Bhel- Traders Trap at 275 on 4th March 2024 ( Wave Story)Disclaimer:
Trading in financial markets involves substantial risks. Consult your financial advisor before making decisions. This commentary is not a solicitation to buy or sell.
WaveTalks - Market Whispers!, can you hear them
Elliott Wave Analysis Insight
January 30, 2024: 230's to 240's
At the start of the year, BHEL's stock was trading between the 230's and 240's. Investors were cautioned about limited upside potential, especially below the 235 mark. It was predicted that the stock might regress towards the crucial level of 200.
Last Published on 30th Jan 2024
February 13, 2024: Lows of 200
True to the caution, on February 13, 2024, the stock descended to the lows of 200, sparking concerns among investors. However, BHEL managed to maintain its position above 200, offering hope for a potential recovery. A note of caution lingered - any decline below 200 could lead to a deeper plunge towards 165 & 113-120 support zone.
End of February 2024: Triangular Correction Completed
By the end of February, BHEL completed a triangular correction in its ongoing wave sequence. Despite this, caution prevailed as it was observed that Wave-E was truncated, setting the stage for a sharp rally.
March 4, 2024: Surge to 275.85
On March 4, 2024, BHEL's stock surged to 275.85, trapping traders on upside. However, the warning remained clear - maintaining above 200 it can push upside in 225-240's, while breaching 200 spelled trouble, leading to a slip towards 165 and the critical support zone of 113-120.
Post-March 5, 2024: Decline towards 206
Post-March 5, 2024, the stock experienced a decline towards 206, approaching the key support level of 200 in a an impulsive manner.
The familiar tale repeated itself - maintaining above 200 hinted at a potential upswing towards 225-240's, repeating same thing again & again.
while breaching 200 will trouble, leading to a slip towards 165 and the critical support zone of 113-120.
And so, the tale of BHEL continued, with its fluctuations and uncertainties.
From
WaveTalks
(Market Whispers!, Can you hear them)
Abhishek
Wishing you a Happy Holi-day! 🎉
Community ideas
Avanti Feeds LtdThe company is the largest producer of shrimp feed in India with a market share of 45% in the domestic feed business & best technical support to the farmer and caters to the quality standards of global shrimp customers.
Shrimp Feed Business (78% of revenues)
Inverse Head & Shoulders:-
Inverse Head & Shoulders Recovery pattern is marked in yellow along with Target 670 (its also a resistance).
200 EMA on Weekly & Monthly Chart:-
Price is below 200 Weekly EMA (White Line).
Price is below 200 Monthly EMA (Yellow Line).
Both these Weekly and Monthly 200 EMA are approx at 450 level (which is a Strong Buy level).
Fundamentals:-
CMP is more than Book Value, Graham Number & Intrinsic Value.
Stock PE is Less than Industry PE.
Dividend giving stock.
ROCE & ROE Good.
Promoters holding is Good & No promoters are pledged.
Debt is too Less as compare to its reserves, almost a Debt free company.
Piotroski Score is 8 (Good).
Technical:-
Demand Zones are marked as Green shaded horizontal area.
Resistances are marked as red horizontal lines.
Stoploss is marked as orange horizontal line.
Trendline Resistance is Marked & Pink Circles indicate Reversal points from where price fell.
Inverse Head & Shoulders Recovery pattern is seen.
Price is expected to bounce from Demand Zone 1 or Demand Zone 2.
Good Volume is visible along with price accumulating within a zone.
RSI about to take Support at trendline Support which is also at RSI 50 level - which may act as Up Reversal level.
First Entry:-
Buy 490 - 450
Stoploss 400
Tgt 670 - 840 - 975
Second Entry:-
Buy 340 - 310
Stoploss 280
Tgt 450 - 560 - 670 - 840 - 975
This idea is for Educational purpose and paper trading only. Please consult your financial advisor before investing or making any position. Facts or Data given above may be slightly incorrect. We are not SEBI registered.
Getting Started with Technical AnalysisInvesting in the stock market can be both exciting and overwhelming. There are so many stocks and strategies are there that make it hard to decide where to invest. That’s where technical analysis comes in. It’s the study of market data to find patterns, trends, and potential opportunities.
To get started with technical analysis, you need to first understand what exactly technical analysis is.
Technical Analysis:
Technical analysis may sound complex, but it’s actually quite easy. In simple terms, it’s a method of assessing stock or any tradeable asset by studying statistics based on market activity, like past prices and volume.
Technical analysts believe that by analysing charts and other indicators, they can identify and predict market trends for any security. Essentially, they study a stock’s trading history to measure its potential for future price changes.
Let’s understand this with an example:
Let’s make a comparison to weather forecasting.
Can we predict the weather for the future? Yes.
Is the weather forecast always 100% accurate? No.
Weather forecasts are applicable over a period of time rather than being precise second by second.
Similarly, just like meteorologists use past weather data and atmospheric patterns to forecast future weather conditions, technical analysts utilize past price and volume data to predict future stock prices.
How You Can Start Technical Analysis of Stocks?
To begin with technical analysis, the first step is selecting a security for analysis. This can include stocks, commodities, currency pairs, or any other tradable financial instrument available on an exchange. Once you have decided on the security, the next step involves studying its price and volume data.
A widely used tool in technical analysis is the price chart. It provides a visual display of a security’s price changes over time. Price charts come in various types, with the candlestick chart being the most popular and commonly used option.
Candlestick charts offer wide information in a single platform. Each candlestick represents a specific time period, like a day or an hour. The body of the candlestick indicates the security’s opening and closing prices within that timeframe, while the wicks or shadows represent the highest and lowest prices recorded during that period.
By studying these candlesticks, traders can identify patterns and trends in the price movements of the stock.
Along with price charts, traders use various technical indicators to analyse securities. These indicators are mathematical calculations derived from the price and volume data of a security. They give signals that confirm trends, identify potential buy or sell signals , and provide additional information to traders.
Some popular and commonly used technical indicators are moving averages , relative strength index (RSI) , and Bollinger Bands , among others. These indicators help traders to judge market conditions, identify potential price reversals or trends, and help to take trading decisions.
Dos and Don’ts to follow when starting Technical Analysis:
Do’s:
A Volume is an important tool for technical analysis. High trading volume suggests a strong trend, while low volume can indicate a lack of buyers and sellers in security.
Traders mostly confirm trends and signals by using multiple indicators. With one or more than one indicators, a trader can become more confident in a potential trade. This approach allows for a thorough analysis of different aspects of the market, increasing the chances of making informed trading decisions.
One of the most important tips to remember is that while technical analysis can assist in identifying potential trades, practising effective risk management is essential.
Risk Management involves implementing stop-loss orders and ensuring that you don’t risk more than a certain percentage of your portfolio on any single trade. With the help of these risk management techniques, you can protect your investments and maintain a disciplined approach to trading.
As the price of stocks is changing every time, you need to stay updated with news and investments that can impact your investment.
Don’ts:
While technical analysis can look complex, it’s important to avoid difficult things. Stick to the fundamental principles and strategies, and you should be on the right track. Sometimes, simplicity is the key to effective analysis and decision-making in the stock market.
While technical analysis is important, it shouldn’t be the only way to evaluate securities. It’s also important to consider fundamental analysis , which involves looking at a company’s financial statements and economic factors. By using both technical and fundamental analysis, investors can get a better overall understanding of the securities they are analysing.
Trading can involve emotional decisions, but it’s important to let no emotions cloud your judgment. Stick to your trading strategy and avoid making impulsive trades driven by fear or greed. By maintaining discipline and adhering to your predetermined plan, you can make more rational and informed trading decisions.
When you’re taking potential trades, it’s important to think about the risk-reward ratio . This means comparing the potential profit with the potential loss.
With a good risk-to-reward ratio, you can make smarter decisions and aim for a good balance between R:R in your trading strategy.
Conclusion:
Technical analysis is a great tool for traders and aspiring investors in the Indian stock market. It helps identify potential opportunities by analysing price and volume data, allowing traders to recognize patterns and trends. However, it’s important to follow certain guidelines when using this approach. With the help of candlestick patterns , indicators, risk management tools, and fundamental analysis traders can achieve their financial goals.
BANKNIFTY Intraday Trade Setup For 18 Mar 2024BANKNIFTY Intraday Trade Setup For 18 Mar 2024
Bullish-Above 46810
Invalid-Below 46700
T- 47375 47855
Bearish-Below 46300
Invalid-Above 46410
T- 45750 45220
BANKNIFTY has closed on a bearish note last week with 2.6% cut last week. Index is at 50 EMA in daily TF. If at all index has to take support from this zone then we will wait for a bullish price structure atleast in hourly TF while it has to regain 47000 to gain bullishness. Below 46300 index may give a sharp downside as it hourly trendline support. 45660 is another big level for a larger slide.
Coming to Monday's trade setup, if index opens flat and a 15 Min candle closes above 46810 then we will long for the target of 47375 and 47855.
For selling we need a 15 Min candle close below 46300. T- 45750 and 45220.
In case of a big gap up/down, wait till 10 o'clock and mark the high and low of the trading range (5MIN). Trade on this range breakout.
==========
I am Not SEBI Registered
This is my personal analysis for my personal trading. Kindly consult your financial advisor before taking any actions based on this.
#Nifty directions and levels for March 18th.Good morning, friends! Here are the directions for March 18th: The global market trend remains structurally moderately bearish, supported by the Dow Jones, while our local market sentiment also indicates a moderately bearish trend. It might open with a neutral to a slightly gap-down start, as suggested by Giftnifty, showing a -30 point.
Nifty has a range-bound structure, but the trend suggests correction. So, if the market breaks the previous low, then we can expect further correction. However, that is the final wave of correctional impulse, so if it finds support around 21867 or 50%, then we can expect a minimum of 23 to 38% pullback. On the other hand, if it consolidates or breaks the level of 50%, then the correction will continue further.
Alternatively, if the gap-down doesn't sustain or if it takes a sharp bounceback initially, then it may continue the range further, and we can expect a minimum level of 22146 to 22244.
AXISBANK : Opened a position for about 0.625% of the net capitalFundamental Analysis:
Axis Bank, a prominent player in the Indian banking sector, is currently showing promising signs in terms of price and earnings forecasts according to analysts. However, revenue forecasts are not as attractive. Despite this, the financial health of the bank instills confidence among investors.
One notable aspect is the distribution of share ownership, where the majority is held by institutional investors such as mutual funds (21.43%), DIIs (7.40%), and FIIs (54.68%). The remaining 8.29% is held by retailers, with 4.05% being held by high net worth individuals (HNIs). The concentration of ownership by smart money, including institutional investors and HNIs, signifies strong support for the stock. Notably, this ownership is increasing quarter-over-quarter, indicating growing confidence in the company's prospects.
Moreover, Axis Bank has established partnerships with numerous corporations, serving as the primary bank for the salary accounts of their employees. This strategic positioning allows Axis Bank to tap into a stable customer base, enhancing its revenue streams and solidifying its market presence.
As the fourth largest private sector bank in India, Axis Bank holds significant market share, particularly in credit cards and merchant acquiring services, which positions it well within the industry.
Technical Analysis:
From a technical perspective, Axis Bank's stock price has recently touched the bottom trendline of an ascending channel, suggesting a potential bullish move. There is a potential increase of approximately 10.38% to reach the all-time high, with a further upward potential of about 17% to the upper trendline of the ascending channel.
Considering this technical setup, a decision has been made to enter a position equivalent to 0.625% of the net capital. Further accumulation may be considered if the stock consolidates around current levels in the near future. But I do realise that there is a possibility for the price to rally from the current levels itself, without providing a second entry opportunity.
If the market crashes, additional accumulation may be considered at potential support levels.
If my perspective changes or if I gather additional fundamental data that influences my views, I will provide updates accordingly.
Thank you for following along with this journey, and I remain committed to sharing insights and updates as my trading strategy evolves. As always, please feel free to reach out with any questions or comments.
Other posts related to this particular position and scrip, if any, will be attached underneath. Do check those out too.
Disclaimer: The analysis shared here is for informational purposes only and should not be considered as financial advice. Trading in all markets carries inherent risks, and past performance is not indicative of future results. It's essential to conduct your own research and assess your risk tolerance before making any investment decisions. The views expressed in this analysis are solely mine. It's important to note that I am not a SEBI registered analyst, so the analysis provided does not constitute formal investment advice under SEBI regulations.
NATCO PHARMA AnalysisFOR LEARNING PURPOSE
NATCO PHARMA- I am going to buy this stock because of the reasons as follows-
1. Its coming out from a good consolidation
2. The breakout candle is good with great volume
3. Now it is retesting that breakout zone of last 2Y
4. It is showing better relative strength as it stood strong in volatile times
5. The risk and reward is favourable
6. The company has declared Positive results for the last 4 consecutive quarters
7. Coming out from Stage 1 so it has more upside chances as Stage 2 will start now
8. This company has been a underperformer for a long time but its trying to change now
I am going to buy this on Monday with minimum target of 35-40% and then will trail after that.
My SL is at 826.20 rupees
I will be managing my risk.
IREDA LONGThe Elliott Wave analysis indicates that the stock has finished waves (i) and is nearing the end of waves (ii), which are shown by blue numbers on the daily chart.
Wave (i), also known as the impulse wave, unfolded into five waves, which are illustrated in red.
Wave (ii), also known as the corrective wave, unfolded in an a-b-c pattern, as indicated in red.
Wave c of wave (ii) is unfolding in five waves, as illustrated in the black circle. It appears that wave 5 in the black circle is still unfolding.
It is a buying opportunity on the downturn (dip).
Wave (3) will begin following the completion of wave (ii).
Wave (3) is expected to have around five subdivisions, which are highlighted in red.
Wave levels are depicted on the chart.
Level of Invalidation
The invalidation level of 50 has been identified as the starting point for wave (i). If the price falls below this level, it means that the projected Elliott Wave pattern is not as it appears.
I'm not a registered Sebi analyst. My research is done solely for academic purposes.
Please consult your financial advisor before trading or investing. I bear no responsibility for your profits or losses.
Regards, VJ.
BANK NIFTY.... THE FINAL EUPHORIA....As per Elliot's wave pattern on the downside, Bank nifty is currently moving in the 4th wave.
The structure formed is one of the classical patterns of wave 4 - A horizontal flat.
We have had enough volatility recently (again, a classic of wave 4), and now it looks like the final leg of wave 4 is ongoing.
We could see a resistance trendline from which Bank Nifty fell thrice. We expect a bigger fall (wave 5) soon in the Bank Nifty chart.
Bank nifty can fall to 45000-45500 levels, and I'm expecting a decent rally from there (a curtailed wave 5 resulting in a larger trend resuming in the opposite direction).
Keep cash ready to invest at the right time (maybe around 45000 levels). Not an intraday trading idea; place appropriate stoploss.
COFORGE moving into supply zone short termStock has rallied good in the recent month and started making zigzag zone and at the same time struggled to make a higher high indicating signs of weakness , the rising wedge and a rounding bottom within it supplementing the weakness bias . Momentum indicators signalling diversion and not much market participation ( possible signs of distribution during the zig zag move )
Time cycle is fresh and a breach down here could trigger inversion , keep a watch on this counter for short term weakness at the break of recent support zone (highlighted in amber)
Note : Slight thought, it could loiter around for a while or possibly make weak upmove a bit before breaching the support zone
KIRLOSKAR BROTHERS ANALYSISFOR LEARNING PURPOSE
KIRLOSKAR BROTHERS- I am going to buy this stock because of the reasons as follows-
1. Its coming out from a good consolidation
2. The breakout candle is good with great volume
3. It is showing better relative strength
4. The risk and reward is favourable
5. It is at fair valuation plus has healthy long term growth
6. Coming out from Stage 2b so it has more upside chances
I am going to buy this on Monday with minimum target of 35-40% and then will trail after that.
My SL is at 918.60 rupees
I will be managing my risk.
Trade/Investment Idea In ICICIPRULIFE (on Weekly Chart)STRENGTHS:
Strong Momentum: Price above short, medium and long term moving averages
Company with Low Debt
Company with Zero Promoter Pledge
Near 52 Week High
WEAKNESS:
Poor cash generated from core business - Declining Cash Flow from Operations for last 2 years
Declining Net Cash Flow : Companies not able to generate net cash.
OPPORTUNITY:
Decrease in Provision in recent results
THREATS:
Companies with growing costs YoY for long term projects
High PE (PE > 40)
Promoter decreasing their shareholding
Quick Results Snapshot:
H1FY24 Bi-Annual Result Announced for ICICI Prudential Life Insurance Company Ltd.
ICICI Prudential Life Insurance Company announced H1FY24 results:
ICICI Prudential Life Insurance has registered a 27% growth in its Profit after Tax (PAT) to Rs 4.51 billion for H1FY24
The Value of New Business (VNB) stood at Rs 10.15 billion with a VNB margin of 28.8% for H1FY24
The total Annualised Premium Equivalent (APE) for the Company stood at Rs 35.23 billion, with minimal concentration risk from any single distribution channel.
In H1FY24, the retail protection business segment APE grew by 73.7% YoY, resulting in a protection mix of 20.8% of overall APE.
The Company’s retail New Business Sum Assured (NBSA) grew by 52% YoY to Rs 1.1 trillion in H1FY24. The total NBSA stood at Rs 4.9 trillion in H1FY24.
The 13th-month persistency ratio improved by 100 bps to 86.9% for H1FY24. The 49th month persistency ratio, improved by 220 bps to 65.8% for H1FY24.
The Assets Under Management (AUM) grew by 11.3% YoY to Rs 2.7 trillion on September 30, 2023.
Anup Bagchi, MD & CEO, ICICI Prudential Life Insurance said, “We serve a crucial societal need of providing financial security to millions of families by helping them achieve their protection, retirement, health, and long-term savings goals. In H1FY24, our VNB stood at Rs 10.15 billion, with a margin of 28.8%, while PAT grew 27% year-on-year to Rs 4.51 billion. We are focused on growing the absolute VNB with the help of our 4D framework comprising Data analytics, Diversified propositions, Digitalisation, and Depth in Partnerships, to develop quality business in a risk-calibrated manner.
The retail protection business, which faced supply-side challenges in the past has come back on track. The retail protection APE registered a strong YoY growth of 73.7%, resulting in a total protection APE of Rs 7.34 billion in H1FY24. We believe protection, given the under-penetration in the country, presents a significant growth opportunity for us.
Persistency is the most effective indicator of the quality of sales and customer experience. Our 13th and 49th-month persistency ratios in September improved by 100 bps to 86.9% and 220 bps to 65.8% respectively. The customer’s continued trust in us is reflected in the improvement in persistency ratios across all cohorts.
We recently launched the first-of-its-kind ‘ICICI Pru Stack’, a set of platform capabilities encompassing digital tools and analytical abilities. We believe the key to market expansion is in getting the customer-product-channel equation correct – the right product to the right customer at the right price through the right channel. The ICICI Pru Stack has facilitated customer segmentation, enabling us to extend ‘Term By Invite’ and ‘Insurance By Invite’ offers to customers, besides providing them with an end-to-end digital fulfillment journey from buying to claim settlement. The Stack has enabled the Company to issue ~20% of the policies on the same day for the savings line of business.”
SHAREHOLDINGS:
Icici Bank Limited PROMOTER 51.2 %
Prudential Corporation Holdings Limited PROMOTER 22.1 %
Camas Investments Pte. Ltd. FII 1.8 %
Government Of Singapore FII 1.6 %
Compassvale Investments Pte. Ltd. PUBLIC 2.0 %
Sbi Arbitrage Opportunities Fund DI 2.0 %
Icici Prudential S&P Bse 500 Etf DII 1.0%
Thats all for now.
N.B : I wanted to emphasize that the views I express are strictly personal and should not be construed as advice. It is crucial to consult with your financial advisor before making any trades or investment decisions. The complexity and unpredictability of financial markets underscore the importance of seeking professional guidance tailored to your individual financial circumstances and goals.
Double Bottom & Double Top Patterns and How To Trade Them👋 Hello Trading community and my friends so today i came here with an educational post hope you like my work mates, In technical analysis quite often we hear about Double bottom and Double top patterns so today i am sharing that in very simple and easy to understand way. Although a lot can be understood from the idea's image alone but for those who are new to technical analysis i am explaining them by the description below.
⚪ Double bottom pattern-:
It is a bullish reversal pattern that typically occurs at the end of a downtrend. It consists of two distinct lows at approximately the same price level, separated by a peak in between. Here's how you can identify and trade on a double bottom pattern:
⭐️Identify the Pattern- Look for two consecutive troughs (low points) in the price chart, with a peak (high point) in between. The lows should be roughly at the same price level, forming a "W" shape.
⭐️Confirmation- After identifying the double bottom pattern, it's important to wait for confirmation before entering a trade. Confirmation can come in the form of a breakout above the peak that separates the two lows. This breakout should ideally be accompanied by an increase in trading volume, signaling strong buying interest.
⭐️Entry- Once you have confirmation of the pattern, you can enter a long (buy) position. Some traders prefer to enter immediately after the breakout above the peak, while others wait for a pullback to the breakout level before entering to improve risk-reward ratios.
⭐️Stop Loss- So there are no particular definition of stop loss after the activation of trade because it totally depends on a trader's setup some takes below resistance close or trigger basis and some can take below the recent swing low and maybe there are some more ways too.
⭐️Target- Determine a target price based on the height of the pattern. Measure the distance between the lowest point of the double bottom and the peak, and then add this distance to the breakout level. This gives you a potential target for your trade.
⚪ The double pattern-:
it is another common technical analysis pattern observed in financial markets, often signaling a potential reversal of an uptrend. The double top pattern typically occurs after an extended uptrend in the price of an asset.
⭐️Identify the Pattern- It consists of two consecutive peaks (or tops) at approximately the same price level, separated by a trough (or valley) in between. The peaks resemble the letter "M" on the price chart.
⭐️Confirmation- Traders typically look for confirmation signals to validate the pattern, such as a break below the trough between the two tops, increased volume during the breakdown, or other technical indicators like bearish divergence on oscillators such as the RSI or MACD.
⭐️Entry- Enter a short trade after confirmation, preferably when the price breaks below the trough between the two tops. Some traders may wait for a pullback to the breakdown level before entering to improve risk-reward ratios.
⭐️Stop Loss- So as i said above for the double bottom stop loss now telling the same for it too that it depends on trader to trader setup that some can take stop loss above resistance on closure or trigger basis and some can take above recent swing high likewise.
⭐️Target- Set a target for your trade based on the height of the pattern, which is the distance between the peak and the trough. Additionally, consider other support levels or Fibonacci retracement levels as potential targets.
⭐️Remember that no trading strategy is foolproof, and it's essential to combine the Double bottom & Double top patterns with other forms of analysis for better accuracy and risk management.
⭐️Risk Management- Always manage your risk by sizing your position appropriately and setting stop-loss orders. Additionally, consider the overall market conditions and use other technical indicators to confirm your trade decision. As always, combining technical analysis with proper risk management and market understanding is crucial for successful trading.
⭐️Exit- Exit the trade when your target is reached, or if the price shows signs of reversing. Pay attention to other technical indicators or chart patterns that may suggest a change in market sentiment.
My Setup-: So after the confirmation usually i take retest entries to minimize my risk for these type of trades and somehow retests gives me more confirmations too of the strength of breakout, And one more thing i use and that is RSI indicator with default settings for these type of trades provided by Trading View so thank you very much to them. Stop loss i take on closing basis above or below on support and resistance. This is educational post so no logic to update this idea but still then if i will get any good example i will provide that via update. Thanks for reading and giving your valuable time.
Best Regards- Amit
“I get real, real concerned when I see trading strategies with too many rules (you should too).”
Larry Connors
HOW-TO use the Fundamental Strength Indicator? (full guide)Below is the complete instruction on how to use the Fundamental Strength Indicator .
Part 1: The Fundamental Strength of the Company
To understand what it is for, let's imagine that you manage a long-distance running team, and you need to recruit a team of excellent athletes. However, you don’t even know the names of these athletes or their contract amounts. You only have information about their health and athletic performance: hemoglobin and iron content in the blood, maximal oxygen consumption, steps-per-minute rate, speed, age, etc. Each player has their own large table with different parameters. And you have, let’s say, a thousand tables like that.
If you spend 3 minutes studying one table, it will take you 50 hours to analyze all the tables, which is just over 2 days of continuous work. And how long would it take to compare each athlete with the rest? Approximately 2 years of continuous work.
This is obviously no good, that is why you take a computer, enter all the data from the tables and start thinking about how you can reduce the time to compare one athlete with another. As a result of your brainstorming, you come to the following conclusions:
— Each parameter has its range of values, which can give you an idea of whether an athlete is suitable or not suitable for a marathon.
— The parameter may have its dynamics: it may increase from month to month, stay the same, or decrease.
— Each parameter can be assigned a score.
For example, the step-per-minute rate can be:
— 175 and above (+1 point)
— 165–174 (0 points)
— 164 and below (-1 point)
And you do that with each parameter.
What are these points for? To convert indicators that use different units into one measurement system. Thanks to this method, you can now compare apples to oranges.
Then, you sum up all the points per month and get one single number — let's call it athletic strength. You like your thought process, and you apply this algorithm to every athlete’s table.
Now, instead of dozens of parameters per month, you have one number (athletic strength) for each athlete. It looks like your task has been dramatically simplified. Next, to study the dynamics of athletic strength from month to month, you “ask” your computer to create a plot for each of the athletes.
This chart shows that Athlete #1's athletic strength has fluctuated chaotically in the first three quarters of 2022, possibly due to the lack of regular training. But then you observe a positive trend, where athletic strength has grown from month to month. It seems like the athlete has taken up training.
Then, to compare one athlete with another, you “ask” your computer to add the average value of athletic strength over the past six months (average pre-competition training period) to the existing plot. Now, you can use the most average recent value as a weighted score of athletic strength and compare athletes with each other based on this value.
Thanks to this solution, you accelerate the analysis process by a magnitude: one athlete – one number. It appears that you can then simply sort the table by the highest athletic strength weighted score and consider the best athletes. However, not wanting to sort the table every time the data is updated or when you get new athletes, you make a better decision.
The logic behind the points system implies that there is a maximum and a minimum possible number of points that one athlete can get. This allows you to create ranges of scores for athletes with excellent, mediocre, and poor training.
For example, let’s say the maximum is 15 and the minimum is -15. Athletes with a score of 8 to 15 will be considered as strong, 1 to 7 – mediocre, and 0 to -15 – weak.
That’s it! Now, thanks to this gradation, you can simply check which range the weighted athletic strength falls within, and decide whether each athlete will be admitted to the team.
I believe that now your primary selection will take no more than one working day (including a lunch break).
Now let's mentally replace athletes with public companies. Instead of data on health and athletic performance, we will have data from the companies’ financial statements and financial ratios.
Applying a similar algorithm, we will get the fundamental strength of the company instead of athletic strength.
I think it's time to show the Fundamental Strength Indicator . Let's launch! What do we see?
— First, it is a Histogram with bars of three colors: green, orange, and red. The width of the histogram depends on the depth of data from the company statements. The more historical data, the wider the histogram over time.
The green color of the bars means that the company has been showing excellent financial results by the sum of the factors in that period. According to my terminology, the company has a “strong foundation” during this period. Green corresponds to values between 8 and 15 (where 15 is the maximum possible positive value on the sum of the factors).
The orange color of the bars means that according to the sum of factors during this period the company demonstrated mediocre financial results, i.e., it has a “mediocre foundation” . Orange color corresponds to values from 1 to 7.
The red color of the bars means that according to the sum of factors in this period of time, the company demonstrated weak financial results, i.e., it has a “weak foundation” . The red color corresponds to values from -15 to 0 (where -15 is the maximum possible negative value on the sum of factors).
— Second, this is the Blue Line , which is the moving average of the Histogram bars over the last year (*). Averaging over the year is necessary to obtain a weighted estimate that is not subject to medium-term fluctuations. It is by the last value of the blue line that the actual Fundamental Strength of the company is determined.
(*) The last year means the last 252 trading days, including the current trading day.
— Third, these are operating, investing, and financing Cash Flows expressed in Diluted net income. These flows look like thick green, orange, and red lines, respectively.
— Fourth, this is the Table on the left, which shows the latest actual value of the Fundamental Strength and Cash Flows.
Indicator settings:
In the indicator settings, I can disable the visibility of the Histogram, Blue Line, Cash Flows (each separately), and Table. It helps to study each of the parameters separately. It is also possible to change the color, transparency, and thickness of lines.
The movie Moneyball was released in 2011, where Brad Pitt plays the role of Billy Bean, the sports manager of the Oakland Athletics baseball team. With a small budget, he managed to assemble a high-scoring team based on the analysis of player performance. As a result, this approach was applied by other teams in the league, and Billy Bean received massive recognition from the professional community.
Part 2: Benchmark Business Model
One day, when I had already grasped the concept of the Fundamental Strength of a company, I was returning home from vacation. I was in a taxi and the driver was listening to an audiobook. As the drive took longer than an hour, I had nothing to do but listen to the story. I liked the content. It was a fictional novel with a plot centered around the main character named Alex Rogo. He is a manager of one of the three enterprises of the UniCo corporation.
Even though Alex spends all his time and energy on work, things are not going very well for the company: over the past six months, the company has only had losses. This leaves Alex's executives no choice but to give him an ultimatum: if he can’t radically improve the situation in three months, the enterprise will be shut down, and he will be left without a job. At the same time, Alex's wife is tired of her husband’s absence in her personal life, so she decides to leave him. Anyway, the story's beginning turned out to be very dramatic, and I wondered how Alex would cope with all this.
Luckily, in this stressful time, he meets his former physics teacher Jonah, who now consults companies regarding efficient production. Alex tells his old acquaintance about what’s going on and how he managed to increase labor productivity at the enterprise after purchasing new robots. However, the losses continue to hang over his head like the sword of Damocles.
After listening to Alex's story, Jonah wisely suggests that the problem with his enterprise lies in the management is concerned about anything but the main goal of their business, which is creating money or profit. Jonah explains to Alex that all management ideas related to expanding the sales market, using new technologies, or improving product quality can lead the company to a disaster if fundamental things are not considered. In his opinion, management should only focus on three indicators:
— Throughput , which is the rate at which a company makes money through sales.
— Inventory , which is all the money invested by the company in assets: premises, equipment, patents, raw materials, etc.: that is, in something that can then be sold.
— Operational expenses , which are all the money a company spends turning investments into cash, or something that can’t be sold, such as the salary of employees, the cost of rent, payment for delivery services, etc.
Thus, the management’s job is to make improvements that will ultimately lead to an increase in Throughput and a decrease in Inventory and Operational expenses.
For example, Alex’s purchase of robots to increase the number of products produced has led to an increase in production. However, suppose you look at it through the prism proposed by Jonah. In that case, we actually have the following picture: Inventory has increased, Operational expenses have not decreased (no one has been fired), and the robots can’t contribute to sales growth in any way (the Throughput is not increasing). As a result, this was not an improvement, but a deterioration.
The accumulation of such bad decisions eventually leads to the unprofitability of the company. Conversely, continuous improvements that will increase the Throughput and reduce Inventory and Operational expenses will inevitably lead to achieving the main goal – making money.
After I got home, I tried to find this book on the Internet. It turned out that it was written by physicist and philosopher Eliyahu M. Goldratt back in 1984. The novel is called The Goal .
That’s when I realized that if the company's management adheres to the approach described by Goldratt, then after a while, we will most likely see a fundamentally strong company. And the Fundamental Strength Indicator clearly shows how much the management has succeeded along this path.
For example, according to Goldratt, an increase in Throughput should lead to an increase in Earnings per share (EPS) and Total revenue . The reduction in Inventory may be linked with a decrease in Inventory to revenue ratio . Optimization of Operational expenses will definitely reduce the Operating expense ratio . All these parameters are considered when calculating the Fundamental Strength of the company.
So, let's move on to the methodology for calculating the Fundamental Strength Indicator.
The main idea that inspired me to create this indicator is: "Even if you buy just 1 share of a company, treat it like buying the whole business" . Guided by this approach, you can imagine what kind of business an investor is interested in owning and simultaneously determine the input parameters for calculating the indicator.
For me, a benchmark business is:
— A business that operates efficiently without diminishing the return on shareholders' investment. To assess the efficiency and profitability of a business, I use the following financial ratios(*): Diluted EPS and Return on Equity (ROE). The first two parameters for calculating the indicator are there.
— A business that scales sales and optimizes its costs. From this perspective, the following financial ratios are suitable: Gross margin, Operating expense ratio, and Total revenue. Plus three other metrics.
— A business that turns goods/services into cash quickly and does not fall behind on payments to suppliers. The following financial ratios will fit here: Days payable, Days sales outstanding, and Inventory to revenue ratio. These are three more metrics.
— A business that does not resort to significant accounts payable and shows financial strength. Here I use the following financial ratios: Current ratio, Interest coverage, and Debt to revenue ratio. These are the last three parameters.
(*) If you are keen to learn more about these financial ratios, I suggest reading my two articles on TradingView:
Financial ratios: digesting them together
What can financial ratios tell us?
Next, each of the parameters is assigned a certain number of points based on its last value or the position of that value relative to the annual maximum and minimum.
For example, if the Current ratio:
— greater than or equal to 2 (+1 point);
— less than or equal to 1 (-1 point);
— more than 1 but less than 2 (0 points).
Or for example, if Diluted EPS:
— near or above the annual high (+2 points);
— near the annual minimum and below (-2 points);
— between the annual maximum and minimum (0 points).
And so on with each of the parameters. As a result, the maximum number of points a company can score is 15 points. The minimum number of points a company can score is -15 points. These levels are marked with horizontal dotted lines: the green line is for the maximum value, and the red line is for the minimum.
I track the number of points for each day of a company's life on a three-color Histogram. The resulting average value for the last year is on the Blue Line. For me, it is the last value of the Blue Line that determines: this is the actual Fundamental Strength of the company.
As an additional filter, for example, when comparing two companies where all other conditions are equal: I use the dynamics of Cash Flows expressed in Diluted net income. These are the thick green, orange, and red lines over the Histogram.
Examples:
Below, I will evaluate various companies using the Fundamental Strength Indicator.
Tesla, Inc.
The indicator shows that since 2020, Tesla Inc. has been steadily increasing its Fundamental Strength (from 3.27 in Q1 2020 to 12.79 in Q1 2023). This is noticeable both by the color change of the Histogram from orange to green and by the rising Blue Line. If you look in detail at what has been happening with the financials during this time, it's clear what meaningful work the company has done. Revenues have almost quadrupled. Earnings per share have increased 134 times. At the same time, Total debt to revenue fell almost 10 times.
Keurig Dr Pepper Inc.
The company, formed in 2018 by the merger of Keurig Green Mountain and Dr Pepper Snapple Group, has failed to deliver outstanding financial results, causing its Fundamental Strength to fall from 4.63 in Q1 2018 to -0.53 in Q1 2023. During this period, the decline in diluted earnings per share was accompanied by higher debt and deteriorating liquidity.
Costco Wholesale Corporation
Wholesaler Costco has been surprisingly stable in its financial performance and with steady growth in both earnings and revenue. This is the reason the Histogram bars are exceptionally green throughout the calculation of the indicator. The Fundamental Strength has not changed in three years and is high at 11 points.
Part 3: Company Cash Flow Dynamics
The other day I came across an interesting article about the work of the Swiss company Glencore International AG in the 1990s. This company specializes in trading raw materials, and at that time it was actively trading with the countries that had left the USSR. None of those countries had foreign currency, and trust in local currencies had not yet appeared, so it was necessary to exchange commodities for commodities like in the Middle Ages. For example, to sell copper in Kazakhstan, a Swiss company bought raw sugar in Brazil, then took it to Ukraine for refining, then the refined sugar was exchanged for Siberian oil in Russia, then the oil was exchanged for copper ore in Mongolia, which was then sent to a plant in Kazakhstan to create copper suitable for sale on the world market. As we can see, money was used here only at the moment of purchase of raw sugar and sale of copper, the rest of the chain of transactions was an exchange of goods for goods. It turns out the following scheme:
Money - Raw sugar - Refined sugar - Oil - Copper ore - Copper - Money'
Of course, all of this made sense when Money' (with a stroke) equaled big money. Otherwise, the cost of preparing and executing such a complex transaction simply wouldn't have paid off.
This example once again convinced me how significant a role money plays in any company's operations. Can you imagine the chaos that a business can become without money and having to make up similar supply chains? Money simplifies and accelerates all processes in a company, so competent management of these flows is the basis of an effective business.
If you compare a company to a living organism, Cash Flow(*) is its circulatory system. It is thanks to this system that the company is supplied with everything it needs to produce goods or services.
(*) If you are keen to learn more about Cash Flows, I suggest reading my two articles on TradingView:
Cash flow statement or Three great rivers
Cash flow vibrations
Considering that cash flows play a fundamental role in the activity of any company, it is reasonable to assume that their analysis will give us the necessary information to decide.
For this reason, an additional parameter was added to the Fundamental Strength Indicator : the dynamics of Cash Flows expressed in Diluted net income(*).
(*) Since the value of income can be negative, the Diluted net income module is taken, that is, without the "minus" sign.
Why do I use income as a unit of measure of Cash Flows? Because it is a good way to make the scale of indicator values the same for companies from different countries, with different currencies. It also allows you to use a single value scale for both Cash Flows and Fundamental Strength.
So, let's take a look at how the dynamics of Cash Flows look like in the Fundamental Strength Indicator. These are three lines of different colors, which are located over the Histogram. Each of the flows corresponds to a specific color:
— Operating cash flow: green line;
— Investing cash flow: orange line;
— Financing cash flow: red line.
In this way, I can track the dynamics of the company's Cash Flow over time.
To interpret the dynamics of Cash Flows, I pay attention to the following patterns:
— How the cash flows are positioned in relation to each other;
— In which zone each of the cash flows is located: in the positive or negative;
— What is the trend of each of the cash flows;
— How volatile each of the cash flows is.
As an example, let's look at several companies to interpret the dynamics of their Cash Flows.
John B. Sanfilippo & Son, Inc.
This is the most ideal situation for me: operating cash flow (green line) is above the other cash flows, investment cash flow (orange line) is near zero and practically unchanged, and financial cash flow (red line) is consistently below zero. This picture shows that the company lives off its operating cash flow, does not increase its debt, does not spend a substantial amount of money on expensive purchases, and retains (does not sell off) assets.
Parker Hannifin Corporation
With stable operating cash flow (green line), the company implements investment programs by raising additional funding. This is noticeable due to an increase in financial cash flow (red line) and a simultaneous decrease in investment cash flow (orange line) with a significant deepening into negative areas. Apparently, there is not enough operating cash flow to realize the planned investments. One has to wonder how sustainable a company can be if it invests in its development using borrowed funds.
Schlumberger N. V.
The chaotic intertwining of cash flows outside the Fundamental Strength range (-15 to 15) is indicative of the company's rich life, but to me, it is an indicator of high riskiness of its actions. And as we can see, Fundamental Strength has only begun to strengthen in the last year, when the external appearance of cash flow has normalized.
Thus, when the Fundamental Strength of two companies is equally good, I use an additional filter in the form of Cash Flow dynamics. This helps me to clarify my interest in this or that company.
What is the value of the Fundamental Strength Indicator:
— allows for a quantitative assessment of a company's financial performance in points (from -15 to 15 points);
— allows you to visually track how the company's financial performance has changed (positively/negatively) over time;
— allows to visually trace the movement of main cash flows over time;
— accelerates the process of selecting companies for your shortlist (if you are focused on financial results when selecting companies);
— allows you to protect yourself from investing in companies with weak and mediocre fundamentals.
Mandatory requirements for using the indicator:
— works only on a daily timeframe;
— only applies to shares of public companies;
— company financial statements for the last 4 quarters and more are required;
— it is necessary to have the data from the Balance sheet, Income statement, and Cash flow statement, required for the calculation.
If at least one component required for calculating the Fundamental Strength is missing, the message "no data to calculate the Fundamental Strength correctly" is displayed. In the same case, but for the operating cash flow, the message "no data to calculate the Operating Cash Flow correctly" is shown, and similarly for other flows.
Risk disclaimer:
When working with the Fundamental Strength Indicator and the additional filter in the form of Cash Flows, you should understand that the publication of the Balance sheet, Income statement, and Cash flow statement takes place sometime after the end of the financial quarter. This means that new relevant data for the calculation will only appear after the publication of the new statements. In this regard, there may be a significant change in the values of the Indicator after the publication of new statements. The magnitude of this change will depend both on the content of the new statements and on the number of days between the end of the financial quarter and the publication date of the statements. Until the date of publication of the new statements, the latest relevant data will be used for calculations.
I would like to draw your attention to the fact that the calculation of Fundamental Strength and Cash Flows requires the availability of data for all parameters of the valuation model . It uses data that is exclusively available on TradingView (there is no reconciliation with other sources). If at least one parameter is missing, I switch to another company's analysis to continue using the indicator.
Thus, the Fundamental Strength Indicator and an additional filter in the form of Cash Flows make it possible to evaluate the financial results of the company based on the available data and the methodology I created. A simple visualization in the form of a three-color Histogram, a Blue line, and three thick Cash Flow lines significantly reduces the time for selecting fundamentally strong companies that fit the criteria of the selected model. However, this Indicator and/or its description and/or examples cannot be used as the sole reason for buying or selling stocks or for any other action or inaction related to stocks.
USDCADUSDCAD displays a bearish outlook as it breaks out of its ascending channel and rising wedge pattern. This technical analysis signals a potential short opportunity, with the breakout indicating a shift in momentum. Traders may consider short positions in anticipation of a continued downward trend in the USDCAD currency pair.
J KUMAR INFRA PROJECTS LTDHello & welcome to this analysis
JKIL is a small cap infra co which has in higher time frame been making higher highs and higher lows since its listing.
Currently trading around a resistance.
Fresh breakout above 715 with strong support near 550
All the best with your investing and trading strategies
Momentum swing idea|Vidhi Specialty Food Ingredients LtdVidhi Specialty Food Ingredients Ltd
Vidhi Specialty Food Ingredients Limited, incorporated in 1994, is a leading manufacturer of Superior Synthetic and Natural Food Grade Colours. The company is Asia’s 2nd largest food colour manufacture
Fundamental :Strong
Market Cap ₹ 2,367 Cr. Current Price ₹ 474 Stock P/E 67.9
ROCE 17.6 % ROE 16.2 % Debt to equity 0.15
Promoter holding 64.3 % Quick ratio 2.08 Current ratio 3.00
Piotroski score 6.00
Profit Var 3Yrs 3.57 % Sales growth 3Years 21.6 %
Return on assets 11.1 %
This stock is already in momentum zone also look at reversal up move momentum.
if its continue we have to keep watch it closely.
although food colour business is in trend since long time.
keep in radar.
Note: I am not SEBI registered financial Adviser. I solely present my views on chart .I do not charge any kind of service. This is not buy sell recommendation.
If you like my ideas than like boost and follow me for more ideas.
Thanks and comment freely
XTZ Breaking Out! Bullish Momentum Building 🚀💎 XTZ has recently broken out of a resistive trendline and formed an inverse head and shoulders pattern, accompanied by CHoCH and BOS signals, indicating a shift towards a bullish market structure. These developments increase the probability of a bullish move for XTZ.
💎If XTZUSDT manages to break above the neckline and resistant levels of the inverse head and shoulders pattern, we can anticipate further upward movement towards the next resistant levels. In the event of a pullback, we can anticipate a bounce from the bullish OB area. However, it's important to confirm such moves with bullish candlestick patterns.
💎On the other hand, if the price breaks down below the bullish OB level, it would be considered bearish. In such a scenario, it would be prudent to wait for better price action confirmation before making any trading decisions.