Saturday, September 11, 2010

There is no substitute for hard work

The only thing better than hard work is reading this Blog!

Well, on a more serious note, the question in our minds is: this rally shows to signs of stopping. How do we do our analysis? One way is to look at our charts to determine the nature of such up moves. I am looking at the up swing and subsequent corrections for the past few months. What is the average duration of the rally?


On this chart, the number of days in each upswing have been labelled. Now, each upswing has its own reason for moving higher or stopping at some point. My point is: we cannot create an average that says: okay the average is xx so market should stop moving up at xx days. Eash swing will be different. But, we can say: the market has been making swings of 4 - 5 days. The current swing has lasted 7 days. This should be compared with the initial upmove from May lows, which went on for 9 days. Therefore (a) we may be in a strong trend, and, (b) we may be in the final phase of a minor uptrend. One or both of these are possible.

This was analysis, not an attempt to generate buy / sell signals. But, all analysis must eventually lead to actionable ideas. Please share your ideas through comments.

More notes:
A free two week trial to Marketclub is available. I hope readers take advantage of it. No payment information is required. Click Here

4 comments:

Pi said...

The chart is overlapping with the side column. Not a problem with this chart as its clear, but might be in future.

kaps said...

This is a very simple,easy and good way to approach a market.I use these techniques and are quite helpful.Infact all primary info instead of derived indicators has more reliability and accuracy according to me.These points when combined with other TA give us a probable turning points.

Kapil Gupta

Ravi said...

I heard your comment on CNBC the other day in which you said that Tata Steel rally is not convincing where as that of Hindalco was good. In fact Hindalco had made quite a few jerky moves from 180 - 160, that according to me was not convincing whereas that of Tata steel has been in a very strong consolidation phase. Kindly explain.

kk said...

RESPECTED SIR
I HAVE ALWAYS BEEN INTERESTED IN PRICING THE MARKETS RATHER THAN TIMING IT. COUNTING DAYS FRUSTRATES ME.
I USUALLY TRADE WITH A MINDSET ABOUT THE TREND OF THE MARKET. FOR ME , MARKET IS DOING EXACTLY REVERSE OF WHAT IT DID IN THE LAST BEAR MARKET. THERE WERE FOUR SUPPORTS IN PREVIOUS BEAR MARKET , AND THAT'S EXACTLY WHAT HAS HAPPENED IN THE PAST 1.5 YEARS. NOW IT HAS NOTHING TO DO BUT TO BREAKOUT.

MEDIA PLAYS AN IMPORTANT ROLE IN MY DECISION MAKING PROCESS. AT 5550 THE WHOLE MEDIA UNIVERSE WAS LOOKING FOR A CORRECTION , WHICH NEVER HAPPENED. NOW EVERYBODY IS TALKING OF A BLOWOUT, WHICH IS HIGHLY SUSPECTABLE FOR ME.WE MIGHT HAVE A BALANCED UPMOVE.