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These logics we assume are in positive directions or examples for bullish situations this same logics apply for negative directions or bearish situations.
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Whenever there is a spurt in a stock in price movement unless the high of the stock is crossed do not buy, wait for the stock to retrace from the low to high to at least 50%.
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This should be applicable for Gaps opening in the Indices
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Only 20 % of times it is possible that it retraces 28% and moves in the direction of the opening.
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If it retraces more than 62% from the high than it is likely to move in the opp direction in which it has formed a gap
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Gaps cannot be left unfilled, No one can remove one day from your life, not even a single second, simultaneously whenever the gap is formed it has to be filled .it can take its own time depending upon the price movement.
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One more probability of the Indices movement is it can come up to the previous closing level after a gap opening and from there it can again move to the gap opening direction the probability of this situation is very less and approximation % is not more then 3-5%
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Every stock after giving a positive closing comes to the pivot level the next day.
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Say for example Buyers and Sellers both are using their strength and that particular day the Buyers win and takes the price movement to a positive close, so the next day they come to the previous days average price where they see that are the Sellers being aggressive at that price, the second point is that the previous day when they had outnumbered the Sellers they had to buy at a higher price so to average that they leave their command over the stock and accumulate that at the previous average price ,here if they are unable to sustain previous days average price the game is in the hands of Sellers .This situation can happen 70-75% of the times according to our research.
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In every bull phase there is a short bear phase of 2 and a half days, the movement and the power of this is so fast that it pulls out all the profits which an intermediate investor or a trader has made (intermediate means that one has not entered the rally at the beginning, they have made a late entry in the market). If this phase is for a longer period than expect the trend to change, because buyers if cannot show their strength at a given point of price then they loose their hold on the stock/market.
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Price discounts every thing the major reason why most of the stocks fall on the positive results are that they have already made a price jump in consideration to the results, so now what? Most of the investors get trapped here and buy seeing that there is a superb growth or profit made by the company and often they wonder why is the market reacting weird, the answer is market players knew that this particular stock is going to perform well so they had started accumulating at lower prices so now they have exited the stock because now the story is over for them and therefore the price falls.
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Simultaneously if the quarterly or yearly results are bad or worse than to the stock is holding the price but the price moves up. The company does not fulfill the estimated growth so they get worried and sell of the stock, then to the prices do not fall because some traders feel that there is a loss but the future growth is there in the company and the worse which was going to happen has happened now what? And the price moves up in anticipation
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Considerably when we find the market to move in a one side direction, prior to that it gives the space for the short sellers to exit their positions, which we call as the reverse gear means before a rally of 1000 points there has to be a strong weak rally of 100-200 pts, where the impatient investors and traders exit from their positions. This always happens on a technical confirmation.
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Markets gives the opportunity to ENTRY as well as EXIT at the purchased or the sold price to all, we have to judge whether its an opportunity to exit the positions wisely or foolishly see our portfolios drown.
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Nobody is going to know all the operators in the market, i.e. who is operating which scrip we have to judge by their price movements and then enter or exit.
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Generally at every expiry if the closing week is bullish expect the month was full of short selling and vice versa.
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All high momentum stocks gives a relief rally in the last week for to exit, there are 2 reasons, the options writing is done majority of the times during the mid of the month and they square off their positions and the second is the options are available at highly cheaper price during the last week, so they get enormous amount of returns .The whole game is always in the hands of the operators who have put their liquid cash and bought in the cash market.
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No company ‘s working can jump 10% or slow down by 10% in one single day it is always the sentiment which is created by the traders in the minds of investors or speculators which they always Win.
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Why do always there is a slowdown in the B group stocks after diwali and why they are highly emphasized on and give enormous amt.of returns after July, Because the most of the domestic investors feel that they need to put some amt of money from their parental business into low valued stocks in which they get hand some returns.
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This is where the rumors in the market get running that this XYZ stock is going to reach here, and it does gives u a small hand some returns and fast, but ultimately the investors after making profit in the particular stock, buys another stock and gets stucked , This is where a smart investor liquidates its money and sits on cash.
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Most of the traders who are unknown from the rally where it has started get trapped in Wave 5. I.e. when only small amount of traders pulls the prices of stocks, which attract the unknown traders, and they get stucked .
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We all have to accept that there are two cycles in all phases of life, it is just that the timing of our entry in the cycle should be with the trend, Imagine a person waking up in the mid afternoon and sleeping in the middle of night, ultimately he will find himself in a jinx, where he does not only affect its health but his social as well as financial life.
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So similarly in the stock market Bears and Bulls are two major factors that affect us, if we are in the positive position in a bear market and a short position in bull market imagine what would be the state of our portfolios as well as our minds.
Markets in a sideways market gives no clear cut confirmation on any technical parameters that where would it be headed and before giving a clear direction ,it majority of times gives a fast false signal.
Domestic traders till today believe in the same old fashioned trading and are self contended and happy ,simultaneously whenever there is a alien (FII) participation they get confused and stay back but at a given point of time they do not loose the opportunity to support and short at technical levels ,these traders even use logics with the help of technical price movement
Whenever the market is in an impulse mood i.e above daily levels ,the domestic traders who trade for intraday often get trapped in the opposite direction .
When the market tops out in the short term time frames and falls during intraday with huge pressure ,do not get panicked and short sell at those levels because above 90 % of the times it is observed than the market bounces and comes near to the previous top and or above that just to give a false signal to cut down the positions of shorts and then market falls ,At this point of time the first indication of Sell should be considered vigorously and acted upon to gain a good amt of returns within a short span of time .This indication is only applicable in nifty and not In stocks .Whereas stocks can stay in an overbought zone in smaller time frames as well as daily charts for Months .
Whenever the stochastic parameter stays in an over bought zone above 80 levels and the high of the bar is crossed ,an impulse movement of the stock can be seen with good momentum ,this applies to the stocks which are in an oversold zone below 20 levels ,and here if the low of the bar is crossed the stock is expected to crash with great speed .
Daily charts when come in trend the mood of the investors overcome the mood of the traders which affects the intraday earnings for going in the counter trend trade
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During intraday ,on a gap opening Up ,the low of the first 5 min bar if is not broken within the first half an hour of trade ,one can go long with the stoploss of closing below the First Bar .
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When the market opens with a gap and is conservative by going up and on the first overbought signal when it comes down grab it as an buying opporunity because bulls always buys on dips and are not ready to buy at higher price
When the weekly charts show thier first breakouts and the smaller time frames are very over bought do not be in the opposite direction as the winds have changed and every correction would be considered as an opportunity for the real trend
There are always crossovers of big moving averages on a pullback rally ,which decides that if the
rally is going to last or exhaust ,This decision is always done on a simultaneous crossover of the same moving averages irrespective of thier prices from the previous crossover till the it is wise to be with the trend .
During Intraday if the market has made a new low or New High and the second time if it does not take out that low then the opposite direction trade could be easily taken and simultaneously there are times that market makes a new Nominal high or low and goes in the opp direction the very next time and it is to trap the traders who buy on daily high or low crossed .
