Tuesday, February 26, 2013

BSE Midcap nearing support

BSE Midcap Index has been in a free fall for over a month now, falling over 10% since its highs in January. Well, it finally seems to be nearing a strong support line as can be seen in the chart below. Keep a close eye on this level as it would not be surprising to see a bounce here.



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Take care and good luck!



Sunday, February 24, 2013

Watchlist for next week

Here are a few stocks that I like for the week ahead. The important levels are marked on the charts itself.







A word of caution here. While I was doing the weekend scan for setups, I noticed that a lot of the stocks which had gone up on Friday had down so on low relative volume. Keep an eye on MA(20) levels on S&P and Nasdaq to get an idea of where the market is headed.

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Take care and good luck!

Thursday, February 21, 2013

Staying out IS an option

A couple of days back, I had commented on the negative divergences developing on the Nasdaq and had written that the index might test MA(20). Well, here is how the chart looks after yesterday's action.


Right at MA(20). The last few times the index touched MA(20), it bounced right back. What's going to happen this time? Well, the answer is simple. Wait and watch! Simple, right? But implementing it is pretty hard. One of the hardest things in being a trader is to develop the ability to sit there and do nothing. Being a short term trader, sometimes one feels simply obliged to take a position but in order to be a successful trader, one must master the ability to just sit back patiently until the right high probability opportunity comes. And right now, I feel the market demands just that - sit back and watch.

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Take care and good luck!

Sunday, February 17, 2013

Negative divergences in NASDAQ

With NASDAQ just missing out on a seventh consecutive up week and testing the important 3200 level last week, it seems like a good time to step back and take a look at where we are from the bigger picture point of view. By this, I mean the weekly chart.


The importance of the 3200 level can be seen from the above chart as it is the level of previous highs. What struck me most when I saw the above chart, was the negative MACD divergence i.e. MACD is making lower highs while the index is making newer highs. On further inspection, it was discovered that a negative divergence has also been developing in the NASDAQ McClellan Oscillator over the last few months.



Does this mean you should go ahead and short the index? Well, not exactly. The divergence has been developing for a long time now but the market has been grinding upwards. Go with the flow but keep tight stops in place as a pullback to MA(20) cannot be ruled out.

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Take care and good luck!