Sunday, April 11, 2010

Another Breakout - A big One ??

The Nifty is pushing against 5350 once more after two earlier attempts to breakout did not quite succeed. The range around 5350 is significant since there is very little resistance between 5350 and 6360, the 2008 bull market top. This means, once prices move above 5400 then there may be very little resistance to their upward journey.

Breakouts: Points of Maximum Risk

The breakout from 5350 is an opportunity to enter a new up move. It is also the point of maximum risk since the failure of this breakout could mean entering at the top. Breakouts are always like this. If they work, you make lots of money and if they do not, you end up having entered the market at the worst possible location.

I usually trade these breakouts. I understand the risk. I also understand the potential rewards. But each trader has to decide on her own risk level. Do a search of this blog and you should find a number of posts on breakouts. The search option is on the right side, just scroll a bit.

ATA monthly meeting

The next monthly meeting is scheduled for April 24, Saturday in Delhi.

6 comments:

jagjit said...

Hi sudarshan ji,

I am new to your blog. Actually i was searching for Larry william's report on nifty for the year 2010 because in 2008 he gave very fine report. Who know this time again he might be right.

But i was unable to get the full report, and only report available is on wheat, dollar etc. and not on nifty but it was published in the full report,

If you have the full PDF file please give me a link to that.

Thanks,
jagjit

VIKAS said...

Respected sir,
You tested refinement in MA crossovers roughly but had not guided us with your concrete findings...pl guide us further in continuation of topic- http://www.sudarshanonline.com/2009/10/reducing-whipsaws-in-moving-average.html

"Conclusion: trading only after 2 losses reduces whipsaws and increases the efficiency of the moving average system. Aurobindo's system used 2 averages, while I did my test on MA and close. I think similar results will be found on 2 MA. I will do the test over the weekend, and, also test on intraday data. Like most trend following systems, winners are concentrated in small clusters. Only system traders can trade these systems.
One caveat: while I did try to check my programming, I wrote the code quickly so there is a small possibility of errors. I will recheck and come back over the weekend."
Thanx..
Vikas Sharma, Ludhiana

gurvi said...

Hello Sudarshan ji,
Gold price is touching it's life High...What is your take on it?

Thanks,
Gurvi

shan said...

timely. downside is limited. 5400 barrier is set to go. continuation triangle getting formed on 1 month chart. rsi 14/30m on 1month chart is hinting a shoot up. rsi 14/1day is also hinting towards firing of next cylinder.

Siva Sunku said...

Sudarshan Ji,
I am a follower of your shows on CNBC and this website. I am currently located in US, and do trade with smaller amounts on NYSE. But, whenever I do start trade, I think in mind.. what Sudarshan Ji would have done with this chart and initiate the trade...some time I have losses, which is acceptable.

One thing I wanted to know from you is the behaviour of stock during Quarterly results of any company. I have been observing from 2 years, the stock goes up and rallies till the results are announced, but on the day, if results are good and beat the expectations by 10%.. then only stock raises on the next day. Sometimes it happens even if the stock beat the expectation, or just met the expectation.. price tumbles down.
I dont have stats to prove.. but as balpark estimate.. I could see 80% of the times stock prices went down, even after results are good.

Eg: Jan Q1 results of Intel beat the estimates on Jan 14th, but stock price was dropped by 3.5% on the immediate next day. Unfortunately during the after hours trade, prices were up by 2% (I think retail investors cause this increase of share price). On NYSE, people do trade after market closes..but volume will be very less during this time.

Today (Apr 13) also, Intel results exceeded market expectations. I am sure that market will go down on Apr 14. But i just wanted to know if there is any reason for this rally till results and drop down after the results...
If you know any research/papers on the behaviour of stock/retail investors during result season.. can you please share across.
I couldn't find any similar papers in google..so the next one came to my mind to check is you.

I thank you again for all the things you gave me(/us) till now and for your time on this one too..

imran said...

hello sir..
i think we r in 4 th wave of correction in nifty..suggested by irregular correction..
and the next move is 5 th and final..
which according to u if breakouts,,will b an extended move.
plz give a thought on ew waves on current nifty moves.
thank and regards.