days of last week and what follows are some ideas on how you could have traded those days using pivot points.
........................26.10.09-Monday.......................
.........................27.10.09-Tuesday....................
.........................28.10.09-Wednesday.................
.........................29.10.09-Thursday.................
.........................30.10.09-Friday....................
.......Week starting 26.10(Mon) to 30.10(Fri).....
Keep those weekly, daily Pivots and fine tune them to perfection.

Sunday, November 1, 2009

Divergence Trade..(Most Potent)

When divergences between price and momentum indicators (roc, rsi & macd)arise, it can lead to some very profitable, high probability trades.
These set-ups are counter trend tactics, and as such, one must employ a hard stop in the event that the trend reasserts itself and you are on the wrong side. Contrast this tactic with the principle: “Trends have a higher probability of continuation than reversal.”
When you play for a momentum divergence trade, you are always playing for a target closer to the price the divergences commenced and playing for a possible shift in buying/selling pressure. Before attempting any such trade, I suggest researching further on this potentially profitable topic.

Some of the most popular Oscillators/indicators for uncovering price divergences include the MACD, stochastic, RSI, Ultimate Oscillator, rate of change, etc. You have to discover which indicator works best for you. Indicators are used as ‘training wheels’ until you can develop an intuitive sense of determining where the buying and selling pressure (momentum of the move) are diverging with the price action. This process takes time, yet indicators can help highlight these conditions. There is no perfect indicator to do this. I am using a fast MACD oscillator in my chart example. You can also spot divergences in other momentum oscillators.
Momentum precedes price in that a slowing of momentum indicates that a possible change in price is yet to come. Do not get caught in the trap of searching for momentum divergences all over the chart. Examine them at the (possible) end of mature trends for greater probability. Again, we are not seeking the end of a trend move (reversal), but just a retest and a small target. In fact, we are playing for a simple retracement swing against the direction of the prevailing trend. This illustration may help:
We are in a mature uptrend and price is continuing higher. A situation develops where the buyers are becoming less aggressive in their momentum (force of buying pressure) and momentum is declining while price is not.
Of importance to note (and the reason behind the divergence in the oscillator) is also price based. Note the steep rise of the previous swing up (creating heightened oscillator/indicator readings) and then the more gradual rise of the second swing up (creating a lower peak in the mathematical oscillator). This sets up the divergence while the reason for it is declining momentum.
If momentum precedes price, then in this case, a decline in momentum forecasts a decline in price as the most probable swing play. If buyers are less aggressive to raise their offers, then it won’t take much effort for price to fall and those who own the stock will begin to sell.
This chart highlights momentum divergences finally reversing the trend:
Divergences are difficult to quantify for a mechanical system, so this is one area discretionary traders may have an edge over programmers.
I did want to highlight another point through the use of various time-frames. Divergences and momentum concepts are valid across all time frames.
There are a few factors to be aware of when identifying momentum divergence plays:
• Momentum divergences are invalidated (and nonexistent) in range bound, consolidating markets
• Only look for momentum divergences in the context of a mature trend (however short the time-frame)
• Momentum divergences work best after a “three-impulse” pattern in a trend( That is two impulse moves followed with a consolidation/pause/sideays move with a final impulse move)
• Momentum divergences are to be played for a target (price correction) commensurate with the time cycle it is noticed and NOT in the higher time cycle.
• The best divergences resemble “double-top” or “double-bottom” chart patterns.
• Keep a stop in the market close to the last pivot point in the event that the strong trend reasserts itself and causes great losses.
• Exit divergence trades which do not resolve within a time parameter.
. Trading momentum divergences is a complex strategy and should only be attempted after repeated exposure and internalization of the price behavior that sets up the pattern.