Bull therapy 101-thread for technical analysis with the fundamentals

(Mehnazfatima) #222

I find a very interesting discussion on the fractal nature of markets.

I too use this system quite extensively in combination with other volatility indicators.

I picked up the details of the multiple moving averages system ( which you refer to as fractal system) from the book by Daryl Guppy.

Guppy calls the bunching of moving averages as convergence of price and value. I view it as collapse of volatility and when combined with other volatility indicators (bollinger bands) and fast momentum indicators…such a system is quite useful in capturing volatility breakouts…

I too have studied technical analysis extensively but with more of a materialistic perspective. I am mostly concerned with two things 1) how to get in at the early stages of uptrend and 2) how to ride the uptrend. With regards to the former, volitility breakout system is of utmost importance. It enables one to make an initial position before the trend begins and then to buildup position as the trend gains momentum. A perfect example of tbis would be sterlite tech which had a volitility collapse @96…

Just put your fractal charts for sterlite tech…and see what a wonderful opportunity it gave to accumulate at 96…

Secondly, since market is fractal in nature…so why not use the multiple moving average s,ystem on longer time frames…weekly, monthly…quarterly. what works soo well on hourly and daily charts should work equally well for longer time frames.

Just try this approach with quarterly charts on aksh optifiber and hcl infosystems…you would notice that these are poised for a volatility breskout on quarterly charts. And a stock which has a breakout on quartrrly charts can keep going up for a quite a number of quarters…and incidentally thats how i would define a muktibagger stock (one which keeps going up for a few years).

So the fractal system / mma system on quarterly charts answers both my questions…just try it on aksh optifibre and hcl info

Discl…i am invested in aksh optifibre and watch hcl info quite keenly.

I would like to discuss another interesting aspect of fractal nature later on…what if there is simultaneous and similar pattern on all the time frames…i picked up the idea from Connie Brown. She says it may lead to a steep / violent breakout

(Hitesh Patel) #223

Great insights. I too use guppy miltiple moving averages on all time frames and in addition to some other patterns have found them to be extremely useful.

(Hitesh Patel) #224

As @Mehnazfatima mentions about his bullishness on hcl info, I tried analysing it on a longer term time frame using EW analysis. (the newly found love :grinning: )

Attaching a chart made using line charts so that the whipsaws are taken out of picture. On looking at charts it seems the wave counts are pretty clear on longer term time frame. How they play out now onwards needs to be seen. (disc; invested as a techno funda bet)

Business wise the management commentary in q3 fy 18 seems encouraging. Company seems to have completed rights issue priced at 47 Rs largely subscribed by promoters. I will share my write up on relevant thread of the stock.

(PE_Ratio) #225

@Mehnazfatima Technically, it looks very strong. Just like Aksh (which is going to break the longterm downtrend line at 42). It broke the 10-yr long downtrend line (green line). Breaking out of the currently formed ascending triangle (red lines, i.e. sustaining above 66) will be a confirmation that wave 3 started.

But I am not able to understand what’s the reason for the upmove. Just a quick look at the financials shows that the company is loss making!

Seems @hitesh2710 got the count right. I have similar count, only that wave 2 will end only at the end of triangle.

(Mehnazfatima) #226

HCL info is now bullish on all the time frames…quarterly…monthly…weekly…and daily

its giving purchase signals on long term investment entry systems suggested by different stalwarts…such as Stan Weinstein…Mark Minervini…Andrew Cardwell (200 day rsi moving above 50 level)…and also on quarterly charts (a system which i use…which works quite well atleast in back testing)…

so those with investible funds should definitely look at HCL INFO

and as if to demonstrate the fractal nature of the market…the stock is placed almost identically…on quarterly, monthly, weekly and daily charts - with respect to Andrews pitchfork
the respective charts… .ususally such convergence is followed by a violent upmove…

hoping for such a move in HCL info too

(PE_Ratio) #227

I agree with that. Wave 3 or Wave (3) tend to be steep, which is where exactly is. What can be steeper than this? Wave [iii] of Wave 3 of Wave (3).

But I don’t see it as fundamentally strong just from a quick look. I’ll start looking deeper into the fundamentals.

(Hitesh Patel) #228

Coming to HCL Info chart, I think the triangle I have posted is a wave 2 correction in the bigger wave 3 which has begun and once the wave 2 in form of triangle gets over there could be a violent move. Triangles usually have very good propulsion force because all this time the stock price has remained compressed like a coiled spring and when it breaks out of triangle the force can be a big violent push.

I had seen this thing long time back in TTK prestige but didnt know much about these things. The only carry home message I took was to look out for long term triangle breakouts which can act as launch pads for strong upmoves

(Mehnazfatima) #229

When different technical systems give a purchase signal at the same time…then it implies that there is some change taking place in the underlying fundamentals of the company.

When the small cap and midcap index is trading at a very high p/e, then all the fundamentally good stocks would have run up. Now money is to be made only in turnaround stocks…ones whose future promises to be very different from the past. Look at and study HCL INFO as a turnaround stock.

(PE_Ratio) #230

Thanks for posting about this company here. Seems extremely good on the chart. I’ll keep it in the wishlist. Will look at the next couple of quarters and see how the numbers turn out.

(sta) #231

@hitesh2710 sir for hikal the stock price should have moved up then done cup and handle and then moved up again. Like a symbol mu. Before this cup and handle it was moving sideways.this is not a classical cup and handle. Don’t you think so?

(Mridul) #232

Good pattern emerging in DCB Bank on 5 yr chart. Stock tested support trendline around 155-160 and rose up sharply. Tested the resistance line around 2-03 and retraced.

Fundamentally good as well!

(Mehnazfatima) #233

I prefer to map long term triangle breakout with RSI indicator. And this is how the quarterly chart of HCL INFO looks with RSI indicator…it gives two very clear breakout levels…

In fact the RSI indocator shows that there may be two triangle breakouts in HCL info…one a shorter term and another a long term…and once the breakout happens, then HCL info may move towards the middle forkline on quarterly charts…

(Pankaj J) #234

I am not able to post the image but is AU Small bank a cup and handle pattern? Time period from 24th Jan to today. today seems to be the breakout.


@pankaj I am posting the chart here

(Agarwala) #236

Gujarat State Fertilizers & Chemicals . . . will it also surge ahead?
GNFC has surged ahead on the basis of good numbers. What can we expect from GSFC? GSFC made a top of 166.4 on 16th January 2018. Then it fell to 113.25 on 6th February. A double bottom was formed during the last week of March. The stock has pulled back to 38.2% levels. For last three trading sessions it seems to have stuck there. The stock is trading above its short term moving averages (see the fractals).

It is a fundamentally strong company with low debt levels and good dividend payout. Good monsoon has been predicted.

I request fellow boarders to comment.

Disclosure: invested

(yourraj) #237

With my Limited Knowledge if taking monthly candle The overall trend is downwards

and since 2006 there is not stong upwards movemnts shown in ADX So My take not so graet movment will be shown on long term .The upward swing if any come that willl last long for short span

Second take taking daily candle

MCAD Showing furthur Bearish cross over which is supported by selling trend in ADX only RSI is showing the reasonable support for buy .
It will have short slip more

(Santosh Dave) #238

@hitesh2710 @Mehnazfatima
Would like to have your views for my academic learning. Cup seems to be formed in Ujjivan Financial from Jan 18 to Apr. Volume but was not dried up at bottom. Is I am looking at Cup correctly?
Equitas results were very good. Can we expect same from this peer, leading to breakout?

(Deltaru) #239

Is this chart of Bhansali engg. Polymer forming cup and handle pattern?

(PE_Ratio) #240

Did an Elliott Wave analysis on BEPL. Seems to me 5 waves up are complete and now correcting in ABC pattern. If this count is correct, then the correction should happen at least until 142.5.

(Mahendra243) #241

a fire at one of its plant will also help i think to see the price in downtrend atleast in short term