A flat correction differs from a zigzag in that the subwave sequence is 3-3-5, as shown in Figures 1 and 2. Since the first actionary wave,

Fibonacci studies: arcs, fans, retracements, and time

Overview: Leonardo Fibonacci was a mathematician who was born in Italy around the year 1170. It is believed that Mr. Fibonacci discovered..


The Negative Volume Index (“NVI”) focuses on days where the volume decreases from the previous day. The premise being that the “smart money” takes positions on days when volume decreases

Basic Technicals

MACD technical analysis MACD technical analysis stands for moving average convergence/divergence analysis of stocks.

Fundamental Analysis

Doubling Stocks Review: Is this a scam? If you are looking for the truth about doubling stocks this is a necessity. One always thought there was something wrong with a doubling of stocks.

Monday, January 17, 2011


Media and entertainment company Midvalley Entertainment has fixed its issue price at the higher end of Rs 64-70 a share. It raised Rs 60 crore by issuing 85,71,429 equity shares.
Date of Issue                                   :10/01/2011 to 12/01/2011
No. of members                             :32
Issue Size (lakh shares)              :equity shares of Rs.10/- each aggregating to Rs. 6000 Lacs
Price Range                                     :64 to 70
Issue Price ( Rs.)                           :70
Rating agency                                :Brickworks Ratings India Pvt. Ltd.
January 10-12                               : subscribed 4.03 times.
Retail investors &
Non-institutional investors            : subscribed 9.01 times and 4.68 times
Qualified institutional investors’  : subscribed 0.35 times

Thursday, January 13, 2011


Moving averages are one of the most popular and easy to use tools available to the technical analyst. They smooth a data series and make it easier to spot trends, something that is especially helpful in volatile markets. They also form the building blocks for many other technical indicators and overlays.
The two most popular types of moving averages are the Simple Moving Average (SMA) and the Exponential Moving Average (EMA). They are described in more detail below.
Simple Moving Average (SMA)
A simple moving average is formed by computing the average (mean) price of a security over a specified number of periods. While it is possible to create moving averages from the Open, the High, and the Low data points, most moving averages are created using the closing price. For example: a 5-day simple moving average is calculated by adding the closing prices for the last 5 days and dividing the total by 5.
(10+ 11 + 12 + 13 + 14 = 60) ( (60 / 5) = 12)
The calculation is repeated for each price bar on the chart. The averages are then joined to form a smooth curving line – the moving average line. Continuing our example, if the next closing price in the average is 15, then this new period would be added and the oldest day, which is 10, would be dropped. The new 5-day simple moving average would be calculated as follows:
(11 + 12 + 13 + 14 +15 = 65) ( (65 / 5) = 13)
 Over the last 2 days, the SMA moved from 12 to 13. As new days are added, the old days will be subtracted and the moving average will continue to move over time. In this example , using closing prices , day 10 is the first day possible to calculate a 10-day simple moving average. As the calculation continues, the newest day is added and the oldest day is subtracted. The 10-day SMA for day 11 is calculated by adding the prices of day 2 through day 11 and dividing by 10. The averaging process then moves on to the next day where the 10-day SMA for day 12 is calculated by adding the prices of day 3 through day 12 and dividing by 10.The chart above is a plot that contains the data sequence in the table. The simple moving average begins on day 10 and continues.
This simple illustration highlights the fact that all moving averages are lagging indicators and will always be “behind” the price. The price is trending down, but the simple moving average, which is based on the previous 10 days of data, remains above the price. If the price were rising, the SMA would most likely be below. Because moving averages are lagging indicators, they fit in the category of trend following indicators. When prices are trending, moving averages work well. However, when prices are not trending, moving averages can give misleading signals.
Exponential Moving Average Calculation:
Exponential Moving Averages can be specified in two ways – as a percent-based EMA or as a period-based EMA. A percent-based EMA has a percentage as its single parameter while a period-based EMA has a parameter that represents the duration of the EMA.
The formula for an exponential moving average is:
EMA(current) = ( (Price(current) – EMA(prev) ) x Multiplier) + EMA(prev)
For a percentage-based EMA, “Multiplier” is equal to the EMA’s specified percentage.
For a period-based EMA, “Multiplier” is equal to 2 / (1 + N) where N is the specified number of periods.
For example, a 10-period EMA’s Multiplier is calculated like this:
This means that a 10-period EMA is equivalent to an 18.18% EMA.
Below is a table with the results of an exponential moving average calculation for Eastman Kodak. For the first period’s exponential moving average, the simple moving average was used as the previous period’s exponential moving average (yellow highlight for the 10th period). From period 11 onward, the previous period’s EMA was used. The calculation in period 11 breaks down as follows:
1. (C – P) = (61.33 – 63.682) = -2.352
2. (C – P) x K = -2.352 x .181818 = -0.4276
3. ((C – P) x K) + P = -0.4276 + 63.682 = 63.254

 The 10-period simple moving average is used for the first calculation only. After that the previous period’s EMA is used.

Tuesday, January 11, 2011

Relative Strength Index (RSI)

Relative Strength Index (RSI)
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between zero and 100. Traditionally, and according to, RSI is considered overbought when above 80 and oversold when below 20. Signals can also be generated by looking for divergences, failure swings and centerline crossovers. RSI can also be used to identify the general trend.
RSI is an extremely popular momentum indicator that has been featured in a number of articles, interviews and books over the years.  Trading Professional, features the concept of bull market and bear market ranges for RSI.The positive and negative reversals for RSI. In addition, Cardwell turned the notion of divergence, literally and figuratively, on its head.
Average True Range and the Directional Movement Concept (ADX).

Calculation:RS = Average Gain / Average Loss
To simplify the calculation explanation, RSI has been broken down into its basic components: RS, Average Gain and Average Loss. This RSI calculation is based on 12 periods. Losses are expressed as positive values, not negative values.
The very first calculations for average gain and average loss are simple 14 period averages.
*  First Average Gain = Sum of Gains over the past 12 periods / 12.
*  First Average Loss = Sum of Losses over the past 12 periods / 12.
The second, and subsequent, calculations are based on the prior averages and the current gain loss:
* Average Gain = [(previous Average Gain) x 13 + current Gain] / 12.
* Average Loss = [(previous Average Loss) x 13 + current Loss] / 12.
Taking the prior value plus the current value is a smoothing technique similar to that used in exponential moving average calculation. This also means that RSI values become more accurate as the calculation period extends. SharpCharts uses at least 250 data points prior to the starting date of any chart (assuming that much data exists) when calculating its RSI values. To exactly replicate our RSI numbers, a formula will need at least 250 data points.

Monday, January 10, 2011


Name of the issue                                                          :RAVI KUMAR DISTILLERIES LIMITED
Book Running Lead Manager                                    :Comfort Securities Pvt Ltd
Date of Issue                                                                    :08/12/2010 to 10/12/2010
No. of members                                                                :69
Price Range                                                                         :11500000 Equity Shares
Issue Price ( Rs.)                                                                :Rs 56 to64
Market Lot                                                                            : 100 Shares
Minimum Order Quantity:                                             :100 Shares
Listing At                                                                               : BSE, NSE
Qualified Institutional Buyers (QIBs)                       : 0.15 times.
Non Institutional Investors                                         : 7.31 times.
Retail Individual Investors (RIIs)                             : 3.01 times.
Employee Reservation                                                    : Nil.
Updated On 27 Dec 2010
Security Name :Ravi Kumar Distilleries Limited
Face Value     :10.00
ISIN Code      :INE722J01012
Listed On        :27 Dec 2010
Open                 :72
High                 :91
Low                  :72
Close               :80.05

Saturday, January 8, 2011

Ultimate Oscillator

Values range from 0 to 100 with 50 as the center line. Oversold territory exists below 30 and overbought territory extends from 70 to 100.

Three time frames are used by the Ultimate Oscillator and can be specified by the user. Typically values of 7-periods, 14-periods and 28-periods are used. Note that these time periods all overlap, i.e. the 28-period time frame includes both the 14-period time frame and the 7-period time frame. This means that the action of the shortest time frame is included in the calculation three times and has a magnified impact on the results.


Calculate Today’s “True Low (TL)”. TL = the lower of today’s low or yesterday’s close.

Calculate Today’s “Buying Pressure (BP)”. BP = Today’s close – Today’s TL.

Calculate Today’s “True Range (TR)”. TR = the higher of 1.) Today’s High – Today’s Low; 2.) Today’s High – Yesterday’s Close; 3.) Yesterday’s Close – Today’s Low.

Calculate BPSum1, BPSum2, and BPSum3 by adding up all of the BPs for each of the three specified time frames.

Calculate TRSum1, TRSum2, and TRSum3 by adding up all of the TR’s for each of the three specified time frames.

The Raw Ultimate Oscillator (RawUO) is equal to:
4 * (BPSum1 / TRSum1) + 2 * (BPSum2 / TRSum2) + (BPSum3 / TRSum3)

The Final Ultimate Oscillator is equal to:

                                                   ( Raw UO / (4 + 2 + 1) ) * 100

Use The Ultimate Oscillator can be used on intraday, daily, weekly or monthly data. The time frame and number of periods used can vary according to desired sensitivity and the characteristics of the individual security.

It is important to remember that overbought does not necessarily imply time to sell and oversold does not necessarily imply time to buy. A security can be in a downtrend, become oversold and remain oversold as the price continues to trend lower. Once a security becomes overbought or oversold, traders should wait for a signal that a price reversal has occurred. One method might be to wait for the oscillator to cross above or below -50 for confirmation. Price reversal confirmation can also be accomplished by using other indicators or aspects of technical analysis in conjunction with the Ultimate oscillator.

Friday, January 7, 2011

Percentage Volume Oscillator

Percentage Volume Oscillator
The Percentage Volume Oscillator (PVO) is a momentum oscillator for volume. PVO measures the difference between two volume-based moving averages as a percentage of the larger moving average. As with MACD and the Percentage Price Oscillator (PPO), it is shown with a signal line, a histogram and a centerline. PVO is positive when the shorter volume EMA is above the longer volume EMA and negative when the shorter volume EMA is below. This indicator can be used to define the ups and downs for volume, which can then be use to confirm or refute other signals. Typically, a breakout or support break is validated when PVO is rising or positive.
Percentage Volume Oscillator (PVO):
((8-day EMA of Volume – 18-day EMA of Volume)/18-day EMA of Volume) x 100
Signal Line: 15-day EMA of PVO
PVO Histogram: PVO – Signal Line
The default settings for the PVO are (8.18.69), which is the same as MACD or the PPO. This means PVO is positive when the 15-day Volume EMA moves above the 26-day Volume EMA. PVO is negative when the 8-day Volume EMA moves below the 18-day Volume EMA.
The positive or negative degree depends on how far above or below. A PVO that equals 5 would indicate that the 12-day Volume EMA was 5% above the 26-day Volume EMA. A PVO that equals -3% would indicate that the 12-day Volume EMA was 3% less than the 26-day Volume EMA.
The PVO-Histogram acts just like the MACD and PPO histograms. The PVO-Histogram is positive when the PVO is trading above its signal line (9-day EMA). The PVO-Histogram is negative when the PVO is below its signal line. Note that the PVO is multiplied by 100 to move the decimal point two places.

Courtesy Copyright stockcharts.com .This content copyrights protected  Written bystockcharts.com Teams.

Wednesday, January 5, 2011

Keltner Channels

Keltner Channels are volatility-based envelopes set above and below an exponential moving average. This indicator is similar to Bollinger Bands, which use the standard deviation to set the bands. Instead of using the standard deviation, Keltner Channels use the Average True Range (ATR) to set channel distance. The channels are typically set two Average True Range values above and below the 20-day EMA. The exponential moving average dictates direction and the Average True Range sets channel width. Keltner Channels are a trend following indicator used to identify reversals with channel breakouts and channel direction. Channels can also be used to identify overbought and oversold levels
Chester Keltner introduced the “Ten-Day Moving Average Trading Rule”, which is credited as the original version of Keltner Channels. This original version started with a 10-day SMA of the typical price {(H+L+C)/3)} as the centerline. The 10-day SMA of the High-Low range was added and subtracted to set the upper and lower channel lines. Linda Bradford Raschke introduced the newer version of Keltner Channels in the 1980s. Like Bollinger Bands, this new version used a volatility based indicator, Average True Range (ATR), to set channel width. StockCharts.com uses this newer version of Keltner Channels.
There are three steps to calculating Keltner Channels. First, select the length for the exponential moving average. Second, choose the time periods for the Average True Range (ATR). Third, choose the multiplier for the Average True Range.
Middle Line: 20-day exponential moving average
Upper Channel Line: 20-day EMA + (2 x ATR(10))
Lower Channel Line: 20-day EMA – (2 x ATR(10))

The example above is based on the default settings for SharpCharts. Because moving averages lag price, a longer moving average will have more lag and a shorter moving average will have less lag. ATR is the basic volatility setting. Short timeframes, such as 10, produce a more volatile ATR that fluctuates as 10-period volatility ebbs and flows. Longer timeframes, such a 100, smooth these fluctuations to produce a more constant ATR reading. The multiplier has the most affect on the channel width. Simply changing from 2 to 1 will cut channel width in half. Increasing from 2 to 3 will increase channel width by 50%.

Tuesday, January 4, 2011

Basics of the Dow Theory

Trend Analysis: Basics of the Dow Theory
principles of the Dow Theory were used only for the American indices created by Charles Dow: Transportation and Industrial. Most of them, however, can be successfully applied to the foreign exchange market.
Indices discount everything. According to Charles Dow any factor which influences demand and supply will be reflected in the index. These factors cannot be foreseen but nevertheless they are taken into account by the market and reflect index behaviour.
There are three movements on the market. Uptrend is characterised by the fact that every following top is higher then the previous one and every next bottom is higher then the previous one. Downtrend is characterised by the fact that every following top is lower than the previous one and every bottom is lower than the preceding one. When the market is in the flat position every next move (up or down) is approximately at the same level as the preceding one:
Dow classified market trends as follows:
1. primary trend (it is called a broad one and lasts from anything less than one year up to several years);
2. secondary trend (it lasts from three weeks to three months and is considered as a correcting trend to the primary one. These in-between rebounds are one-two thirds (or even half) of the range prices move during the primary trend);
3. daily trend (a short-term movement within the secondary trend, which has very little long-term forecasting value).
Another classification was suggested by Thomas DeMark:
1. short-term trend (if the price has moved less than 5%);
2. mid-term trend (if more than 5% but less than 15%);
3. long-term trend (if more than 15%).
DeMark designed a forecasting method to predict the beginning of a trend, both mid-term and long-term. The method is based on the specially designed coefficients.
The primary trend has three phases. During the first phase all unfavourable market information has been discounted by the market and the far-sighted and better informed traders start to buy. The second phase starts when the traders who do technical analysis enter the market. Once all economic data becomes more favourable, the third, final phase begins, which is characterised by high activity on the market supported by the mass media and optimistic economic forecasts in the newspapers and on TV. Despite the positive sentiment, the final phase is the first sign that the prevailing trend is about to end.
Indices must confirm each other in order for the signal to have authority (referred to Industrial and Rail (or Transport) indices). Charles Dow said that any significant uptrend or downtrend signal on the market must be considered together in the Industrial and Rail indices. If we applied this principle now on the basis of modern technical analysis, it would mean that a signal from one technical indicator must be confirmed by a signal from another technical indicator.
Trade volume must confirm the prevailing trend. If prices move in accordance with the prevailing trend, it increases the volume and inversely, when there is a rebound, volume decreases.
The primary trend remains intact until a change in that trend has been given by the theory. The last major signal remains in force until a new signal develops. Many analysts believe that a bull market must always be moving to new highs. However, the market can undergo extended periods of sideways or lackluster trading without the primary trend changing. If the last major signal under the theory is bullish, the primary bull market trend remains in force until a bear market signal is given.