How to pick Momentum Stocks – Bajaj Finance or Reliance Capital?

Trading or Investment success depends a lot on Stock selection and Timing. In case of Investment timing can be off to some extent but in case of trading timing is again a very important element.

Now let us try to see a very simply method to select a stock either for Momentum trading or for Investment purpose. A few might not agree with the below methods if they are contrarian traders or value investors. But that is what results into market movement after all!

The below technique shows two well known companies – Bajaj Finance among the news post it touched 10000 mark giving exorbitant returns in just few years and the other one is Reliance Capital stuck in medium term downtrend post the top made in 2014.

We can clearly see inverse movement in terms of trend in both of these stocks and for a momentum player one should trade in direction of all the trends – short, medium and long term. Bajaj Finance has continued to be a strong outperformer and this stock rose by nearly 10% even after so many months of already up move.

Look at the charts carefully and let us continue our discussion:

Bajaj Finance and Reliance Capital line chart:

The blue line chart representing Bajaj Finance clearly highlights increase in momentum with each passing day. The valuation might not be justified that many fundamentalist might argue but the least line of resistance is on upside and any dips should be utilized as buying opportunity unless and until we see a clear reversal sign or formation of lower highs and lower lows.

I would rather avoid buying an underperforming stock like Reliance Capital both for trading or investment because the fastest way to see increase is share value is with the one which has least resistance on upside. In Reliance Capital each rise will be stopped even though temporarily by the supply from investors who are stuck in the stock for many months or years. This will result into intermittent pause or reversal on downside whereas if a stock is trading at new highs it is everyone’s guess how far and how fast it can go! Trust me catching a top in such outperforming stock is not possible and if someone claims to know he is probably just a novice.

Case in point: In stock market one should never try to think that the stock has already doubled so how far it can go… Bajaj Finance is a classical example that shows rise of more than 10 times in just few years and inversely one should avoid catching a low in falling stock by guessing how much more it can fall else you can be stuck in stocks like HDIL, Suzlon, Reliance Capital and many more that are still trading way below its top made in 2008, rest alone the opportunity loss for these 8 years!

For details on various services offered by us please Contact US or write to us at helpdesk@wavesstrategy.com or Call us / whats app us on +91 9920422202 / +91 22 28831358

How to trade stocks like Yes Bank using Moving average and Channeling technique?

Dow Theory applied on stocks like Yes Bank. Trading is a systematic process. Moving average and Channels can help to develop trend following systems.

Dow Theory is one of the important subjects of technical analysis.  This theory is 100 years old however it is still one of the most powerful technique to determine the trend in current volatile market environment. Below are the important rules of Dow Theory:

1.      Market has three trends: Primary, Intermediate and Short term trend.

2.      The stock market discounts all the news.

3.      Stock market averages must confirm to each other.

4.      Trends are confirmed by Volume

5.      Trends exist until the market confirms.

These rules can be applied on any asset class. We were able to capture the up move of Yes Bank recently as trading in the direction of medium term trend is less risky and can generate fruitful results.

Yes Bank 60 mins chart: (Anticipated in the morning of 26^th July 2016)

Yes Bank 60 mins chart: (Happened till now)

(Part of research published in the morning of 26^th July 2016)

Wave analysis:

“Yes Bank has continued to move higher after taking support at lower levels. Trend will remain positive unless we see reversal in this stock as per Dow Theory method.

In the month of February 2016 prices made an important low at 663 level and since then up move has continued. In the entire up move from 663 to 1185 level, prices have continued to protect the low of prior week. This structure is intact from last 22 weeks. As per this technique, 1143 is the important support. 10 weeks Exponential moving average is proxy for the same which has been providing strong support to the up move. Although the entire rally is corrective in nature it is better not to catch the top as long as pivot supports are intact on downside.

As shown in 60 mins chart, 100 periods Exponential moving average along with channeling technique has continued to work well during the entire rise. In last session also prices touched 100 periods EMA and bounced back on upside sharply. This suggests that up move has some more steam left on upside. On downside 1155 is the crucial support.

In short, Yes Bank trend is positive with 1155 as support on downside. Move above 1190 will suggests that trend towards 1225 has started where channel resistance is placed.”

Happened: Yes Bank is moving in lines with our expectations. Post breaking above 1190 level prices sustained above the pivot support and made high at 1226 level in today’s session. It is prudent to trade in direction of the trend unless there is reversal as per Dow Theory and we see clear lower highs and lower lows formation. However, one should be aware about the overbought zone and levels where risk reward is not proper.

Subscribe to “The Financial Waves Short Term Update” which covers in-depth research on Nifty, Bank Nifty and stocks with Elliott wave explanation, trend following methods along with key support and resistance areas for short to medium term trades. For more information visit Pricing Page

Training on Elliott wave, Neo wave and Hurst's Time cycles- Stock selection with practical examples and Trade setups

Elliott Wave, Neo Wave and Time Cycles are one of the most advanced concepts of technical analysis.

Many believe that keeping it simple is the key to trading success which is probably true but we think it applies from Risk management and money management perspective.

However, with respect to timing the market and knowing when to enter the trade, simple strategy no longer gives the desired outcome given that Indian equity markets are moving in complex formations. To cater to the changing market environment it is prudent to apply the best of the tools available to increase trading success.

Time is the essence for everything. It is applicable not only to our day to day life but for freely traded markets as well. A good trade setup if not timed properly can still result into a serious loss. There are very few technical analysis studies that focus on Time since most of the techniques are driven by Price alone!

The course is designed to aim at the following aspects of trading:

1. Best Trade setups to enter the market

2. How to make the most of the position by timing the exit

3. Know when not to trade – A key to trading success

4. Applying other techniques along with Elliott wave for high conviction trade setups

5. Time cycles – A very important element to help reduce the number of probable scenarios to nearly one!

6. How to keep the profits intact after a winning streak…

AshishKyal, CMT will be conducting Most Advanced Technical Analysis Training – Neo wave and Time Cycles in Mumbai on 23^rd-24th July 2016.

Ashish Kyal declared winner on ET NOW- Buy Now Sell Now. The training will also focus on the techniques he followed during the ET Trade show to generate exceptional returns in just a week’s time.

The stock selection based on Neo wave and Elliott wave techniques helped to deliver exceptional return of 9.11% in just over a week.

Ashish carries vast experience of analyzing World Equity, Currency and Commodity markets using techniques like Elliott Waves, Neo wave, Time Cycles, and momentum tools. He is a frequent speaker on business channels like ET Now, Zee Business, CNBC TV18, Bloomberg TV.

Ashish also speaks at financial seminars like Market Technicians Association (MTA - USA), Association of Technical Market Analysts (ATMA), National Institute of Bank Management (NIBM), Sydenham Management college. He is on the selection panel of GDPI for premiere B- Schools and invited by Somaiya Institute of Management Studies and Research to speak on Entrepreneurship. He has also been invited as a guest speaker at National Stock Exchange of India (NSE) for the Post Graduate Certificate Program in Financial Economics.

Training Details:

This training would cover Advanced Technical Analysis Concepts – Elliott Wave, Neo Wave and Time Cycles. Practical application of these advanced tools on Equity, Commodity, Forex and Global Markets.

Contents:

1. Overview of Elliott Wave

2. Neo Wave

3. Two stage confirmations

4. Diametric Pattern

5. Newly discovered patterns

6. Different Rules and guidelines

7. Cycle Analysis: Time the market with accuracy using Time cycles

8. Trade setups, Application of the concepts on charts

9. Momentum Stock selection for Intraday trades with exit strategies

SCOPE

The training is ideal for those who want to analyze and understand Equity / Commodity / Forex markets in detail. Traders or investors who want to learn on how to build their investment portfolios or do trading for living. The course is designed for anyone and everyone keen to learn systematic way of trading using scientific approach. The only pre-requisite is passion for learning objective method of trading.

WHO SHOULD ATTEND?

§ Members of Equity, Commodity, Currency exchanges

§ Brokers / Traders / Dealers

§ Research analysts in Equity, Commodity and Currency markets

§ Students who aspire to pursue career in Financial Markets

§ Treasury dealers of Banks and Corporate

Where and when is the course?

The training is at Hotel Grand Sarovar Premiere, Goregoan, Mumbai. This belongs to 5 star category having chain of international hotels and the fees are including Tea / Coffee and Lunch.

Dates: 23^rd and 24^th July 2016

Training Duration: 16 hours (8 hours per day)

Registration Fee:

The charges for the Training are Rs. 23000 + 14.5% Service tax. Register before 15th June 2016 to avail Early Bird Offer and confirm your seat today!

If registered after 15th June 2016 charges would be Rs. 26000 +14.5% Service tax (Service tax will be revised to 15% from 1^st June onwards)

Registration is on first come first basis as there are limited seats.

Refer a friend and get 10% discount

After the course :

1. One Month of free Nifty Neo wave research report to understand the practical application on realtime basis

2. Instant interaction on Discussion Forum at www.wavesstrategy.com

3. All participants will be entitled for 20% Discount on any of our research products after the course for 1 month subscription

How to Enroll?

To register for the training using either Credit Card or Netbanking visit http://www.wavesstrategy.com/Payment.aspx  and mention Product as “Neo wave Training” and period as “1”

For any other details call us on +91 22 28831358 / +91 9920422202 or write to us at helpdesk@wavesstrategy.com   

  

Testimonials    

• First of all big thank you for the excellent training session. This was one of the best training I've ever been in!!!You did terribly well! I was/and still am impressed about how you made something "simple" from this very complicated stuff called NEOWAVE -I tried to read the book, and gave up...Now I'll give it another try..

      - Francis RAMA, France  

• The simplification of complex subject of "Elliot Waves" and combination of Elliot Waves with Classical Technical Tools are not only Awesome, but Unique too. I've thoroughly enjoyed Mr. Kyal's Seminar at Sarovar Premier Hotel, Bombay during 13th & 14th October, 2013 because of his Flawless, Plain (Jargon free) and Lucid Language. Best of all I liked his virtue to teach what he really performs in his real professional life.And last, but not least, Mr. Kyal's Seminar was the Best of All Seminars I've ever attended

      -Kiran Banjara, KB Investment Avenues, Ahmadabad-GJ

• Mr. Ashish Kyal is simply the most amazing teacher of practical Elliott Wave Theory.

      -Rishabh Vasaria, Hyderabad 

• Myself Sameer. Just want to share my feedback. From last 7 years, I am doing full-time trading in F&O segment (Nifty & Bank Nifty) using my technical study and Elliot wave counting. I attended 2 days Neo Wave seminar on 1st March at Goregaon. The session and teaching by Mr. Ashish Kyal was excellent. The topics covered in session e.g. new Neo wave patterns, new Elliott rules, 2 stage confirmation and Time Cycles were very useful. Today I applied these techniques on Nifty and Bank Nifty (Daily & 60 Min charts) and its working perfectly fine. I am very much satisfied with the course. Just want to say Thank You for sharing such valuable knowledge. I have also subscribed for your daily mail service on Nifty EOD and Elliott view. From last 3 months, I am reading these mails daily. I always verify my own analysis with your mails, before taking any entry in market. The accuracy and success ratio of your mails (analysis) is more than 98%, which is excellent. Thanks again.

      - Sameer Dharaskar,Mumbai

What is Neo wave, difference between Elliott wave & Neo wave?

Neo wave is an advanced concept of Elliott wave developed by Glenn Neely.

Orthodox Elliott wave was originally discovered by R. N. Elliott in 1930s. His original work mentioned that stock market does not move randomly but in systematic fashion that follows Fibonacci numbers and natural laws. This systematic movement in prices are in form of waves. Normally there are 5 step forward and 3 step backward resulting into a net progression which is valid for stock market as well. The concept cannot be just applied but one needs to understand the basic premise and certain rules to apply it objectively.

Any price movement as per basic Elliott wave is classified into Impulsive and corrective. There are various patterns within these broader heads. Impulsive waves need to follow three basic rules:

1. Wave 2 cannot retrace complete of wave 1

2. Wave 3 cannot be the shortest of the directional waves 1,3 and 5

3. Wave 4 cannot enter into territory of wave  1

The above 3 basic rules if followed then the price movement under consideration can be classified as a normal Impulse wave.

However, when the market structure is complex there is possibility that the movement can be counted in many different ways. This can result into subjectivity and the entire purpose of wave theory can be lost. To overcome this limitation,  Neo wave was developed that has more than 15 different rules to define a simple impulse pattern. Following are a few of them:

1. Wave 2 cannot retrace more than 61.8% of wave 1

2. Wave 3 cannot be the shortest of the directional waves 1,3 and 5

3. Wave 4 cannot enter into territory of wave 2

4. There has to be atleast one extended wave which is going to be 1.618% of non extended wave. If there is no extension then the pattern under consideration is corrective

5. One of the directional waves should subdivide

6. Corrective waves should consume more time than the preceding impulsive wave

7. Touch point rule: Out of 6 points not more than 4 points should lie on the channel

8. …

9. …etc

The above shows only a few set of rules for an impulse pattern as defined by Neo wave. There are newly developed patterns as well which were never a part of original Elliott wave. To name a few are:

- Diametric Pattern

- Neutral Triangle

- Extracting Triangle

- 3^rd Extended Terminal with 5^th Failure

These new patterns are equally important to understand because majority of the movement seen in the world equity markets are taking the forms of these patterns that were never covered in original work of R. N. Elliott

We take a step ahead and combine this complex study of Neo wave to that of Time cycles. It is not always that both the studies will be in sync but when they are indeed suggesting the same outcome that is the time that the trade setup is of very high accuracy and it just leaves only one probable outcome. These are the times when one can go all in with prudent risk and money management strategies which have the potential to give the best of the returns in shortest amount of time.

Below part of research was shown on 4^th March 2016 monthly report when Nifty made a low near 6825 levels on Budget day:

Figure 2: Nifty Weekly Time cycle chart (shown on 4^th March 2016 monthly research report)

Figure 3: Nifty daily chart (shown on 4^th March)

The Diametric pattern as shown in Figure 3 highlights completion of wave g of (g) and the previous down leg is so far retraced back in faster time. This virtually confirms completion of the correction from 8340. ….We have published an interim update on 1^st March as soon as 7100 level was broken and from there itself Nifty is up by more than 400 points in 3 days. For now it is better to keep using trailing stop method with levels mentioned in daily short term update to keep profits intact and also be a part of this big uptrend.

In a nutshell, there is high possibility that the trend might break above the channel resistance as well near the level of 7750 – 7800 and might cross above 8000 as there is change in market dynamics. Volume MA, Volume ROC also confirms this subtle shift which might not be visible to majority. The methods that worked previously during the downtrend of past one year might require tweaking and the surprises will be on upside. Looking at weekly Time cycle there is high possibility that we might not be able to cross above 8654 top in 2016 and there can be a higher low formation either in form of intermediate wave 2 or second standard correction. For now the trend is firmly positive as long as 7000 zone is protected and do not try to catch a top in this fast moving market.

The above gist simply shows the power of combining Neo wave with Time cycles. Nevertheless, we were keen on expecting an impulsive rise from 6825 but the entire rise came in form of overlapping pattern and so one need to keep measuring wave patterns against expected outcome.

References are taken from “The Financial Waves short term update”daily research report which covers Nifty, Bank Nifty and stocks on rotational basis and “The Financial Waves Monthly update”that shows medium to long term perspective on Nifty, INR Pairs, Global Markets, Gold, other commodities. For subscription options visit Pricing Page

Attend the most Advanced Technical analysis training on Application of Neo wave and Time cycles with practical charts for portfolio creation, stock selection and trade setups. This training will focus on the above methods along with lot of other studies which can be combined together to produce very high conviction trade setups. Register NOW as limited seats available. For more details Contact US or write to us at helpdesk@wavesstrategy.com or call us at +91 22 28831358 / +91 9920422202

Bank Nifty: Application of Time Cycles to understand Elliott wave pattern

While trading or investing in Financial Markets, price as well as Time plays an important role. If timing is right then one can make most from the trend however wrong timing can lead to emotional and financial stress. Hence it becomes important to analyze the particular asset class with advanced studies likes Elliott wave theory, Neo wave and Time Cycles.

Below we have shown daily chart of Bank Nifty which was shown in “The Financial Waves Short Term Update” published in today’s morning. Here we can see that the low formed in February 2016 was due to the Time Cycle of 117 days which is also close to the 108 days Hurst's Time Cycles. Now again this Time Cycle is due in the second week of August 2016, so what Elliott wave pattern and Time Cycles suggest for Bank Nifty ahead?

Bank Nifty daily chart: (Part of research shown from “The Financial Waves Short Term Update”)

Wave analysis:

From last few weeks we have been witnessing mixed performance among banking stocks. Private Banks has continued to move in consolidation whereas PSU banks have been outperforming the overall market and has showed sharp rise in last few weeks. Bank Nifty has showed V shaped recovery post forming low at 16950 level on 24^th June 2016. The up move has managed to take out the previous pivot high of 18050 level, however post that it has failed to generate the strong momentum and consolidation is ongoing from last few days. This suggests us to look at the medium term structure.

The daily chart indicates that from the lows of 13400 formed in the end of February 2016 prices have continued to rise however the entire rally is corrective in nature. As per wave perspective, prices are in minor wave ….. of third standard correction pattern. This suggests that either Flat correction or Triangle pattern is under formation. So as per this wave counts still sideways to negative action is left in this index.

Time Cycle of 117 days: In above chart we can see that Time Cycle of 117 days is working well to capture the bottoms. As per this time cycle now next bottom is due in the second week of August 2016 and as of now prices are trading at 3/4^th phase of cycle and hence upside momentum from hereon should ...............

We have also shown 60 mins chart with internal wave count in original report which has been removed purposely from this free article section.

Also understand cycles can keep changing and one has to tweak it based on the latest price action. Time cycles helped us to capture a major low in early March 2016 when majority had given up on Equity markets and now everyone wants to buy stocks at much higher levels. Humans have tendency to herd and stock markets clearly reflects this herding behavior. Such behavior and emotions of Greed, Fear results into repetition of patterns again and again.

We, at Waves Strategy Advisors try to work with probabilities and use Time cycles to predict the probable Elliott wave pattern a stock or index might follow. Trading and investing is all about probabilities but sticking to time proven techniques have helped us to be on right side of the trend more number of times which is sufficient to be profitable on net basis. Many would look only at short duration to judge the validity of success or failure of any theory but our many years of experience has resulted into application and combination of Time cycles with Neo wave as one of the most powerful techniques that one can come across.

Attend Most Advanced Technical analysis training - Combining Time cycles with Neo wave - Advanced Elliott wave to forecasts the market from trading and investment perspective. Get free research report for a month to see its application as it develops in real time and post your questions on our Discussion Forum post training to keep learning the application of the same. Limited Seats left... To register fill the form on Contact US or Call us / Whatsapp at 9920422202 or 022 28831358 / write to us at helpdesk@wavesstrategy.com

Nifty: Power of multi-month Channel, extreme optimism in last 100 points!

June 2016 was an eventful month with lot of news around the Globe that resulted into very high volatility and sharp movements.

“BREXIT” was the main focus in second half of June which resulted into big Gap down opening in world Equity markets along with sharp appreciation in basket of currencies against Britain Sterling – GBP. The selling pressure was seen across developed economies but emerging markets still managed to outperform post 24th June 2016. Nifty created a Gap of around 250 points with intraday low of 7925. This level was protected post the event day……

Below is part of the research picked up from daily research report “The Financial Waves monthly update”

Figure 2: Nifty weekly chart

Sharp appreciation was seen in INR against GBP and Rupee appreciated by nearly 8% in single day. Such sharp appreciation in currency pair is not a good sign as it directly erodes the bottom line of companies having exposure to the UK. Even so we are seeing some irrational exuberance where the world markets are ignoring its repercussions and are again back to the level or infact higher than that was seen pre- Brexit.

Nifty showed “V” shaped recovery from the lows without any meaningful accumulation or pattern formation. Such movements are not conducive from trading perspective atleast in index as it does not provide prudent Risk reward ratio. During such scenario one should focus on outperforming stocks that had managed to move higher irrespective of the news or events.

Weekly chart of Nifty shown in Figure 2, was previously update in January 2016 report when prices were near the lower support trendline of the channel. It was then we mentioned about the reversal is due from the lows which happened in late February after turning majority bearish. The scenario is stark opposite now when prices have reached towards the upper resistance line of this channel and majority has turning extremely optimistic for target of 9000 back on Nifty. Crowd turns extremely bullish exactly when prices hit crucial resistance and Fibonacci levels.

As shown on daily chart in Figure 3, (shown in actual research report) we continue to think that the rise from the bottom has been in double corrective pattern with current wave ……… of second correction is ongoing. The internal counts of this wave ……. is not clear and there is possibility we might start seeing some distribution from here on. In addition to the above channeling technique the area of ……… is also near the 76.4% retracement level of the entire fall from 8845 levels to …… which can act as reversal zone.

However, it will be only on faster retracement of last rising segment we will get strong negative confirmation. Unfortunately that level is now at 7925 which is far away from here. Break below ……….might result into break of d-f trendline which will provide first negative confirmation. So one should keep an eye on ………. followed by ……… levels for medium term reversal.

In a nutshell, the current ongoing leg …………..

The above research simply highlights use of channeling technique and imagine the power when combined with Fibonacci retracements, Time cycles and other advanced Elliott wave concepts – Neo wave. To get in-depth research covering these techniques on Nifty, Midcap index, Currency pair, FTSE 100, US Markets and much more subscribe to “The Financial Waves Monthly update”. For subscription options visit Pricing Page

Attend two days workshop on most advanced technical analysis training – Time cycles and its application along with Neo wave – Advanced Elliott wave. Register NOW. For more details visit http://elliottwavetraining.wavesstrategy.com/most-advanced-technical-analysis/

ICICI Bank chart: Application of Time Cycles!

Time cycle is one of the important concepts along with price confirmation which can help us in trading or investment from short to long term perspective. There is no specific time cycle periods or days that works on specific asset but one needs to apply different time cycle observing the important lows and highs formed in price chart. It is as good as finding the moving average which is providing vital support or resistance. Many of the analysts suggest the importance of 200 days moving average however on certain charts you will not find any use of 200 days moving average (MA). So one need to find out the MA which is working on chart. So applying time cycles is more of visualization process rather than any system.

“The Financial Waves Short Term Update” covers Nifty and 3 different stocks on daily basis where short term trading opportunity exists. In the research of 23^rd June 2016 we covered ICICI Bank applying 68 days Time cycles which has worked most of the time as topping one. Thus Elliott wave pattern along with Time cycles was suggesting that downside pressure should increase for next few days. At the time of publishing the research ICICI bank was trading near 240 level and post that it moved lower towards 221 level.  

ICICI Bank daily chart: (taken from the research published on 23^rd June 2016)

(part of research published in the morning of 23^rd June 2016)

Wave analysis:

The daily chart of ICICI Bank shows that the rally witnessed in last 2 months from the lows of 180 is corrective in nature which indicates that minor wave x of Triple standard correction is ongoing. Post breaking the downward moving channel, prices failed to pick the upside momentum which further confirms that still few more months of sideways to negative action is left looking at the Time Cycle of 68 days.

The above chart shows that on most of the occasions this Time cycle has acted as a topping one. Main power of cycle lies in capturing important lows as cycles of different periodicity are synchronous during low formation and dispersed during the topping process. Nevertheless, we assume what has worked in the past will work in future as well.

Using this cycle along with Elliott wave helped in identifying short term opportunity on downside. Post that the stock has reversed back and is now again re-testing the levels of 240 but the validity of the cycle will remain as long as the highs at 257 is protected. This gives very vital information to a trader or investor who now knows what should be the strategy for ICICI Bank and the probability of success will lie more on negative side.

We use Time cycles to forecasts Elliott wave patterns for getting high conviction trade setups. This is one of a few techniques we used that helped us to win the ET NOW stock trading game show.

Enroll NOW for one of the most Advanced Training on Technical analysis – Time cycles application in combination with Neo wave, which gives very powerful tool to forecasts and identify trade setups. The two days workshop will be held in Mumbai on 23^rd - 24^th July. For more details Contact US