Excellent work done by you. It would help me if you explain the BSL concept using Titan case.
The stock has fallen and has touched lower range of 226. I am aware of the increased import duty on gold as a factor which might affect the stock in short run.
How do we know the near support of the stock from here on. It has crossed the Triple Top at 235 and that point did not give the anticipated support.
Also it would be helpful if you tie-up all the concepts you have covered till now and take a case study of a stock where we can apply all the concepts. Not sure if this is possible.
Thanks for the detailed explanation. It would be nice if you could give the reason for last line where you say â
The stock has to once again touch 240 where one can say that there are more buyers than sellers.
Are you saying this based on double top formed at 240 or there is some other logic.?
If you are referring to 240 double top is it fine to reach a decision because between todayâs point i.e. 242 and double top at 240 (seen during Sep 2012) the space is filled with O and X.?
If you could give your inputs it would make things more clear.
The answer is simple. One has to go back to the basics. You will recall that Point and Figure charting follows the 3 box reversal system. Each box has a price point. In the case of Titan we have chosen each box to represent Rs.5/-. Therefore price is shown as 155,160, 165 etc. When plotting the X or O in each column, at the end of the day you have to ask two questions:
1). If in the X column, did the price rise by one or more box. If yes then you put an X in each box. Suppose the price rose from 260 to 265, then you will put only one X. If it rose by Rs. 20, then you put four Xâs. If the price did not rise, or rose by less than Rs. 5, then the next question.
2). Did the price fall by Rs. 15/-. This is because we follow the three box reversal pattern. Each box is represented by Rs. 5/- so three boxes gives Rs.15/-
Now coming to our case study of Titan. The last price was Rs.225/-. We are in the O column and so at the end of the day we have to ask:
1). Did the price fall to Rs.220/- or more. If the answer is no, then ask the next question.
2). Did the price rise by Rs.15/- or more. If yes then one has to put the X in the respective boxes. As the last price was Rs.225 I added Rs.15/- which gave me Rs.240/-. See the chart today, the stock rose to Rs.242, three Xâs have been put in the X column.
This concept dates back to 1940s when Earnest Staby noted that the markets were bullish at the top and bearish at the bottom. In 1955 A W Cohen created the NYSE Bullish percent indicator that is bearish at the top and bullish at the bottom.(Contrarian)
It is important to understand how a Bullish percent is calculated. I will explain this with an example too in the Indian context.
On the Point and Figure charts stocks give buy signals. A buy signal has been explained by me earlier. A bullish percent is calculated by dividing the number of stocks on the Point and Figure chart which have given a BUY signal within a particular universe of stocks. So, in the case of Nifty, there are 50 stocksand if the number of stocks which have given a buy signal are 25, then the bullish percent reading will be 50 percent.I use the Sensex 100 as the universe of stocks covered are larger.I am maintaining a data base of the Sensex 100 stocks from January 2013. Earlier I used to keep a data base of Nifty, but changed to get a larger coverage.
According to my analysis on 8th January 2013, 84 stocks out of 100 were on a buy signal, i.e 84 percent. Now compare that to 22nd March, 2013, where only 27 stocks out of 100 are on the buy signal. Reading this analysis and comparing it to the state of the market today, one can note how bearish the markets have become. But this indicator tells us to think the opposite, i.e BE GREEDY WHEN OTHERS ARE FEARFUL.
How to use the indicator:
Like what we do for stocks on the Point and Figure charts, the resulting percentage is plotted on a graph from 0 to 100. Each box represents 2 percent. Whenever, the charts show levels above 70 it is time to get ready to SELL, as these levels indicate overbought or high risk levels for further purchases. Similarly when the reading of 30 percent levels and below are reached it indicates oversold levels and low risks for buying.
Today we are at the 27 percent level and hence a good time to enter the stock market and buy selectively, value stocks which are available at cheap or reasonable prices.
If Investors had sold stocks at 84 percent levels in January 2013 and bought at 27 percent levels, imagine the profits one would have made. I did apply this principle, but being a novice did not go the whole hog. I have learned from this mistake immensely and also profited to some extent.
MONTH
JAN HIGH
JAN LOW
FEB HIGH
FEB LOW
MAR HIGH
MAR LOW
SENSEX %
84
64
60
43
40
27
The above table captures the sensex stocks well. In January, 2013 84% of the stocks were on buy signals at the highest point while the same reduced to only 27% in March, 2013.
Make your own analysis and invest safely. The markets are not out of the woods presently. There is support at 5500 where the Nifty will make a double bottom. Let us wait and see.
I have attached an Excel Sheet showing how a Bullish Percent Chart looks. This is for the Sensex 100, BSE PHARMA AND BSE BANKEX. Working on the other sectors too. Will share my findings with all.
Pharma index shows that it has changed to X column and hence it is one of the strongest sectors to be in.
Nice post again. Can you point to the resource which will help us to find the Bullish percent monthly wise or Do we need to find the buy signal for each of the individual stocks in BSE 100 to come up with the percent.
Thank you for your comments. There is no resource available in India. I manually keep track of 100 sensex stocks and note the buy signals for each stock. So, its pure hard work. I do it twice, every Tuesday and Friday.
The hard work pays fast. This keeps me in the loop with most STOCKS/SECTORS and I know their trends too.
MONTH
JAN
JAN
FEB
FEB
MAR
MAR
BSE AUTO
75
42
42
33
58
25
BSE CAPITAL GOODS
79
42
37
21
26
16
BSE CONSUMERDURABLE
88
38
38
0
50
25
BSE REAL ESTATE
77
46
54
31
54
8
BSE FMCG
90
70
60
50
70
40
BSE METALS
92
50
50
8
17
0
THE TABLE ABOVE GIVES A SECTOR WISE ANALYSIS OF BULLISH PERCENT
[quote="onlycastel, post:48, topic:996262942"]
> Hi Anuprem,
>
> Thank you for your comments. There is no resource available in India. I manually keep track of 100 sensex stocks and note the buy signals for each stock. So, its pure hard work. I do it twice, every Tuesday and Friday.
>
> The hard work pays fast. This keeps me in the loop with most STOCKS/SECTORS and I know their trends too.
>
> MONTH | 25
> ---|---
> BSE CAPITAL GOODS | 25
> BSE REAL ESTATE | 8
> BSE FMCG | 40
> BSE METALS | 0
>
> THE TABLE ABOVE GIVES A SECTOR WISE ANALYSIS OF BULLISH PERCENT
[/quote]
Hi Tony,
I took the S&P BSE AUTO Index and tried to find out the bullish percent by referring the P&F chart for each of individual scrips of the index. I found the Bullish percent for March to be 30%.
Here is observation as per my understanding.
Company
Signal
Tata Motors
sell
Mahindra & Mahindra
buy
Bajaj Auto
buy
Maruti Suzuki
sell
Hero MotoCorp
sell
Bosch
sell
Cummins India
buy
Exide Inds
sell
Ashok Leyland
Sell
Bharat Forge
sell
Bullish %
30%
Could you please verify if the above signal for March 2013, for each of the above scrips is fine. As per your table it is 25%. Am I missing some thing.?
Your analysis is perfectly right. Each stock you have analysed is correct. In my list I have Amtek Auto and Apollo Tyres and I do not have Bosch. I will update my list from April. So I have 12 scrips while you have 10. However, it does not make much difference.
Great work and application. Work at it more and more, and you will master it.
Question is when do you start buying? At below 30 (lets say at curret 27) we start buying but it may go to 10 or zero and by that time there can be huge erosion.
When do we start selling? If sold at 70 and market goes to 84, one will miss a lot of upside.
I like when people ask me questions. However, I will not give you a straight forward answer. That I will do it later.
Suppose you like a Smart Phone which was launched earlier in the year at a Price of Rs. 40000/-. Due to various reasons you could not buy it. Now today there is a sale announced for the same phone for various reasons and it is available at Rs. 25000/-. What would you do?
What would have been your reaction if the same phone was purchased by you at Rs.40000/-?
In the same way the stock markets for various reasons announces a SALE of shares are mouth watering prices. So should one buy shares in a sale or pay the full price in a season when the prices are high?
When buying vegetables, fruits, cereals etc., one goes to no ends to find the lowest prices, but when it comes to buying shares, the same principles are given a go by.
Human beings follow the herd mentality. Only a few swim against the tide. That is the reason all are not successful in life.
Peter Lynch in his book âONE UP ON WALL STREETâ makes the following comments on when to buy shares:
" During the collapses,drops, burps, hiccups and free falls that occur in the stock market every few years. If you can summon the courage and presence of mind to buy during these scary episodes when your stomach tells âSELLâ, youâll find opportunities that you wouldnât have thought youâd ever see again. Professionals are often too busy or too constrained to act quickly in market breaks, but look at the solid companies with excellent earnings growth that you could have picked up.
For example HONDA SIEL. The stock was trading at Rs.700/- and today it is available at Rs.390/-. It has Rs.130 cash per share in its balance sheet. (This is not a recommendation to buy).
Do your analysis and buy strong companies based purely on fundamentals and in the long run you can never go wrong.
You all know that we are already in the Summer months and the days are getting hotter with each passing day. We also know that the best Mango season is round the corner. You will agree with me that it is best to eat seasonal fruits. You cannot get the best Apples in Summer nor Grapes for that matter, but you do get the best Mangoes.
Are you surprised that i am talking Fruits when i should be talking of shares on this blog?
Earlier I had written to you about the Bullish Percent analysis and given the data for each Sector. I had also said that it is best to buy stocks in those sectors where the Bullish Percent is below 30. I do agree that no one can time the market, and always be a winner, but by buying stocks in those sector which are below 50 one can only minimize risks of buying stocks at a higher price.
Buying low and selling high is a much better way of making money with stocks. The MARKET is like a super market, and the SECTOR is like a mini super market or mall. Understanding each sector and knowing when they are in a bullish or bearish phase will help you get better returns.
This is what I had written about Astral Polytechnics on 16th May, 2013 under company name Astral Polytechnics:
Since Nov. 2012 till May 2013 the stock has been trading in a range of 330 to 410. After a long time the stock has given a break out and touched a new high of 430 today. It broke out of a triple top at 410 where it was having resistance and then made another double top at 420. Now we can expect another new high if the markets and the results support the stocks journey.
The stock is in strong hands as it is trading above its 50 EMA of 387 and 200 EMA of 345.
Here is the chart for those who want to see the movement.
I accept your congratulations, however it is best to remember that every trade does not work in the market, as Mr. Market has a mind of its own. When fundamentals are backed by Technical Analysis, then the chances of success are always higher. That was the case with Astral.
As for Repco, i will not be able to help you as the stock was recently listed, and hence no data is available. I will take one stock at a time. This time it is ICICI.
If you read my comments of 31st March above, you will note that I give importance to Market as well as Sector. The Bullish Percent of the Market is 69 which is very close to overbought positions. So one should be cautious. With settlement due next week I feel the markets will correct once again. The Banking Sector too is very close to over bought positions and is now 57. So be wary of the above while buying any stock.
Looking at the chart of ICICI it has made a double top at 1220 which is now acting as a resistance. If it breaks 1220 then it can touch 1260 and thereafter make a new high. Presently the stock is trading above the Bearish Resistance Line marked in Red which is a good sign. If the stock reverses from here and falls below 1160 then it can change direction once again and fall to 1120, 1060 and then all the way to 1000 where it will make a triple bottom. If it breaks this support then it can fall all the way to 980 and 880. Below 980 the stock will turn weak again as it will lose momentum and trade below The Bullish Support Line marked in Blue. See chart below:
According to Point and Figure charts, the price objective of Astral Poly is around 590-610. Today Astral makes a new high of 565. Great going for this stock
According to Point and Figure charts, the price objective of Astral Poly is around 590-610. Today Astral makes a new high of 565. Great going for this stock
The stock is near oversold levels and currently in the O column. It has strong support near 134 where it will make a triple bottom. The stock is also close to its 200 EMA of 142. If the stock falls below 134 then it can go down all the way to 128 and then 120 levels. On the up side it will meet resistance at 160, 170 and then 185. The stock has been trading above its Bullish Support Line marked in Blue since Sept. 2012 which is a good sign. Any fall below 134 will make the stock weak once again. Let us hope it does not fall below 134. This week is settlement week and hence markets will be volatile.
