Friday, 24 February 2017

Commodity-Metals Shares-Are They Breaking Out?

Metals have seen their last highs in mid 2010,Though nifty has rallied to life time highs,metal scrips could not break out upside.
They might have come up with nifty,but I don't call it as a rally.

Copper has been continuously cracking from 600 levels to odd 200 levels till last year,from mid march the stage seems to be set with global rise in demand for copper/aluminium. copper has surged from 280 odd levels to 400 plus in last three has been consolidating and continuously trapping bears.While writing this post it stands tad above 400.Coming back to our metal scrips,they have taken positive momentum from global commodities and seems to be ready for a break out.With IT,PHARMA sectors loosing steam,metals seems to be taking charging of niftys rally towards 9000 levels.

Vedanta-from the merger of sesagoa with sterlite industries,everybody expected this scrip would be a mutibagger,however it fell to the levels of 70 in feb 2016 before seeing steady rise,however it has broke 2015 high of 235 levels and sitting comfortably above 250 levels.This scrip has seen good volumes of buying lately.

Another under rated scrip in this sector is Hindalco,with due respects to the fact that this company hasn't given returns to investors,but charts show positive momentum,a breakout above 190 levels can attract further buying,this scrip can be kept on radar,and can be accumulated on dips.

Nmdc,Hind zinc,jsw steel also look good as per valuations,but they don't actually see aggressive movements in one direction.But they are all worth watching going ahead.

Sunday, 29 January 2017

Algo Trading-HFT Trades-Retail Investors

Dear Readers,am writing this post after a year,this post would highlight the effects of high frequency trades and algorithams on reatil trades.

way back till 2014,market trades were not supervised by algorithams or say softwares,a technical trader would easily track a sucessful break out,many technical indicators would help, i used to use bolinger bands,macd combining with candel stick patterns and ofcourse open interest and p/c ratios in futures segement.All this data helped a lot for retail investors using technical analysis.

Now technology has taken over markets,big players like funds and brokerages having proprietary trading are widely using algorithms,on a normal day 95% of trading is done by softwraes,everything is programmed,Funny part is these programs target technical investors,il try to explain with a example below

say am technical trader and waiting for same break out,i found exide industries breaking 200  intraday (its trading below 200 from past few years),for a technical person its a sureshot buy,and without any further delay i go long on it,as the softwares also display huge green candles with spurt in volumes,so i close the day by accumulating some lots,now all my trades are tracked and it opens gap down next morning with continuos falling till 185 levels intraday,and you wonder how it happend as there were huge volumes with increase in OI.ultimately i realize that it was a false breakout am stuck,so i rush to squareoff and remember i was not only one who went long technically,this rush will further push the scrip down..making all retail longs wash out.

now the challenge is how to identify the real longs? which technical indicator to follow? the answer for this is in fact none.All trades are captured and no way to escape.many of you have felt that as soon as you go long on some scrip it immediately comes down(only 10% chances that you are on right direction)

let me give live example,hope you people remember the BREXIT day,markets opened less than 2% down and all global markets were cracking,all technical indicators showed sell,and nifty broke long term resistance and spurted down,it lead to many technical shorts,now big players manipulated the market and with no volumes nifty cleraed all its early losses.This is only one among many instances.

shall try to explain in next post how zero cost brokerages are taking advantage of these trades using softwares.stay tuned.