Wednesday, October 14, 2009

Pause after a big move

A strong rally in the Nifty on Monday is likely to be followed by a period of consolidation. This is not unusual, since the Nifty has this tendency to go through a big expansion, then begin a process of contraction for the next few days. Individual stocks will continue to move up / down while this consolidaition takes place.

Returns from Investing / Trading
A new hedge fund starting in the USA says it aims to get "almost 15% per year" in returns. This will be better than the average return on hedge funds which is 11%. In India, because of higher interest rates, the aim should be to have higher returns. My own sense is that 30% annualized return (average) for a trader will represent excellent performance. Trader expectations must match the reality of life.

Membership of ATA and the MTA exam
A question on the MTA exam asks if membership of any society is acceptable for this exam.
My Notes: As far as I recall, MTA exams require the candidate to be a member of the MTA. This is a good opportunity to make a case of the Certified Technical Analyst (CeTA) certification that the Association of Technical Analysts is now offering. Please visit http://www.taindia.org/ for more details.

I have requests to review the charts of Bharti Airtel, RCom, McLeod Russell..... . For Bharti, a key question is: Has the stock touched significant support? A look at the weekly (long term) charts will show that current prices of Bharti has at the same level as in November 2008 when the Nifty was around 3000. The current price of 350 has seen many touches over the past three years. It seems reasonable to expect the stock to consolidate at current levels. The second question is: will it move up after such consolidation? There is no answer to this one. We have to follow the price to find out what it will do later.

5 comments:

Manoj said...

Sir,
Is the nifty movement from 4990 to 5030 on monday is the 'big expansion', you are referring to?

Manoj said...

Sir,

The nifty options move average 30~50 % per day in price,

how come 30% return per year will represent excellant performance for an avg trader?

So do you suggest that the super high returns per day is not for indian trader only for wall st super computer hawks?

Jagdish said...

Sir, I love your posts but am really unable to fathom your interest in Bharti. The stock is a classic underperformer and represents weakness. It should be shunned at all costs. Buying a weak stock is like betting on a slow horse. Chotti munh, badi baat - but maybe I sense a bias towards Bharti and a liking for it. The charts seem to be saying sell sell sell telecom - dont even go near it.Buying it and making money is akin to gambling on a bad bet - the odds are too much against it.

men said...

Mr. Sudarshan, how is one to trade in a listless intraday movement of the nifty, this has been going on for a bit too long, is this the vacuum BEING CREATED just to suck in the ones who have not been tempted still? It reminds me of the days in 2001 when one could see huge qty of buy and sell within a very small range and getting even your intraday brokerage was very difficult then.

sunny said...

sir bharti share has been split, so past support of 330 etc ur mentioning cant b compared to current price i think. Its my view, i may not b right. And @MANOJ 30% return is good on capital of billions. On capital of few thosands or lakhs u can take risk, u can afford to lose all, but cant afford to lose billions. I make 300-400 pts per month in nifty, thats abt 50% return per month on capital of 25-30000. But i will not take that big risk with 1 billions dollar( or even 1B rs)