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It is a training material about a methodology one can pursue.
Do yourself a favor. Just watch the market action. It will tell you want you need to know.
Trust Your Eyes: In Financial markets - one should focus on what market is doing and not what it should be doing. The problem: majority of market participants trade their beliefs about the market and have a tendency to get carried away by opinions. Read Trust your eyes and Follow Price Action on the Screen.
How to Read Price Action?: Fundamentals do not change in the market on a daily basis but what changes: How people think about the market, and that can have a profound impact on market behavior. The Charts/Price Action helps us understand people's thinking about the market. It's important to understand the rules of the game. Read Science of stock price action.
The Stability in Nifty counts: A stable market is a must for solid gains. Nifty found the ultimate support at 200-week ma on Feb 12 2016 and rallied back to near 9000 by Sep 09 2016. The market offered many stock specific technical opportunities during the bullish phase (March-September). It's only during Jan-Feb 2016 and Nov-Dec 2016 when it became difficult to execute a good clean trade. Two Best Calls on index in 2016
How Fundamental Turnaround happens in a sector? - Yes, they happen after a big bang announcement and all one needs to do is pay attention. Here's a Brilliant Case Study - How a turnaround helped this large cap stock deliver outstanding returns in a short period of time
Which is a risky stock? - The stock that keeps making new lows and keeps going down or the stock that keeps going higher. Why the fascination with buying at the lowest point is the riskiest exercise in the market? A simple definition of risky stock
How Technical Turnarounds happen? - An underperforming stock can make a U turn and surprise on the upside. Here are some stocks that did "Technical Turnaround" in 2016 and delivered great returns. Some failed too miserably. Here's how some stocks did Bullish U turn in 2016?
The Power of Resistance: Stock prices have strong memory and once they start retreating from a level, they keep doing the same. A simple resistance over time becomes powerful. Here are few charts that will explain the power of resistance and how one can avoid huge pain by taking money off the table at reistance.
What happens when a stock breaks this resistance: It's called Breakout and once the stock breaks out, it runs a distance like crazy. Here are some best breakouts of 2016.
What happens after a stock makes a big move - The stock starts trading sideways. It generally build a base for future move. This pattern resulted in some great opportunities in 2016
How Bull market ends in a stock? - Do stocks give clear signal that it's time to "Sell and Fold" than "Buy and Hold". Two great case studies to explain the same.
How a strong Momentum move happens in a stock? - Do stocks give clear signal that it's time to "Buy and Ride" than "Wait on sidelines". Two great case studies to explain the same.
How traders play Gap-ups in a stock? - Here are few stocks where traders got the opportunity to play this pattern. Read more
A Leader is a Leader - Never ignore a stock just because it has run up too much. The best rally comes pretty late in the cycle. Here are few big moves some leadership stocks delivered in 2016.
Building a base at Moving average - A stock gives a clear compelling signal before making a big move. Example: Bouncing and forming a base at well defined moving average. Here are few examples.
What is Deep Value technically? - Here are some illustrations of how a trader should look for "Deep Value" opportunties technically and how it results in huge returns from such deep value levels?
What happens when stock exhibits no trend? - Is there pattern in all stocks? Are all moves technical in nature? Here are some charts on why it's a bad idea to force a pattern on all charts
It's better to play on a Good scoring Pitch: Once the market falls in a love with a sector - then the best technical opportunities develop in the stocks of that sector. Here are some fancy themes market fell in love with in 2016 and it's fascinating how stocks after stocks of those sectors delivered super returns in short period of time. Read a fascinating case study of how stocks in these sectors made a big move -1. NBFC; 2. Oil Marketing companies; and 3. Chemicals.
Additional Case Studies Stock stories
- How Bull market tests your conviction
- How this stock made a huge text book move in 2016?
- How some stocks even after doing all the right things disappointed traders?
- One Stock and Multiple Patterns
- How a stock on Bull market journey offer multiple opportunities along the way?
- Two Lessons we can learn from Apollo Hospital stock chart
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers