Sunday, March 14, 2010

Elliott with Point and Figure and different Time Scale!


At times when markets are confusing and not doing what it is expected to do we try to find out smarter and more efficient ways of evaluating the on going market conditions
It is very much important for markets to behave in such a way as it helps to get the best out of a Researcher or a Trader or an Investor
If a trader / researcher proves its ability to tackle surprises he / she will be richly rewarded later as market does not always move in complex structures
Sensex chart today is shown in Point & Figure format, one of the ancient way of charting and not used extensively but is an amazing way of identifying potential support and resistance levels
As shown we are once again entering into a zone where cluster of Resistances are acting together
P&F also helps us to identify Elliott wave counts which can sometime be difficult on a line or a bar charts
MACD is showing strong negative divergence here. (This is different than MACD plot on normal time scale)
Please note the "TIME SCALE". It is very different than what normally everyone follows.
P&F changes the timescale based on steepness of trend or areas of consolidation
Time is just a Relative component and we should go beyond the acceptance of standard calendar to measure dates
There are many different ways and many countries have their own traditional ways of measuring the dates and months like a Hebrew Calendar, Islamic Calendar, Persian Calendar Egyptian Calendar. But to standardize, everyone across the globe follows one single calendar
We need to go beyond this standard practice as there can be a time scale that can better explain stock price movements. This is still an untapped Research area!
Tweak your time scale and you can find out a technique no one would have ever thought of: Just think !

Wednesday, March 3, 2010

Wave 2 continues during Budget session!


Time cycles were suggesting a bottom in early week of March and rally in form of wave 2 / B but it looks prices formed a bottom 2 weeks earlier
Time cycles sometimes work pretty accurately and a few times it can be deceptive and keeps us guessing. But it always provide a way of caution at times when Mr. Market is not moving as expected
Budget Euphoria: The first one hour of Budget did not produce much movement in Sensex and everyone thought Union Budget will be a non event as Railway Budget
When maximum number of traders become complacent, Mr. Market has a tendency to take them by surprise and that exactly what happened. Prices started moving up very fast during the last 30 mins of Budget
There was no major announcement that would have caused a spike up but please be aware that news does not drive markets, prices can sometime behave as per news but will surely resume the major trend sooner than later
A move below 16000 - 16150 would confirm start of wave 3 till then sit and relax for wave 2 to get over!