If you still hold short position in Exxon and Crude

Guyz ,

The day I suggested to take a short (Sell) position in Exxon, it peaked out.
You could have gained 18% (3 mnths)
As for Crude Oil the return is 8.5% (3 mnths)

This implies that once you understand the right ways, Stock market Investing can be profitable even in the most difficult times.

It is advisable to book your profits.
Since Oil has already seen a correction of about $ 33.
Though it can very well go below $100, betting against oil may be very risky.

Exxon Mobil overvalued

www.stockcharts.com

its not recession its inflation that can cause disaster!!!

Recessions are generally considered healthy but inflation can be a disaster to the economy. US govt has to take some immediate steps to control inflation.
There is a lot of speculation in the commodity market right now, I expect it to correct itself or will not be surprised to see some action by the govt. to control the commodity speculation.
Atleast there will be some hints from the govt, something like they feel they need to raise interest rates to control inflation.
My call: There is a high probability that at least the Oil bubble is about to burst.

Is it time to Short Oil for the short term ???

You would have made some serious money if you had short INFY on 6th morning!!! So Close your position in INFY

Time to short Short INFY??

Is it the right time to buy??? Wait !!!

DOW 24th March

RIM (Research in motion, blackberry manufacturer),

Finance Trivia

Q: Where does the name "Wall Street" come from?

Q: Rakesh Jhunjhunwala (Indian Investor), net worth around $1.1 Billion, started with a capital of ______

Type of Candlestick (DOJI STAR)

How to use head and shoulders pattern (Read previous articles on head and shoulders before you read this)

Head and Shoulders pattern in the making??

Diana Shipping DSX (Please read previous blogs for better understanding)
For Chart: Click here

Shoulder 1: Mid dec 07, Head: Mid Jan 08, Shoulder 2 Early Feb

Note : This head and shoulder pattern has some flaws:
1) not at all symmetrical. There is a significant difference in the levels of two shoulders.
2)Neckline is downward sloping (Neckline is formed by joining the two peaks in the head and shoulder pattern, see the above fig to understand what is a downward sloping neckline)
3)and some more.

I just want you to track this stock for fun. I just came across this chart and thought it was worth sharing. Keep in in mind this head and shoulders pattern has its flaws, but you never know may be you will see price go up by X. (i.e. around 35). You will find much better head and shoulder patterns than this one if you go through a lot of charts. Its not possible for me to dedicate so much time so I encourage you all to share them on this blog.

What is a candlestick? (What they dont teach You at B-School)

Different types of Charts
Line Chart: Click Here
Bar Chart: Click Here
Candlestick Chart: Click Here

Every Chart has some important information.
My favourite is a Candlestick Chart and You will soon realize WHY!!!

Another Head and shoulders example

Please read : Beautiful Example of head and shoulders before this post.
For Chart Click Here

This may be a little difficult to understand.
Shoulder 1 Oct 07, Head Nov 07, Shoulder 2 Dec 07

The price again goes down by X.

I just want to add a note of Caution, these patterns though may look simple have a lot of complexities involved like:
the volume (Volume generally decreases as the pattern is formed), the slope of neck line, the tendlines, etc.

This post is only to give u an idea that such patterns exist.

If u come across any such pattern, i would really appreciate if u can post it on this blog for further discussions.

Head and Shoulders Pattern

If you look at the DOW weekly line chart. (Weekly chart represents the close of every week. line chart is as shown above and in the link below, the chart posted in my last blog is daily candlestick chart, the blue and white bodies are called candles and hence the name candlestick chart) you will see one of the most beautiful chart patterns called Head and shoulders. Please bear with my poor drawing skills. The above figure will give you a clear idea.
For Chart Click here
you will see a head and shoulders pattern in the period: June 2007 to Jan 2008.
The idea is whenever a head and shoulders pattern is formed (two shoulders and head) if the price goes below the neck line, it will possibly go down by X (X is Shown in the fig above).
I know its complicated, so I request u all again to post ur queries incase u are not able to see a pattern.
Explaining this will become much easier once I get permission to post charts on my blog.

Dow 15th feb

To View Chart Click here : Please open it in new Window.

Dow closed at 12,348.21 just above the 20-Day moving avg, which is a strong support level. In case it would have closed below the 20 day moving average, we could have concluded that the market looks negative. The fact that dow has been able to sustain this level shows a strong support.

But if you look at the volume. The picture looks to be negative. Jan 1st to about 20th Jan the dow saw a big correction and that too with huge volumes ( See charts, dow lost about 1200 points and the volume kept on increasing). After this correction there was a pullback but with lower volumes (this shows there were not many traders who were bullish)

My take : Wait for the DOW to give a signal (upward or downward) if dow breaks the 20 day moving avg. with heavy volume we may see a level of about 12150-12200.
If it moves up from here with good volumes we can see level of 12700.

Varun Malhotra

Seeking permission to post charts.

Hello friends,

I am still in the process of seeking permission to post the charts on my Blog, which will help all of u to understand the analysis better, till then you can visit the yahoo finance links to look at the charts.

Note: The links on my blog will have all the necessary settings and changes in the charts to save your time. Ex: 20 day moving avg line, Indicators such as MACD, RSI, etc.

The technical terminology may sometimes not make sense to new investors.
Feel free to post your queries.

Varun Malhotra

Technical Analysis

Friends,

One reason to start this blog is to share my knowledge of Technical analysis with you all so that everybody can admire the the science behind it.

There is no dearth of critics of Technical Analysis but time and again Technical Analysts have proved its importance. Having said that, I don't mean Fundamental analysis is not as effective as Technical Analysis, being an MBA myself (Olin Business School, USA) I really appreciate the results of Fundamental Analysis and strongly believe that it is the best possible way to value a firm, but the question is, does a normal investor have all the necessary data and time to evaluate a firm Fundamentally?

This is were Technical Analysis comes into picture, following are the advantages of Technical Analysis:

1) The assumption that PRICE & VOLUME discounts everything(Basis of Technical Analysis), helps us to ignore everyday news. Technical Analysis is based on the assumption that the current & past share price have all the information regarding the company.

The question is, would it be right to make such an assumption?

My answer :YES, Consider that a company ABC makes an expansion announcement, if the market believes that this is good news the share price goes up and this rise in price will be supported by high volume of shares traded. So a chartist (Technical Analyst) can clearly see the rise in price and volume on the charts, and without any information of the news comes to a conclusion that there is something positive about the stock. (Remember there are so many indicators that help you decide the right price, its not just Price and volume, but for beginners I feel this would make sense)

2)The ease of performing Technical analysis.
There are many softwares easily available in the market.

3)No need to understand the balance sheets, cash flows & Income statements.

I believe the right Investment strategy is to combine both Fundamental and Technical analysis.
But for people who have other Jobs and cant spend more than half an hour in a day to track the markets, Technical Analysis is the answer to their Investment problems.

I will try to post my analysis of the NASDAQ and DOW as regularly as possible and some particular stocks if time permits, and may be will be able to convince people that Technical Analysis does work. I am myself new to this science, have been practising it for a couple of years, and trust me though it appears to be simple initially it takes 3-4 years of practice to make you a good trader (not an expert)

Note: All these are my personal opinions and should be used for learning only, dont be stupid and make investments based on my opinions. :-)

Varun Malhotra