June 20, 2018

In Charts: India’s Stock Market Is Driven By Traders From One City

A record number of Indians now have demat accounts but India remains a traders’ stock market driven by one city: Mumbai.

The nation’s financial capital consolidated its hold on the stock market trading, according to data from the regulator’s Handbook of Statistics 2017. The city’s share in turnover has grown for BSE Ltd., bringing it on a par with that of the National Stock Exchange, India’s largest bourse. Top six cities now account for over 71 percent of BSE and 84.5 percent of the NSE’s turnover.

Read more at https://www.bloombergquint.com/markets/2018/06/19/in-charts-indias-stock-market-is-driven-by-traders-from-one-city

BANK NIFTY hourly charts

- bullish breakout from triangle failed
- where downside from triangle fail?
- height of triangle is 1000 points

Expanding triangle provides support S&P500 hourly charts

This was hinted yesterday... now upper trendline to provide resistance and then let's see if a breakout happens.

June 19, 2018

Hot stocks and charts

Hot stocks

LAST updated: 19-JUN-2018 

Expanding triangle seen in S&P 500 hourly charts

- lower trendline will offer support
- breakout above upper trendline will be bullish

Market outlook

Daily charts:
- trend is down on daily charts
- today NF closed 0.8% in negative at 10710
- AD was 1:3
- NF at lower end of trendline

- option writing support 10700 resistance 11000

This happens in the stock markets only - no where else

This is the story of two investors, neither of whom knew each other, but whose paths crossed in an interesting way.

Grace Groner was orphaned at age 12. She never married. She never had kids. She never drove a car. She lived most of her life alone in a one-bedroom house and worked her whole career as a secretary. She was, by all accounts, a lovely lady. But she lived a humble and quiet life. That made the $7 million she left to charity after her death in 2010 at age 100 all the more confusing. People who knew her asked: Where did Grace get all that money?

But there was no secret. There was no inheritance. Grace took humble savings from a meager salary and enjoyed eighty years of hands-off compounding in the stock market. That was it.

Weeks after Grace died, an unrelated investing story hit the news.

Richard Fuscone, former vice chairman of Merrill Lynch’s Latin America division, declared personal bankruptcy, fighting off foreclosure on two homes, one of which was nearly 20,000 square feet and had a $66,000 a month mortgage. Fuscone was the opposite of Grace Groner; educated at Harvard and University of Chicago, he became so successful in the investment industry that he retired in his 40s to “pursue personal and charitable interests.” But heavy borrowing and illiquid investments did him in. The same year Grace Goner left a veritable fortune to charity, Richard stood before a bankruptcy judge and declared: “I have been devastated by the financial crisis … The only source of liquidity is whatever my wife is able to sell in terms of personal furnishings.”

The purpose of these stories is not to say you should be like Grace and avoid being like Richard. It’s to point out that there is no other field where these stories are even possible.

In what other field does someone with no education, no relevant experience, no resources, and no connections vastly outperform someone with the best education, the most relevant experiences, the best resources and the best connections? There will never be a story of a Grace Groner performing heart surgery better than a Harvard-trained cardiologist. Or building a faster chip than Apple’s engineers. Unthinkable.

But these stories happen in investing.

That’s because investing is not the study of finance. It’s the study of how people behave with money. And behavior is hard to teach, even to really smart people. You can’t sum up behavior with formulas to memorize or spreadsheet models to follow. Behavior is inborn, varies by person, is hard to measure, changes over time, and people are prone to deny its existence, especially when describing themselves.

Grace and Richard show that managing money isn’t necessarily about what you know; it’s how you behave. But that’s not how finance is typically taught or discussed. The finance industry talks too much about what to do, and not enough about what happens in your head when you try to do it.

This report describes 20 flaws, biases, and causes of bad behavior I’ve seen pop up often when people deal with money.

Read more at http://www.collaborativefund.com/blog/the-psychology-of-money/

Expect a sharp global correction by Diwali; worst over for pharma: Udayan Mukherjee

But overall, the turf for emerging markets looks very tricky for the next 6-7 months and I think we should all tread with caution out there. Particularly markets like ours where we have seen consistent outflows from foreign investors, both from the equity and from the bond market and therefore, a country which is running a fairly significant current account deficit today and the question of how to fund it in a world of shrinking liquidity, both from Europe and the US, is a very important question for both our currency and for our stock market.

So I think, if I had to stick my neck out, I would say that given that stock markets have bounced back quite significantly globally and in India close to the previous highs. I think some time in the next 5-6 months, between now and the end of the year, if you want to narrow it, between now and Diwali, there is a significant risk of a fairly pronounced global correction of between 10 and 15 percent. That is not a small correction. It may not happen immediately like next week or next fortnight, but I think in the next 4-5 months, the chance of a fairly sharp global correction, particularly in emerging markets is fairly high.

Read more at https://www.moneycontrol.com/news/business/markets/expect-a-sharp-global-correction-by-diwali-worst-over-for-pharma-udayan-mukherjee-2603511.html

June 18, 2018

Market outlook

Daily charts:
- trend is down on daily charts
- today NF closed flat at 10800
- AD was 1:2
- option writing support 10700

- markets likely to trade within 10700 and 11000 for some more time

An IIT engineer's journey from e-commerce to successful trading

Manu Bhatia, BTech Chemical
The fact that you ended up with a positive return of 24 percent meant that you were doing a lot of things right. Where do you think you lacked?

Looking back, I think the most important thing that was missing between how I trade now and then is money management and risk management. Back then I did not know anything about position sizing. I used to take the same sized bet for all trades. I used to have the same exposure even when it was time to be aggressive or defensive.

Apart from money and risk management, were there any changes in the core strategy?

Yes, the strategy has also changed. Earlier I used to take positional trades, nowadays I take a lot of intraday trades. But having said that, by applying money and risk management on my earlier strategies, returns would have been much higher. In fact, if I would have used these money and risk management when I had taken a sabbatical I would have met the 100 percent return target in a year.

At what point in time did you decide to quit your job and become a fulltime trader?

June 16, 2018

NIFTY weekly charts

- markets rangebound for this year
- YTD gains are 2.7%
- channel seen on weekly charts
- nifty is at upper end of the channel
- trend reversal from here can lead to retest and break of 10000
- this process can take 2-3 months at the very least

- breakout above 11000 will be bullish

- option writing indicators are bullish this series


BANKNIFTY technicals

Daily charts:
- trend is up
- sideways movement seen from 15-MAY
- markets trading within body of big red bar formed in JUN

- stiff resistance around 27000

June 15, 2018

Market outlook

Daily charts:
- trend is down on daily charts
- today NF closed flat at 10818
- markets formed a hammer showing buying at lower levels
- AD was negative at 7:10
- option writing support at 10700

NOTE: nifty year to date gains are 2.7% - this shows how much rangebound the markets are. However daytraders and swing traders are still making money.

NIFTY intraday 15-JUN-2018

- Sell signal on kplswing indicator
- ignored this as close was near the highs and
- very good support around 10775 F

Should you have subscribed to the Facebook IPO?

According to Barron's, No as FB was overvalued at $23.

Facebook stock is currently trading at 196 USD and as been a buy on every dip so far.

FII flows to Indian markets may slow as Fed hikes rates

Mumbai: Foreign investors, who have pulled out nearly $240 million from Indian stocks since the beginning of the year, may continue selling after Wednesday’s interest rate increase in the US, but domestic institutions which have supported the markets so far are expected to cushion some of the blow, experts said.

Wednesday’s quarter percentage point increase—the second hike this year and the seventh since it started increasing lending rates in 2015—takes overnight lending rate in the US to a range between 1.75% and 2%. The US Federal Reserve’s rate-setting panel also signalled two more rate hikes this year and dropped its pledge to keep rates low enough to stimulate the economy “for some time”.

Read more at https://www.livemint.com/Money/FHxQ3TZTUhOJ7evgBvI7iJ/FII-flows-to-Indian-markets-may-slow-as-Fed-hikes-rates.html

June 14, 2018

How To Use Bollinger Bands / Trading strategies @TheBullBull

Market outlook

Daily charts:
- trend is down on daily charts
- today NF closed  0.5% in negative at 10808
- AD was flat
- option writing support 10700

- notice how option writing support is increasing over past few weeks

NIFTY intraday 14-JUN-2018

On market open
- short signal on 5 min, 15 min, kplswing etc
- took short on first 5 min bar

- covered around 10.20
- reason: support at 10775 F

- if this breaks, I may reconsider new short trade.