I can help you with stock chart reading

Discussion in 'Position Trading' started by vvonteru, Mar 21, 2006.

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  1. Yagnesh07

    Yagnesh07 Well-Known Member

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    @ insider: Any recommendation for present condition?
    any short term call?
     
  2. jamit_05

    jamit_05 Well-Known Member

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    Hello,

    Please look at the monthly chart of Infosys (for ex.) and bring your attention to the volume.

    One will notice that there is a distinct bifurcation in nature of volumes around 2004. After 2004 the volume suddenly thinned out.

    Mathematically,

    Let,
    A = total volume of shares traded from 1998 to 2004 (adjusted for spilts not bonuses, since they do not show in the chart data)

    B = total volume of shares traded from 2004 to current, 2012

    Our focus is A/B;

    For infosys,

    A = 5003679962
    B = 998802680

    The ratio A/B = 5

    If A is almost 5 times greater than B, then one would think that participation was relatively weak after 2004. After 2004, even the major monthly supports do not have serious participation. Therefore, any semi-serious cue (global or local) could easily break these supports. This is because,

    Ones who bought before 2004, at sub-700 prices, would be happy to book profit at current prices. No wonder Infy saw the sharpest fall in its recent history.

    Please provide your views, especially contrary ones.
     
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