Charts for the Day

[anil_s_trivedi]

It is very simple in Amibroker. Just use the Relative Performance AFL in "Basic Charts" category. Type in the symbols for indices, stocks you wish to compare in the Parameters field separated with a comma.

regards.
rm

Dear RM,
Thanks a lot, you made life easier for Amibroker user...donno when Metastock will come up with better adaptibility functions...

Thanks...

 

[mangup]

Thanks Anil for ur help !

I tried to make it from 1st April, 12. Pl refer the attached image.

There is one function in Meta - Relative Strength Comparative which plots the ratio of two securities. But it is saying that ratio is calculated by dividing one securities' price with other one. However as per u that ratio is divided by original base ratio.

Pl explain this concept.

Will this be a different ratio than what u have explained?

 

[anil_s_trivedi]

Thanks Anil for ur help !

I tried to make it from 1st April, 12. Pl refer the attached image.

There is one function in Meta - Relative Strength Comparative which plots the ratio of two securities. But it is saying that ratio is calculated by dividing one securities' price with other one. However as per u that ratio is divided by original base ratio.

Pl explain this concept.

Will this be a different ratio than what u have explained?

Dear Mangup,

What i plotted is relative performance... i mean from your chart suppose if Bank nifty showing last vale at 1.1, it means for 100% movement in sensex, bank nifty performed 110%, i mean 10% outperformer, so one knows which sector performing better

In Relative Strength, stock/Index, to gauge strength, if it is rising it means Stock performing better than index, so trader choose high RS stock...

See there are n number of approaches, it depends on you..what you want...
A trader friend of mine, take high beta stocks from top-100 stocks, every 15 days, and sort high beta in that, then his business remain focussed on that, his clarification is simple, i am a aggressive trader, and want better stock performer.and high beta gives more value to him...

Infact institutions give good weightage to beta, as they hold group of stocks, so portfolio beta is a matter of concern to them...

So decide what you want, my two cents will be shortlist better 100-200 stock from CNX 500 with sectoral mix, then have your screening daily in this 100 stocks, to decide buy/sell decisions..running an exploration over 1500 stocks is a bad idea...

Spend 15 minute each day to look at sectoral indices and list of stocks...analyze those on a fixed time..make it a habit...they will guide you on NIFTY too...

So what i am calculating is on relative basis...

 

[anil_s_trivedi]

As seen from Relative performance, Pharma playing a perfect role of defensive, as falling in rising market, but still on YOY basis it is leading.
Bankex sitting on a breakout scenario, earlier failed at same level, so a brekaout here can lead the index all the way.
IT taking a hit with rising rupess.
Relaty is the good witness of current rally, as bounce looking a good one, so need to see how the retracement in realty will be fared this time
Power, metal and Oil& gas still are underperfromer.
So gist is need to look for investments in Realty(on retracement basis), rest it seems sectors other than seen here will be good choice...a look into midcap will be a good option.

This is analysis is purely on Relative strength basis, and i am in no way suggesting to invest in Real estate, i personally dont have any real estate stock in my portfolio.

 

[mangup]

Hi Anil,

From the chart one can make out is that the Imp sectors (FMCG, Bankex, Auto, IT, HC, etc) are showing divergence against the recent upmove from Sept of Sensex/nifty making it questionable for investors.

Also in my view, the sectors showing relative strength inline/outperforming will be a good choice to enter, which in current scenario "No one is".

However as per second school of thoughts - The most underperformer will show its outperformance provided it is showing a sign of reversal & base formation.

How to take a clue of entry & exit from a particular sector by reading this chart in broad sense? Can any rule/strtgy be made on this for long term horizon?

 

[anil_s_trivedi]

Hi Anil,

From the chart one can make out is that the Imp sectors (FMCG, Bankex, Auto, IT, HC, etc) are showing divergence against the recent upmove from Sept of Sensex/nifty making it questionable for investors.

Also in my view, the sectors showing relative strength inline/outperforming will be a good choice to enter, which in current scenario "No one is".

However as per second school of thoughts - The most underperformer will show its outperformance provided it is showing a sign of reversal & base formation.

How to take a clue of entry & exit from a particular sector by reading this chart in broad sense? Can any rule/strtgy be made on this for long term horizon?

Hi,Mangup,

The above chart is RSC in metastock, and note the divergence, hope now i am clear, yes you can get a sense of what really coming to be...i mean inherent strength/weakness...
Regarding underperfromers, yes a pattern in RSC is a valid one and what i observe it occurs before price starts unfolding, so it gives a clue of bottom formation or top formation,also peak-troughs are equally important...
Regarding entry/exit i dont have written rules, but look into patterns and formation of price alogwith RSC to decipher something which can be helpful in investing...

I am working on it, if got something will surely post here...Rest all depends on application of tool...

 

[anil_s_trivedi]

Hi Friends,

Dear mangup.. this is my earlier study done on BHEL posting here..i usually save my charts on whose basis i initiated my trades and a little writeup..to see how it goes, 'if at all my analysis goes correct...'

In the process of exploring relative strength, here is a analysis chart for BHEL, a leading bluechip of its times now struggling to move ahead.

As seen from chart, Fall of 2008 is a clear a divergence, why..?? Nifty making hew highs, while BHEL refusing to follow UP, so a inherent strength coming in...incidentally in correction BHEL corrected almost less in percentage terms as compared to nifty.
Point is when stock is in bottom formation process, it shows a RS in its character, and best gains comes form the same stocks...here a positive div in RS is implied thing that stock gaining strength and refusing to fall further...or smart ones adding it slowly...

Now second phase of chart is more interesting one, here BHEL rallied alongwith NIFTY, but watch RS, a pure consolidation zone, or rather distribution zone going on..it is the same phase where capex plans are difficult to finance, and government intervened with fiscal measures, but problem is something else...everybody knows it..Execution...so stock holders offload it in the rally..in October 2010 a break in RS followed by price, left long term investors specially retail ones amused...bcoz the first fall was severe in BHEL as compared to nifty...but retail holders go on averaging here...only a RS player will know stock is loosing shine and institutions have already offloaded in the period 2009-april to 2010 september...

So now a bottom finding process again begins, this time fall was severe and in % term it falls more than nifty from its peak...moreover nifty showed a sign of strength by forming a low in Dec- 2011, while bhel too matched it, but afterwards the higher lows in nifty are unable to match by BHEL, a clear sign of weakness if you go by book theory..but wait here..see RS what its doing here...it starts forming a base and recent two lows formed a double bottom in price, is matched by lower bottom in RS lows...so i am quite sure even though stock has not formed a bottom a mean reversion trade is pending..and the our bottom finding process started..see my earlier posts on BHEL..you will get it..
so cutting long story short, the recent rise is a pure mean reversion, and until i see accumulation here, stock will be hard to find upsides..with accumulation sets in..we need to increase our bets and go on adding as long RS having positive slope to offer...

 

[anil_s_trivedi]

Hi Friends,

Dear mangup.. this is my earlier study done on BHEL posting here..i usually save my charts on whose basis i initiated my trades and a little writeup..to see how it goes, 'if at all my analysis goes correct...'

In the process of exploring relative strength, here is a analysis chart for BHEL, a leading bluechip of its times now struggling to move ahead.

As seen from chart, Fall of 2008 is a clear a divergence, why..?? Nifty making hew highs, while BHEL refusing to follow UP, so a inherent strength coming in...incidentally in correction BHEL corrected almost less in percentage terms as compared to nifty.
Point is when stock is in bottom formation process, it shows a RS in its character, and best gains comes form the same stocks...here a positive div in RS is implied thing that stock gaining strength and refusing to fall further...or smart ones adding it slowly...

Now second phase of chart is more interesting one, here BHEL rallied alongwith NIFTY, but watch RS, a pure consolidation zone, or rather distribution zone going on..it is the same phase where capex plans are difficult to finance, and government intervened with fiscal measures, but problem is something else...everybody knows it..Execution...so stock holders offload it in the rally..in October 2010 a break in RS followed by price, left long term investors specially retail ones amused...bcoz the first fall was severe in BHEL as compared to nifty...but retail holders go on averaging here...only a RS player will know stock is loosing shine and institutions have already offloaded in the period 2009-april to 2010 september...

So now a bottom finding process again begins, this time fall was severe and in % term it falls more than nifty from its peak...moreover nifty showed a sign of strength by forming a low in Dec- 2011, while bhel too matched it, but afterwards the higher lows in nifty are unable to match by BHEL, a clear sign of weakness if you go by book theory..but wait here..see RS what its doing here...it starts forming a base and recent two lows formed a double bottom in price, is matched by lower bottom in RS lows...so i am quite sure even though stock has not formed a bottom a mean reversion trade is pending..and the our bottom finding process started..see my earlier posts on BHEL..you will get it..
so cutting long story short, the recent rise is a pure mean reversion, and until i see accumulation here, stock will be hard to find upsides..with accumulation sets in..we need to increase our bets and go on adding as long RS having positive slope to offer...

 

[Tharu]

Anil ji.. Am yet to download BSE data and get the sectoral performance chart.. Have tried almost all the links i caught in TJ but in vain.. Today clearly, defensives performed better till the end.. And realty should have tanked again, thanks to DLF..!
How do u see nifty now.? A correction that could be bought..? In a no trade zone for those who dont wanna risk..? Going to be volatile ahead of earning season, IIP and inflation.? How do experienced traders like you handle such days..??

 

[anil_s_trivedi]

Anil ji.. Am yet to download BSE data and get the sectoral performance chart.. Have tried almost all the links i caught in TJ but in vain.. Today clearly, defensives performed better till the end.. And realty should have tanked again, thanks to DLF..!
How do u see nifty now.? A correction that could be bought..? In a no trade zone for those who dont wanna risk..? Going to be volatile ahead of earning season, IIP and inflation.? How do experienced traders like you handle such days..??

Dear Tharu,

I had expected a interim top around 5810-20 levels, and posted too in post:171, stating the way nifty opened and gapup and a time correction before sets for a short term top...as it caught many shorties...now what to do...a retracement is going on for the early rally..so run your fibo tools, which i like it..come with fibo confluence zones...and then have a strategy to initiate positions there..as per momentum indicators, i am expecting one more top, it may be around 5950/6000...so i will try to be on long side,also i mostly trade on delivery basis...
Before running Fibo tools, study naked chart, where likely price action points will be there, and then have fibonacci analysis..market mostly responds to those confluence zones...
I see possibility of testing 5600 levels and then a bounce till 5700, then again a fall....or else it will slowly correct without a formal bounce and travel towards 5600- levels..may be till 5580 zone...and then a final upside...
now interesting study will be what next group of stocks that will lead towards 5900+ levels will be watchable...