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Economic Cycles

Q&A_ Is Dow Jones and global markets ready for a freefall?Namaste! US Markets substantially affect global market and their indices. There are two main indices which I track most often. DJI (Dow Jones) and SPX (S&P 500). I expect it to be in a downfall in the coming weeks/months. I follow a rule of thumb for a reversal (respecting support or resistance) is that it must close below low of the resistance testing candle within the next 3 candles. My understanding says, "there is a >60% probability of prices moving in the candles closing direction if the prices consolidate". Consolidation can happen near the resistance levels. So, it means there is a <40% probability of reversing (respecting resistance) if the prices consolidate. The logic is very simple. If the sellers were powerful enough, the price will fall quickly, whereas consolidation indicates their unwillingness to sell or more buying pressure than selling at the level. So, the 02 Nov candle closed below the level, hence the selling pressure is strong here meaning more probably price will fall. It is my opinion because I said this happens 60% of the time. This could be that 40% when I am wrong. Disclaimer: The above written article is based on my understanding and experience in the markets. Please do your own analysis and/or consult your financial advisor before investing or trading.
TVC:DJIShort
by UnknownUnicorn7637383
2
Q&A_ What is a book value?Namaste! In this article, I am sharing my understanding of the following subjects. Please correct me if I am wrong in any of the mentioned things. 1. Book value is a value of total assets over total liabilities. Means, Total Assets - Total Liabilities. 2. Meaning, the amount available to the shareholders (per share) whenever the company goes into liquidation. 3. Book value highly depends on the nature of business. For banking companies, it is higher because they treat their given loans as assets. Whereas, for IT companies it is very low because their business doesn't require much of the assets like Plant & Machinery (they're not a manufacturing company), etc. They have a lot of employees as their assets, but by definition, employees are not assets since companies do not have control over them. 4. Book value increases/decreases overtime because of the following factors:- a. Asset value decreasing factors: Depreciation (plant and machinery, etc), so as the Cap-Ex (Capital Expenditure). You know, this is a substantial expense, especially for the telecom companies and manufacturing companies, etc. This is not the case for IT companies. For banking companies, increasing NPAs (non-performing assets). Decreasing market price of assets (for e.g. companies that have an intangible asset like "Patents", they are in demand now but soon the technology becomes old and priceless). "Goodwill", goodwill increase or decrease, totally depends on how the acquirer company values and calculates it. b. Liability increasing factors: Loan interest payments (because our total liabilities increase). New loans and provisions, lawsuits (contingent liabilities), etc. 5. So, when the company goes bankrupt, your stock price doesn’t actually become zero. Because, you will be getting something in return due to a book value per share. After secured creditors, debentures, preference shareholders. Fun-fact: Reliance Power shares are still publicly traded because it didn’t liquidate till now. It has a book value of Rs 36.1 per share, mostly coming from assets like land (Rs 5,887 crore), Plant and Machinery (Rs 37,137 crore), etc. 6. The share price is still falling, one reason is that the interest burden is still increasing YoY. Some banks have written it as a NPA, some are still trying to restructure.
NSE:RPOWER
by UnknownUnicorn7637383
4
Chennai Petro - Multi Year BreakoutCant Miss this Breakout !!! Look Closely Counter is breaking multiyear High of Nov 2007 and Oct2017. Forming a Double Bottom as well in this Process. The Oil & Gas Index has also given a monthly Demand Zone Pull and the Index itself is moving +500 Points. This is supporting my logic Should go a Long way if the breakout above 445 sustains. Take entry at CMP 441-445 T1 - 478 shorterm T2 - 557 midterm T3 - 700 Long Term SL - 424 Fundamentals for Value Investors Strong Annual EPS Growth High Revenue and Profit Growth with High Return on Capital Deployed (ROCE) and Low PE ratio Effectively using its capital to generate profit - RoCE improving in last 2 years High growth and High Return on Equity (ROE) with Low PE ratio Effectively using Shareholders fund - Return on equity (ROE) improving since last 2 year Strong Momentum: Price above short, medium and long term moving averages Annual Net Profits improving for last 2 years FII / FPI or Institutions increasing their shareholding
NSE:CHENNPETROLong
by MoneyMentors
Q&A_ Is Adani group in a bubble?Namaste! Adani group is in a bubble, if I consider the following points. 1. Rs 400 to Rs 4000 in a matter of 2 years. This isn't a behaviour of a large-cap stock. 2. The Adani group companies have borrowed hugely. Just look at the debt to equity ratio of Adani companies:- Adani Enterprises: 1.31 Adani Ports: 1.04 Adani Transmissions: 3.16 Adani Total Gas: 0.45 Adani Power: 1.87 Adani Green: 7.70 Adani Wilmar: 0.40 Average debt to equity is 2.275. Debt to equity above 1 is bad. 3. The overleveraged companies will mostly hit hard in a scenario of a recession. The central banks will increase interest rates to fight inflation, which will increase cost of borrowing. Interest rate payments in the over-leveraged companies will keep eating their current as well as future profits. This profits is already decreased because of a recession. You and me (consumers) will spend less on goods and services due to high cost of living, which has already decreased the profit in most of the companies' pocket. 4. Coming recession: Inflation has crossed highest in 4 decades in USA and UK, 3 decades in India, etc. The central banks will keep increasing interest rates to stabilise their respective economies. 5. The political friendship:- The friendship between current ruling party and Adani has been stronger due to the give-and-take relationship in the past. This is one of the reasons why people and investors are betting hard on Adani companies. 6. What should retail people do: A: Stay away from Adani group companies. There are tons of good undervalued companies so why would anyone only want Adani group company? Just because of FOMO (fear of missing out)? then, it's harmful in the long term especially to retail people. You know, the big investors (institutions) has expertise and knowledge to manage their losing bets. But retail people has only option to sell it at a loss. Recession has not been reflected in the Indian stock market now, but the big investors (institutions) will be lowering their stakes in these risky companies once they see weakness. What do you think about this analysis, please let me know. Disclaimer: The analysis I've shared is based on my understanding and experience in the markets. The future can not be predicted only be forecasted based on higher probability of happening. Please do your own analysis and/or consult your financial advisor before trading or investing.
NSE:ADANIENT
by UnknownUnicorn7637383
3
Identifying Institutional footprints using Wyckoff AccumulationHere I am using 63Moons monthly chart to explain how Wyckoff Accumulation works. The Wyckoff Accumulation has 5 major phases. Phase A - Stopping the previous trend Phase A marks the stopping of prior downtrend. The Preliminary Support(PS) indicates that some buyers are showing up but still not enough to stop the downward move. The Selling Climax(SC) is formed by an intense selling activity as investors panic. This is a point of high volatility where panic selling creates big candlesticks and wicks. The strong drop then quickly reverses into a bounce also known as Automatic Rally(AR) as excessive supply is absorbed by buyers. The Secondary Test(ST) happens when the market drops near the SC region testing whether the downtrend is really over or not. At this point the trading volume and volatility tend to be lower. ST generally forms at or above the same price level as the SC, if the ST goes lower than that of Sc one should anticipate new lows or prolonged consolidation. The lows of the SC and the ST and the high of AR set the boundaries of the trading range(TR). Phase B - Building the cause Phase B serves the function of building a cause for new uptrend. Basically the idea is that something cannot happen out of nowhere, that to see a change in price a root cause must first have been built. Generally causes are constructed through a major change of hands between well informed & uninformed operators in an anticipation of the next markup. This institutional accumulation takes a long time sometimes more than a year. As institutions do their due diligence and take their required positions. There are usually multiple STs during Phase B as well as upthrust type actions near the upper range of TR. Early on in Phase B the price swing tends to be wide and accompanied with high volume. As professionals absorb the supply the volume on downswings within the TR tends to diminish. When it appears that the supply is likely to have been exhausted the stock is ready for Phase C. Phase C - Test In Phase C the stock price goes through a decisive test of the remaining supply. In Wyckoffian Analysis a successful test of supply is represented by a spring(shakeout). A low volume spring(or low volume test of a shakeout) indicates that the stock is likely ready to move up. A spring is a price move below the support level of the trading range (which is established by low of STs in Phase A and B) that quickly reverses and moves back to TR. The spring action is very important and ideal because the greater the movement, the more liquidity you will be able to capture and there the more gasoline the subsequent movement will have. Phase D - Trend within range Phase D consists of breakout and confirmation events. After the shakeout event the price should now develop a clear trend movement within the range with wide candles. This is evidenced by a pattern of advances known as Signs of Strength(SOS) on widening price spreads and increasing volume as well as reactions (Last point of Support LPS)on smaller spreads and diminished volumes. During Phase D the price will move at least to the top of the Trading range. LPS in this phase are excellent places to initiate long positions. Phase E - Trend out of range In Phase E the stock breaches the trading range. This phase consists of impulsive and reactive movements and some shakeouts which are short lived. The price here abandons the structure upon which the cause has been built previously and begins a new trend as an effect of the same. Coming to the chart of 63 Moons any pullback near 180-160 is an excellent place to initiate positions. The Phase E is gonna start soon in this scrip. Hope you liked my analysis.
BSE:63MOONSLong
by nishant_bhatt
12
WALCHAND NAGAR IND | Multi Year Triangle Breakout.NSE:WALCHANNAG Walchandnagar Industries Ltd. engages in the manufacture of engineering products. It operates through the following segments: Heavy Engineering, Foundry and Machine Shop, and Others. The Heavy Engineering segment engages in the engineering, fabrication, and manufacturing of machinery for sugar plants, cement plants, boilers and power plants, industrial and marine gears, mineral processing and EPC, petrochemicals, and space, defense, and nuclear power businesses. Walchand Nagar Ind. Technical Analysis on weekly time frame:- 1. Price has rebound from the strong support zone after a breakdown has failed. 2. The Symmetrical triangle is been in formation for the last 3.2 years and the location on the symmetrical triangle is bullish as it has formed around the support zone, so we can say Its extrinsically is bullish in nature and intrinsically too. 3. The Price is been Trading above 200 SMA which is a Bullish sign. 4. The price is been in a range for over 1.5 Decades and is currently at lower range support. Entry Aggrassiv can enter now and safe investors should wait for a retest of the triangle breakout zone it will add more confirmation to it. Target levels and stop-loss is mentioned on the chart. Walchand Nagar Ind. Fundamental Analysis Points:- 1. Company Turned into Net profit after many Years. 2. Revenue is increased and Long Term has been Reduced. 3. EPS is improving Marginally. 4. Although one concern is a reduction in assets. The above information is for educational purposes only, Before acting on any investment idea please do your own analysis and follow proper risk to reward. I Hope you found this helpful. Please like and comment. Keep Learning, Happy Trading!
NSE:WALCHANNAGLong
by SANJAYPATIDAR_
2
Is TCS looks Weak? My answerQ: Do you think TCS looks weak on chart? My answer is "NO" as far as chart is concerned. Remember, it must have nothing to do with the fundamentals. As you can see in the Monthly charts of TCS, their isn't a "single low broken" since March 2020. Let's analyze each Month's lows. Mar 2020: Rs 1506.05 April 2020: Rs 1650 May 2020: 1865.20 June 2020: 1981.10 July 2020: 2079.50 Aug 2020: 2216.45 Sept 2020: 2241.30 Oct 2020: 2492.30 Nov 2020: 2600.05 Dec 2020: 2624.45 Jan 2021: 2879 Feb 2021: 2880 Mar 2021: 2901.80 April 2021: TBC Q: Can we short or will it fall if the monthly low is broken? My answer is nope, absolutely not. The stock is still in uptrend. Trend has more importance than each particular candle's high or low. Therefore, it will require massive selling pressure and/or Fundamental Causes to make the stock fall. Disclaimer: The views expressed in this article is of my own, you're solely responsible for any decision taken in the markets. The analysis I've shared is just for educational purposes only.
NSE:TCSLong
by UnknownUnicorn7637383
4
Q&A_ What is meant to never sell at a loss?Namaste! You must have heard the words of great investor of all time. Mr. Warren Buffett once said, “The first rule of an investment is don't lose . And the second rule of an investment is don't forget the first rule." Losing money means, in simple terms means, selling at a loss . People get fearful and sell when the stock starts falling. There can be unlimited reasons for this happening, we will never going to find it out. What we can do, is just two things: Buy and Sell . As long as our sell price is greater than our buy price, we're not losing: that's our purpose here . It is a very key thing and hard to implement though. I often wonder why the retail people don't sell, when the stock get's them 3 times profit of their buy price. This is also the case with institutions. They don't sell, when the stock gave them 3 times, but they do, when the stock has been came down up to their buying price , and they get happy thinking, that at least I have saved my capital from eroding further. NO brother, you lost opportunity cost. As soon as you sell, some of the great minds and investor buy from you (including WB). It is very very simple logic, but people make it difficult. If you can somehow counter this, a gate to investing success will open. Anyways, look at the stock Tata Steel. Many could have bought it and sold it at a loss, between a very long period of consolidation (i.e. 13 years). Okay, let's assume, you could have bought the stock at around Rs 516 (which is an average of swing highs and lows). Buying at a high is another a very big mistake, but I will explain it any other time. You would be getting a return of (132% price appreciation + 3% dividend yield for 13 years = Total 171% return). That's around 13% annual average returns. Did you lose money? A: Of course, who sold it at a loss, loosed money. But the people who held it for these years, have made 171% return at minimum. Congratulations, you beat the market. I know some people will say me that, why did you chose Tata Steel, why not Rpower, Unitech, Rcom, etc. Well, I couldn't have placed all eggs in one basket. Sure some of the stocks in my portfolio will get negative returns, and even become zero. But, I am 100% sure, than there will many companies in my portfolio, which will be compensating them, and eventually make me money. Important: "Portfolio diversification isn't important to maximize gains, but to reduce risks" . Sure, you can add some risky stocks (like small and micro-cap) to increase your returns, but primary objective here is to reduce risks. But don't overdo it i.e. more than 2-3 companies in a portfolio of 10 companies. And, I have a method which, doesn't allow me to add more of any stock, if it is continuously falling. Disclaimer: The analysis I have shared is based on my understanding and experience in the markets. Investment carries an element of financial risk. Please do your analysis and/or consult your financial advisor before investing. I already have some shares and may/will add more if I get another opportunity.
NSE:TATASTEELLong
by UnknownUnicorn7637383