Trade, Live and Thrive

Saturday, December 31, 2011

Ichimoku Study - BSE Sensex - End 2011

BSE Sensex - Month Chart - End of 2011 - with the Ichimoku Cloud

This study is rather long term - appropriate for a new year - so here is wishing you a happy 2012 :) - happy learning !!

The Ichimoku Cloud is a versatile indicator that defines support, resistance, identifies trend direction, gauges momentum and gives one trading signals.

The Ichimoku parts - see chart above..

The Tenkan Sen - red line
The Kijun Sen - blue line
The Chikou Span - purple line
The Senkou Span A - black line
The Senkou Span B - grey line
The Kumo - grey shaded area

Read up the funda on this at the reference link at the bottom of this post to learn about this indicator..

Our observations using the Monthly chart - each candle is one month - period 2004 to 2011 - 7 year study.
Past:
1. Indian Equity markets were in Bull mode from 2004.
2. The crash of 2008 brought the market into the kumo (grey shade) - just about neutral / flat zone (not even bear zone)!!
3. Since the 2009 rise from the kumo - it was soon back to Bull mode.

Present:
1. We have a weak kijun sen (blue) cross Sell signal as the recent bearish cross happens above the kumo.
2. We have a weak tenkan sen (red) /kijun sen (blue) cross Sell signal - as the bearish cross happens above the kumo.
3. The current close price (as depicted by the chikou span - purple) is lower than the price 26 periods ago, this indicates that there is a potential for more bearish price action to come.
4. The price is above the Kumo at present and that is Bull zone.
5. There is a Senkou Span Cross coming up which may be Bullish based on present view...

Some useful free links I googled -

To create Ichimoku Charts - if your chart provider does not have it...

http://www.freestockcharts.com/

To learn about the Ichimoku Charts

https://www.ichimokutrade.com/articles/Ichimoku_Ebook.pdf

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:ichimoku_cloud

For the latest study click this link

Update - End of Day : 30 December 2011

Nifty - End of Day Chart - 30 12 2011

Our note at the previous post 'Looking forward' mentions two scenarios - the Bull scenario started off in the first half of the week and the Bear scenario took over in the second half - there was also a Bullish crossover of the 5 EMA to above the 13 SMA followed by a Bearish cross of the same averages this very same week as seen at the right end of the chart above. A hard fought week - Bears won.

Sunday, December 25, 2011

Nifty: Week ending - 23rd December 2011

Recap: We anticipated a change of trend as mentioned in the last post. The combination of an aborted Candle Pattern and channel bottom approaching, culminated in a huge gap up mid week. This was followed by a consolidation above the blue line - finishing the week with equal credit to Bulls and Bears despite a 1+% gain for the week.

Nifty - End of Day Chart - 23 12 2011

Nifty End of Day Chart: The price moved in our range between the two Fibonacci levels. staying above the 5 EMA and the blue line we would see the Nifty attempt the upper Fib 61x. Being the settlement week, one expects some wild moves too...

Nifty - End of Week Chart - 23 12 2011

Nifty End of Week Chart: Week candle for the first time in a long while stayed firmly below the 200 DMA. Continuation of such behavior is a recipe for a big crack to the 4200 level. The silver lining is the indicator shown just about staying above the support/resistance line.

Nifty - End of Month Chart - 23 12 2011

Nifty End of Month Chart: Continues to be in Bear grip below the 4750 line - throwback to the green channel bottom line - is still a possibility.

Looking Forward: Staying below last week's high or the 200 Week DMA - one sees the week going deeper into the red .. a quick move early in the week above the 4750 level followed by a dash to the Fib61x level on the Day Chart would be the script the Bulls would look to enforce.

S&P 500 - EOW Analysis - Week starting 19 Dec 2011

S&P - EOW Analysis - Week starting 19 Dec 2011

The Channel made by the weekly candles of the SP500 - one can see that the downward channel is under pressure for some weeks now - but just about holding without a breach of the channel top line - coming week could be a decider....

Wednesday, December 21, 2011

Update - End of Day : 21 December 2011

Nifty - End of Day Chart - 21 12 2011

The inevitable bounce from extremely oversold levels that we were expecting ... Bulls are back in Business .. now for the follow-up, moving above our blue line is next..

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Welcome Read

The Trading methods used here are suitable for those who (like me) are always Learners in the World Market (never presuming Mastery).

One learns with 'Technical Analysis' using Moving Averages, Channels, Time frames, Pattern & Candlestick Analysis, Fibonacci, Ichimoku Cloud, Oscillators & other Technical Indicators.

To comprehend the Dynamics of any Market, Peer Wisdom suggests, that we show plenty of Patience, keep it real Simple and adopt tons of Discipline.

We therefore use the same framework 'Patiently' every week - 'Simple' Technical Analysis Tools are repeated - The 'Discipline' of keeping a Neutral view is maintained.

So welcome to my notes - posted here for my Friends and Family.

Some Quotes..

There are times when playing the stock market that your money should be inactive - waiting on the sidelines in cash - waiting to come into play. In the stockmarket - time is not money - time is time and money is money. Often money that is just sitting can later be moved into the right situation at the right time and make a vast fortune – patience – patience. Patience is the key to success not speed.

Jesse Livermore.

That's been one of my mantras - focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it's worth it in the end because once you get there, you can move mountains.

Steve Jobs.

Discipline is the bridge between goals and accomplishment.

Jim Rohn.

Favorite Quote

"Why do we trade?

To be sure, trading allows us independence, the opportunity to work for ourselves. Trading also offers the prospects of a lifestyle in which evenings and weekends need not be consumed by work. Some of us crave the competitive aspect of trading, doing fresh battle each day. Others approach trading as a puzzle to be solved, deriving a sense of intellectual achievement. Finally, there is income. A successful trader can make seven figures in a year—and many of the traders I work with are living proof of that.

So why do they trade? Once you have the money, all of trading’s lifestyle advantages could easily be yours. Needs for competition and intellectual stimulation could be met in so many other ways. Why do traders remain traders long after they’ve won the game?

The great professions are those that serve as personal playing fields. They are the arenas we choose to express and develop ourselves. In mastering a discipline, we cultivate self-mastery. In writing a poem or placing a large trade, we capture—in a single act—our vision of how we see the world at that moment.

The great occupations are great precisely because they are such meaningful playing fields. Long after we’ve earned fame and fortune, the calling remains to be more than we are, to return to the arena and do battle with our limitations. The profound urge to extend the human grasp is common to all the great callings. To run faster, to capture more beauty, to predict ever better: in no small measure, our work is our pursuit of the godlike, however fleeting.

Maybe it is our different images of the godlike that animate our career choices.In work we find something divine within ourselves. Whether as scientists, monks, or traders, we strive for those moments when we are just a little closer to perfection, a little nearer to immortality. That is why we trade"

.... Brett N. Steenbarger

Inspiration

The Parable of Talents...

14 For the kingdom of heaven is as a man travelling into a far country, who called his own servants, and delivered unto them his goods. 15 And unto one he gave five talents, to another two, and to another one; to every man according to his several ability; and straightway took his journey. 16 Then he that had received the five talents went and traded with the same, and made them other five talents. 17 And likewise he that had received two, he also gained other two. 18 But he that had received one went and digged in the earth, and hid his lord's money. 19 After a long time the lord of those servants cometh, and reckoneth with them. 20 And so he that had received five talents came and brought other five talents, saying, Lord, thou deliveredst unto me five talents: behold, I have gained beside them five talents more. 21 His lord said unto him, Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord. 22 He also that had received two talents came and said, Lord, thou deliveredst unto me two talents: behold, I have gained two other talents beside them. 23 His lord said unto him, Well done, good and faithful servant; thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord. 24 Then he which had received the one talent came and said, Lord, I knew thee that thou art an hard man, reaping where thou hast not sown, and gathering where thou hast not strawed: 25 And I was afraid, and went and hid thy talent in the earth: lo, there thou hast that is thine. 26 His lord answered and said unto him, Thou wicked and slothful servant, thou knewest that I reap where I sowed not, and gather where I have not strawed: 27 Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury. 28 Take therefore the talent from him, and give it unto him which hath ten talents. 29 For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath. 30 And cast ye the unprofitable servant into outer darkness: there shall be weeping and gnashing of teeth.

The Holy Bible: Matthew - Chapter 25.