Thursday, August 19, 2010

Do not worry - Help is here

Gulshan wants help:
Quote
Why is that you are using fundamental terms in the blog for past few weeks?

If this indicate that TA should be based on fundamentals?
I am confused?
Follow TA or Fundamentals or both of them.

Please help.
UnQuote
 
My Notes: Help has come quickly, so do not worry. I am quoting below Charles Dow, known as the father of classical technical analysis:
In an editorial written in the Wall Street Journal, in 1901, he said :
 
"The market is not like a balloon plunging hither and thither in the wind. As a whole, it represents a serious, well-considered effort on the part of farsighted and well-informed men to adjust prices to such values as exist or which are expected to exist in the not too remote future. The though with great operators is not whether a price can be advanced, but whether the value of property which they propose to buy will lead investors and speculators six months hence to take stock at figures from ten to twenty points above present prices" (July 20, 1901).
 
(bold, italics, mine)
 
My Notes again: Well, in simple English, great operators buy shares when they feel it is undervalued. Then, after six months, shares may reach their normal valuation thus giving profits.
 
When you are investing, you have to consider the value atatched to an investment. Then you use charts to time your entry if possible, and, to detect signs of trouble / profit areas.
 
In trading, there is no need for any value examination, just look at technicals.
 
In my post, I had written "Growth stories are good for trading with a stop loss, but investing in them, specially without adequate knowledge, is a disaster."
 
You can trade any instrument with proper risk control, no need for any fundamental inputs.

2 comments:

ANAS said...

Respecred Sir, its me again. Your valuable time required..... Nifty is at 31 months high today, Its alltime high is still far away. (i.e,. 6100+] .. Banknifty, on the other hand is above 11000 ( all time high].... ... MY OBSERVATION IS, , firstly, our main index on NSE is NIFTY, it has failed to reached its all time till now... Secondly, our second most important index (on NSE] BANKNIFTY, is at alltime high... Thirdly, RELIANCE , the largest stock and the most weighted on NIFTY, is still in consolidation .. making no major leaps. MY QUERY IS, ... 1] is the above behaviour natural for the markets. 2] if we go by DOW THEORY, then can we assume that NIFTY will soon reach its alltime high or 3] BANKNIFTY , is at alltime high and NIFTY is far from that.., Does this mean that its going to have a negative impact on the markets , as the broad market is not confirming with the Banking stocks .....waiting for your priceless view . THANK YOU ONCE AGAIN .

bhaskar said...

Dear sir,

i was wondering if the markets will correct? do you have a timeline by which the markets may take a turn and how much do you think that the markets will correct?

sir even in the 2003 - 2007 bull move we saw periods where the market fell 15%+, but now there seems to be no correction at all.

i am sure many people are left out like me but................

please do answer sir...