Technical Analysis is the art of analyzing a stock's historical prices in an effort to forecast the probable future prices. It is done by studying and comparing current price movement, with the help of tools like (i.e prices ,volume ,speed ,pattern and time) ,with the past price action to predict future course of the price action.
To put it simply, technical analysis is the study of prices, with price,pattern, volume and time as being the primary tool. it is applicable to stocks, commodities and currencies.
With the help of Technical Analysis we can predict the prices from days to several years . It can be applied at the time of both purchasing and selling.
Technical Analysis is useful for improving the investment decision making skill Before making investment decision technical analysis should be supplemented with fundamental analysis
Concepts and tools of technical analysis were developed several centuries ago. Japanese used candlestick trading techniques for rice trading in 16th century itself .
These tools are well tested since then and all over the world investors are using it successfully .
The traditional technical analysis method got a boost after the Dow Theory, developed by Charles Dow in 1900. So he is also called the father of modern technical analysis.
Since then many theories are propounded by many people based on Dow theory or based on price pattern (ie Elliott Wave Theory and Neowave ) or based on Momentum of the Market.
..........to be continued in Part 2.......
Saturday, December 12, 2009
Friday, December 11, 2009
Is the Bear Market over Worldover?
January 2008 saw the start of a bloody decline in stock markets World over and it terminated the bull run in the stock markets that started on 2003. The decline continued till october2008 in most of the Asian Markets and the decline terminated around february in US and European Markets.
People ranging from ordinary men to investors in the stock market panicked and the period saw many layoffs in all sectors of the Economy. Unemployment rose in US and world over. The severely affected country was USA.
Many Banks and Financial Institutions in USA went bankrupt mainly because of sub prime crisis which is due to the burst of real estate bubble and Stock Market decline. The tremors are felt heavily in European countries and it is felt mildly in Asian Economies. It was said at that time, that World was going to face the worst bear market.
Ever since that, Governments offered stimulus packages to boost their respective countries economies. The stock Market were recovered from the lows very quickly. Now, everybody saying that the bear market is over. The stimulus packages given by their governments boosted the economy and everything is normal today.
But My opinion is, even though Stock Markets have rallied for the past 9 months, the present rally seems to be temprory.
No bear market completes its term in just 9 months. So, the real and the worst bear market is yet to come. It may take another five or six years to complete. Hisotry will always repeat itself.
Be prepared for it.
People ranging from ordinary men to investors in the stock market panicked and the period saw many layoffs in all sectors of the Economy. Unemployment rose in US and world over. The severely affected country was USA.
Many Banks and Financial Institutions in USA went bankrupt mainly because of sub prime crisis which is due to the burst of real estate bubble and Stock Market decline. The tremors are felt heavily in European countries and it is felt mildly in Asian Economies. It was said at that time, that World was going to face the worst bear market.
Ever since that, Governments offered stimulus packages to boost their respective countries economies. The stock Market were recovered from the lows very quickly. Now, everybody saying that the bear market is over. The stimulus packages given by their governments boosted the economy and everything is normal today.
But My opinion is, even though Stock Markets have rallied for the past 9 months, the present rally seems to be temprory.
No bear market completes its term in just 9 months. So, the real and the worst bear market is yet to come. It may take another five or six years to complete. Hisotry will always repeat itself.
Be prepared for it.
Will be US Dollar replaced by Euro or Chinese currency?
For the past six months Dollar has been depreciating against all major currencies. Against Indian Rupee it depreciated from 52 to 46 Rupees. It depreciated against Euro and it depreciated against Major Asian currencies.
There is already a talk among certain coutries like Russia, China, France and etc, to replace US Dollar as World Reserve Currency. They want to trade oil in some other currencies except USD.
The US Economy is growing at a very slower pace for the past ten years when compared to the other Major developing Countries like China and India. The growth rate is likely to be slow for another 5 years in USA.
Even the once mighty Europeon Countries are no longer growing as Asian Countries. The continueous lesser growth or no growth in US and Europeon Economy would surely put China in the Drivers seat in world affairs and World Economy.
The Chinese growth in the past decade is phenomenal. It is vast a country and it is almost equal to the size of USA. Its population is more than 4 times the population of US and their only disadvantage is English, the language spoken and understood in most part of world. Even in that area, they are improving day by day.
Going by the vast potential of Chinese in Military and Economic Might, Chinese currency may replace US Dollar in another Five or Ten years in the Future.
Thursday, December 10, 2009
Sectors for the Next Bull Markets
Sectors for the Next Bull Markets
World over each Bull Market will be lead by any particular sector or any particular set of Sectors of the Industry. The 1990s rally was lead by Old Economy Sectors like Cement, Steel, and Automobiles. The next Bear Market was also lead by the same sectors.
The 2000 rally was supported by ICE sectors. ‘ICE’ shortly denotes Information, Communication, and Enterntainment Sector. The Stock prices of Companies like Microsoft, Apple, Oracle, Adobe, Sun, IBM went to dizzy heights. In India, Infosys, Satyam, Wipro, Hcl Tech are the companies saw a massive bull run.
Zee tv, Himachl Futuristics, Global Tele systems were the stocks from Media and Telecom Sector that are in bull Run.
Globally, Telec om Multinational Companies like AT&T saw bull run in all European Stock Exchanges.
Like wise in the previous Bear Market, the same sectors which lead the bull rally, lead the next Bear Market.
The Bull Rally that started in 2003 Globally, is supported by Power, Infra, and Reality Sectors. Globally, the companies in this sector was in demand in all Stock Exchanges. Like wise, the bear market in 2008 was also lead by these sectors.
So, which sector is going to lead the next bull rally. Technical studies reveal Pharma, FMCG, Financials will lead the next rally Globally in all Stock Markets.
Be prepared for that.
Wednesday, December 9, 2009
Market Cycles
I have observed that any free markets in the world are behaving cyclically. Careful examination of the time period taken by the market in each legs reveal that they are behaving rythematically.
It seems world Equity markets are moving in 33 year cycle. A new bull market is started in Dow Jones Index in 1950 and it continued for 1983 and the current leg is likely to terminate 2016.
Whenever equity markets are in last phase of a cycle, Bullion markets are behaving in opposite direction of the equity Market. So, Equit Markets are in bull phase if Gold Markets are in bear phase and Gold marekts are in bull phase, when Equity Markets are in bear Phase.
The 1970s Bull Market in the International Equity Markets were lead by Japan. The 1980s and 1990s Bull Market in Equity Markets are lead by south East Asian Countries. The 2000s Bull Market is lead by India and China. So the next bull market is likley to be lead by some other new countries.
The smart Investors should always look for the right Market to invest and the right marktet to withdraw their funds. It will not be profitable for anyone to hold on to their same investments in all period.
Market cycles will help you to time the market at appropriate time. So do study the Market cylces and take investment decisions based on the study for profitable Investments.
It seems world Equity markets are moving in 33 year cycle. A new bull market is started in Dow Jones Index in 1950 and it continued for 1983 and the current leg is likely to terminate 2016.
Whenever equity markets are in last phase of a cycle, Bullion markets are behaving in opposite direction of the equity Market. So, Equit Markets are in bull phase if Gold Markets are in bear phase and Gold marekts are in bull phase, when Equity Markets are in bear Phase.
The 1970s Bull Market in the International Equity Markets were lead by Japan. The 1980s and 1990s Bull Market in Equity Markets are lead by south East Asian Countries. The 2000s Bull Market is lead by India and China. So the next bull market is likley to be lead by some other new countries.
The smart Investors should always look for the right Market to invest and the right marktet to withdraw their funds. It will not be profitable for anyone to hold on to their same investments in all period.
Market cycles will help you to time the market at appropriate time. So do study the Market cylces and take investment decisions based on the study for profitable Investments.
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