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19 March 2012

TATA MOTORS - ELLIOT WAVE ANALYSIS

Hi Friends,
TATA MOTORS


The key to success in Market is Discipline Trading and Control over Greed and Fear. Buy in panic and Sell in Euphoria.

Tata Motors Marking the All time High is somehow Depicting Euphoria over the Street. And I Would be Fearful to Buy this stock at such Sky High levels when everyone is Greedy.

Well and as most of you know that I'm Die Hard Fan of Elliot Wave Analysis and keep forecasting some unbelievable levels.. :P

So here I'm trying to put my Efforts to do Elliot Wave Analysis of Tata Motors.

The Current Structure of Tata Motors looks like what is Called an Expanded Flat Corrective a 3-3-5. Where the low of Aug 2011 is marked as A and the ongoing leg as B which looks complete at 297.. And now the pending C would take it below the lows made in August 2011 to 120-125.. till June 2012.

OMG that's too Scary!

Though currently I don't have a very strong evidence to make such a Bold Forecast. But we must be alert for such a murderous move on the Stock.

Wave Principle is not primarily a forecasting tool; but it is a detailed study of market behavior. With help such studies one can pick accurate price reversals and targets.

As I'm new to Elliot. I will keep learning from my mistakes and try to improve over the time.


Happy Minting,

Thanks & Regards,

Harsh Dixit

14 March 2012

THE MISERABLE SHAPE OF THE US ECONOMY - PART II

Hi Friends,

This is in continuation of the Previous Post.

The following article is Excerpted from the recent issues of Elliot Wave Theorist & The  Elliot Wave Financial Forecast published by Elliot Wave International (EWI) the world's largest Market Forecasting Firm.

Just Read On -

Some things  "can't be ignored at all. Figure 2 is not based on dollars; it's just numbers. It shows that manufacturing jobs in the U.S. since 1979 have decreased nearly by half. When adjusted for population growth, they have fallen by more than half. This decline isn't as bad as that of stock prices in terms of gold, which are down 87%, but it is still a disaster. Jobs expanded in the area of services, especially financial services, and government.



But an economy can't live on services. If no one produced goods and everyone just wanted to provide services to each other, everyone would be dead. Manufacturing creates real wealth and keeps people alive.


Notice that the steepest plunge in manufacturing jobs began in 2000. I have said that the depression started in 2001, following on the heels of the peak in real stock prices in 1999/2000. Figure 3 is another among several charts that support this case. As you can see, the number of food-stamp recipients began to soar at that time, and it hasn't stopped. This is another statistic that can't hide behind inflation.



The politicians and central bankers can't hide behind Figure 4, either. This graph shows that housing starts have fallen so hard that they are back to the level of 1922. But wait. Three times as many people live in the U.S. today than lived here in 1922. So housing starts per capita are at nineteenth-century levels.





Another Flagging Economic Measure
- Excerpted from the January Elliott Wave Theorist -



This chart of U.S. Domestic Investment shows the severity of the underlying economic weakness. Domestic investment made a series of lower highs through the course of the Cycle-degree bull market from 1974 to 2000. A still-lower high occurred in conjunction with the Dow's all-time price high in 2007, which EWI label Cycle wave b. Then, after falling strongly with stocks in 2008, domestic investment during the wave 2 (circled) rally of 2009-2011 failed even to approach the levels of growth registered at any time over the course of the last half-century. Its meager recovery has, in all likelihood, already turned down after the wave 2 (circled) peak in stocks last April. This underperformance is in line with the tepid bounces in GDP, industrial production, capacity utilization and employment. Taken together, they argue that the transition to outright economic collapse is imminent.
--------------------------

What About the Unequal Distribution of Losses?
- Excerpted from the December Elliott Wave Financial Forecast-


In time, the OWS movement will probably become more confrontational. For one thing, it will lose the "we are the 99%" impetus that gave rise to the protest in the first place. To understand why, we return to a chart showing the percentage of wealth held by the top 1% of U.S. citizens.



It is no coincidence that a version of this chart was first popularized in late 1999, which was just months before the end of the Grand Supercycle Bull Market. EWFF twice identified an outbreak of concern over a top-heavy distribution of wealth as a sure sign of a Financial top. The first was in November 1999, two months ahead of the 2000 peak, and the second was in December 2006, when Financial stocks were two months from their all-time high. Both times, EWFF noted that the 1930s Bear Market "solved" the problem naturally, "but apparently, at a trend change as big as this one, people just cannot wait to get in there and lend a hand."


This must be one huge Financial top, because the battle of the haves versus the have nots is back and bigger than ever. The current outbreak started in early 2011, when riots broke out in many parts of the Mideast. In February, EWFF noted, that "an unfair distribution of wealth is contributing to open unrest." Noting that there was no such violence at the front edge of the Stock Market's topping process in 2000, EWFF concluded, "the Bear Market is more developed, so upticks in negative sentiment produce immediate social unrest. These negative Bear Market manifestations will not stay on the periphery of the financial realm. In developed countries, the wealth destruction will take its usual form of falling Financial prices, but it will also be openly expressed in the culture." Occupy Wall Street fits this forecast to a T.


The share of wealth held by the top 1% of Americans is lower today than it was at the major Market peaks of 1929 and 2000. Yet the impetus to redistribute wealth is far stronger, because social mood is less positive. Ironically, tempers are flaring just as the most powerful phase of the Bear Market prepares to "even the playing field" naturally by destroying most of the wealth created in the preceding Bull Market. As EWI said in 1999, the Bear Market will take care of the distribution-of-wealth "problem." EWI's suspicions are confirmed by NYU researcher Edward Wolff, who has shown that the current wealth disparity is caused by a heavy concentration of stocks and other investments in the hands of the rich and super rich. A rise in the percentage of wealth held by the top 1% in 2008 and 2009, despite the stock market's decline from its 2007 peak, is due to the corresponding decline in housing. "While stock prices fell more than house prices, houses were a much larger share of the gross assets of the middle class than stocks were of the rich," says Wolff. As the middle class exits the housing and stock markets, this line will fall fast. The true relationship is displayed by the bottom line on the chart, which shows the income share of the top 1%; it rose dramatically with the Bull Market from the early 1980s, and fell hard with stocks from 2000-2002 and 2007-2009. As the Bear Market intensifies, the rich will get poorer faster, and the concentration of wealth will follow income downward.


- Elliot Wave International


Well this sort of Information is much more Important than Technical. As Chart patterns May fail at Times.




Happy Minting.


Thanks & Regards,


Harsh Dixit

13 March 2012

THE MISERABLE SHAPE OF THE US ECONOMY - PART I

Hi Friends,

The following article is Excerpted from the recent issues of Elliot Wave Theorist & The  Elliot Wave Financial Forecast published by Elliot Wave International (EWI) the world's largest Market Forecasting Firm.

This is not Technical Analysis but much more important than Technical itself. As I believe in Economic Analysis. And when the Largest Economy in the World is on the verge of breakdown how do one justify the rise in stock prices?

This might be little boring or does not seem relevant to my Indian Friends.. But this is something really worth reading..

If the Economy's "Recovering," Why is the Largest-Ever U.S. City Bankruptcy on the Horizon?

As pundits chatter about an economic recovery, 80 miles east of San Francisco you'll find a city (pop. 292,000) facing bankruptcy: Stockton is on the verge of becoming the largest city in the United States to declare bankruptcy...

Stockton also has one of the nation's highest home foreclosure rates and has been called "Foreclosureville USA."

Yet in recent months investors have been enamored with municipal bonds.
No matter how thick the storm clouds over state and city finances become, the belief in a bullet-proof municipal bond market just seems to grow. As the [chart below] shows, the ratio of AAA municipal bond yields to comparably-dated U.S. Treasury yields rose...in August.


...investors still believe munis are safe, but we'll stick with our bearish forecast...the evidence continues to mount that a change for the worse is underway. Deflation will only accentuate the impact of waning revenue streams, underfunded pension liabilities and bloated labor costs.
- Financial Forecast, Dec. 2011
Other municipalities facing recent bankruptcy include:
  • Jefferson County, Alabama (home of Birmingham)
  • Central Falls, Rhode Island
  • Boise County, Idaho
Jefferson County, Alabama is the biggest U.S. municipality to face bankruptcy; Stockton is the biggest city.


In fact, as of December there were eleven municipal bankruptcies in 2011. Many other cities face extreme financial woes.


- Elliot Wave International


I'm personally working on US  Municipal Bond Market. And recently gone through Stockton's Financials.


With the little knowledge of the Finance & Economics I have I can say the picture of US Economy which is painted as Recovering with all those Good Housing and Jobs Data and blah blah blah is surely not that Rosy.


And there is much more pain left ahead.


For more insights on US Economy read Part - II




Thanks & Regards,


Harsh Dixit.

6 March 2012

SELL ON STALL BEFORE THE FALL

Hi Friends,


S&P 500 Index has finally given the breakdown from that rising Wadge or Ending Diagonal or Terminal Triangle. And the Game has probably begun. So "Sell on Stall before the Fall."
S&P 500
While the Price was making higher highs RSI is losing momentum and making lower highs. The same thing can be observed on DJIA monthly chart. So this is definitely a thing to worry with that package of Euro 500 billion thrown from sky to save the Bankrupts, Good Housing Data and blah blah blah. The real picture may not be so Rosy. 
DJIA
We had already posted the S&P 500 chart showing the outcome of the previous two bailouts. So with that breakdown from the wadge we are giving you the early warning to exit all longs if you cannot dare to sell short. We can at the most witness some sideways action before the final drop.




The European counterparts are also in line for the massacre.


We can see that Germany DAX, UK FTSE 100 & France CAC 40 are similarly poised and are ready to tumble.
DAX
CAC 40
FTSE 100
Our own India Nifty has already started it downward journey. It is just that some local Political Good News can bring some cheer for 2 days and give some odd 100-150 points rally before the final drop.
NIFTY


So message here is to quickly exit losing trades and move on to the next opportunity.




Thanks & Regards,


Harsh Dixit.

3 March 2012

10 QUESTIONS TO ASK BEFORE YOU TRADE

Hi Friends,



Often when we seek answers to combat the chaos of trading, it helps if we ask the right questions.  Read on below for Top 10 trading questions:


1)  How will I enter trades?


The key to good entries is putting on trades where there is relatively low risk compared to much higher reward.  You also should have a clear catalyst for the expected stock move.


2)  How will I exit trades?


You should define an initial stop point for your trade, at the point where the trend is invalidated.  It's also useful to have a 'trailing stop' technique to protect your profits.


3)  What type of orders will I use to enter and exit?

When entering, I like to use limit orders, good for the day only, while exits are often market orders.  Why?  Because limit orders allow me to define my risk and reward clearly on the entry of a trade — while when I need to get out, market orders allows immediate exit compared to the risk of missing my exit with a limit order.



4)  How much capital will I need to trade successfully?


There are economies of scale as you increase the amount of capital you trade with.   Costs related to commissions, quote systems and equipment begin to diminish as the percentage of capital invested goes up.


5)  What percentage of my capital will I invest in each trade?

The amount of capital I typically use is 10% per trade in my own accounts.  I know traders who commit anywhere from 5% of their account per trade to 20% of their account per trade.  Your goal should be to keep portfolio risk per trade at less than 2% per trade (for example if you invest 20% of your portfolio in a trade, a 10% loss on that position would lead to a 2% loss on your portfolio).



6)  How many positions will i focus on at once?


I like to concentrate my portfolio in my best ideas, plus I like to stay focused on how each stock is acting.  If my portfolio is too big (I'd say more than 15/20 stocks can be too many to focus on, but it varies), then I will lose focus and invariably miss an exit on a trade that I should have previously exited.


7)  What will my Trading Journal look like?


In my Trading Journal, I note daily observations, particularly related to my ability to execute my trading plan.  I also commit to doing a post-trade analysis every month.  I note what I did right and wrong, and seek to learn from mistakes to minimize future errors in similar circumstances, while also looking for winning patterns where I seek to repeat big successes.


8)  What is your Position Review process?


Have an end-of-day routine to close your day.  Review your trades, and assess if you followed your plan.  Keep a log of all your trades, and make comments on each position.


9)  What is your Preparation process before trading?


You need defined time to prepare for the next trading day to build up your trading confidence.  I prepare after the close for the next day's trading, which allows me to formulate a plan of action BEFORE I get into the heat of battle.  This keeps my trading proactive instead of reactive.


10)  What broker will I use?


Most traders mistakenly think that commissions are the number one factor they can control.  In reality, commissions are a small cost compared to the broker's effectiveness at executing your trade.  Your focus should be finding a broker who gets you speedy and fair execution of your orders.  Especially with options, the price matters as does the speed of the 'fills'.







Once you have defined these facets of your trading plan, you are in an excellent position to have a strategy to control your emotions when trading and get the edge on your side.  Make sure to review your plan on a regular basis to create effective trading habits.




Trade Well..


Thanks & Regards,


Harsh Dixit.

1 March 2012

S&P 500 LOOKING VULNERABLE. & COULD TUMBLE TO 3 DIGIT NO.

Hi Friends,


Policymakers had been so busy in bailing out Greece & Bankrupt Europe that they could not see whats happening in America. Greece is an old story go short sell America it is going to Collapse like Hell.


I can see some interesting Elliot pattern developing on S&P 500 as well as on DJIA which is really very scary for the Equity Investors across the Globe.  Apart from this with that Engulfing Bullish Candle on Dollar Index and Engulfing Bearish Candle on Euro/USD everything suggesting that all the bets in Equities in the World are going to get off. With that Hanging Man candle formed last week. Warning sign glowing now. And with that Expanded Flat developing on S&P 500 there will be a Bloodbath in all Global Equity Markets.


The low in Aug 2011 at 1100 was the Larger A of this Expanded Flat, and this high of 1378 seems to be the B of the Flat. And the forthcoming C will take S&P 500 below 1000 in next 3-4 months.
There is a rare possibility that S&P 500 to break above this high. And even if it breaks today's high the up move is limited till 1471. The initial confirmation will come below 1340 i.e. upon breaking below this Ending Diagonal or Terminal Triangle (Wadge Shape Pattern) on S&P 500.


Further this another Chart of S&P 500shows you what happened after the previous two Greek bailouts.


Well Fundamentally nothing changed and there is no positive news in Europe. And with this LTRO Policymakers are doing nothing but postponing the Death. More Leverage to these Bankrupts will further worsen the Credit Crisis. The European Economy will continue to go through Recession. The Bailouts are not going to help come out of this Financial Crisis which started in late 2007. The Crisis will continue till 2015-2016. But Within that World will see sets of 2-3 Bull & Bear Markets. The World has already witnessed the 2008-2009 Bear Market and then this Bull Market of 2009-2011. Now after this Down move on S&P 500 during 2011-2012 it will start inching higher and cross this 2012 high in this year itself and will go much higher and also cross 2007 highs till the year 2014. But this is not enough. After crossing the 2007 Highs most probably in 2014 World is going to witness much larger and sharper Decline in 2015-2016. And DJIA will go below the 2009 lows most probably to 3000-4000 in 2016. The Below DJIA chart will help you to know the path over next 4-5 years.




Well this is the first time I've done such Long Term Analysis based on Elliot count. Which could be completely wrong. But All I can say is Buy in Panic and Sell on Euphoria. The Current move on World Indices depicting Euphoria and 1 must book profits if cannot dare to sell short.




Happy Minting..


Thanks & Regards,


Harsh Dixit.