Andrews' Pitchfork_Technical Method

Andrews' Pitchfork

Developed by Alan Andrews, Andrews' Pitchfork is a trend channel tool consisting of three lines.

A technical indicator that uses three parallel trend lines to identify possible levels of support and resistance. The trend lines are created by placing three points at the end of identified trends. This is usually achieved by placing the points in three consecutive peaks or troughs. Once the points have been placed, a straight line is drawn from the first point that intersects the midpoint of the other two.

Andrews' Pitchfork

There is a median trendline in the center with two parallel equidistant trendlines on either side. These lines are drawn by selecting three points, usually based on reaction highs or lows moving from left to right on the chart. As with normal trendlines and channels, the outside trendlines mark potential support and resistance areas. A trend remains in place as long as the Pitchfork channel holds. Reversals occur when prices break out of a Pitchfork channel.

Picking Three Points

The first step to using Andrews Pitchfork is selecting three points for drawing. These points are usually based on reaction highs or reaction lows, also referred to as pivot points.The first point selected marks the start of the median line. Points 2 and 3 define the width of the Pitchfork channel. The median line is based on two points: point 1 and the midpoint between points 2 and 3. As such, the median line starts a point 1 and bisects points 2 and 3. This controls the slope (steepness) of the median line. The outside trendlines are then extended parallel to the median line. The red Andrews' Pitchfork shows an alternative median line based on the July low for point 1. Notice that the red median line still bisects the line between points 2 and 3, but it is steeper than the blue median line. Pitchfork slope depends on the placement of point 1.

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How To Use Support and Resistance Levels

The recognition of support and resistance levels on a stock chart is an integral part of technical analysis. The concepts are simple but very important.

What is support?

“Support” is a level on a stock chart that represents a zone where buyers won’t allow the price to go any lower. Of course the price can always go lower, there are no absolute certainties in the stock market, but the probabilities aren’t in favor of the price breaking below a support level. If a support level is broken then perhaps the trend is changing to the downside.

Keep in mind that the markets work on “supply” and “demand”. When demand exceeds supply, prices go up. When supply exceeds demand, prices go down.

So, support levels occur where buyers are stronger than sellers.

support:

The stock chart above displays a support level at approximately $1.25. The breakdown below that support level that occurred in May 2010 resulted in the stock price moving lower.

What is resistance?

“Resistance” is a level on a stock chart where prices have trouble breaking through. If the stock does eventually break through a resistance level it’s a bullish sign.

resistance:
In the stock chart above the resistance level is located at approximately $11. The breakout above this resistance lead to a profitable rally.

What makes a support or resistance level valid?

The more times a support or resistance line is touched by price, the more valid it is. Also, the longer the level has existed, the more valid it is.

Breakouts above valid resistance levels are significant events. They are a bullish sign indicating the likelihood of the stock price moving higher.

Similarly, breakdowns below support levels are significant events. They are a bearish sign indicating the likelihood of the stock price moving lower.

How can a knowledge of support and resistance levels benefit you as a trader?

If you can identify valid support and resistance levels on a stock chart, you are able to make trading decisions based on better than average probabilities.

Careful analysis of any stock chart will reveal that support and resistance levels define the trend. A trend is made up of peaks and troughs, of which support and resistance levels form an integral part.

The identification of support and resistance levels when studied alongside the dominant trend of a stock can give you a valuable clue as to the stock’s likely next movements.

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Winning Trading Plan Or Good trading plan

There is an old saying in business: "Fail to plan and you plan to fail." It may sound glib, but those who are serious about being successful, including traders, should follow these eight words as if they were written in stone. Ask any trader who makes money on a consistent basis and they will tell you, "You have two choices: you can either methodically follow a written plan, or fail."

If you have a written trading or investment plan, congratulations! You are in the minority. While it is still no absolute guarantee of success, you have eliminated one major roadblock. If your plan uses flawed techniques or lacks preparation, your success won't come immediately, but at least you are in a position to chart and modify your course. By documenting the process, you learn what works and how to avoid repeating costly mistakes.

Once a trader knows where the market has the potential to pause or reverse, they must then determine which one it will be and act accordingly. A plan should be written in stone while you are trading, but subject to re-evaluation once the market has closed. It changes with market conditions and adjusts as the trader's skill level improves. Each trader should write their own plan, taking into account personal trading styles and goals. Using someone else's plan does not reflect your trading characteristics.

Building the Perfect Master Plan

What are the components of a good trading plan?
 Here are 10 essentials that every plan should include:

Skill Assessment

Are you ready to trade? Have you tested your system by paper trading it and do you have confidence that it works? Can you follow your signals without hesitation? Trading in the markets is a battle of give and take. The real pros are prepared and they take their profits from the rest of the crowd who, lacking a plan, give their money away through costly mistakes.

Mental Preparation

How do you feel? Did you get a good night's sleep? Do you feel up to the challenge ahead? If you are not emotionally and psychologically ready to do battle in the markets, it is better to take the day off - otherwise, you risk losing your shirt. This is guaranteed to happen if you are angry, hungover, preoccupied or otherwise distracted from the task at hand. Many traders have a market mantra they repeat before the day begins to get them ready. Create one that puts you in the trading zone.

Set Risk Level

How much of your portfolio should you risk on any one trade? It can range anywhere from around 1% to as much as 5% of your portfolio on a given trading day. That means if you lose that amount at any point in the day, you get out and stay out. This will depend on your trading style and risk tolerance. Better to keep powder dry to fight another day if things aren't going your way. (To learn more, see Matching Investing Risk Tolerance To Personality.)

Set Goals

Before you enter a trade, set realistic profit targets and risk/reward ratios. What is the minimum risk/reward you will accept? Many traders will not take a trade unless the potential profit is at least three times greater than the risk. For example, if your stop loss is a dollar loss per share, your goal should be a $3 profit. Set weekly, monthly and annual profit goals in dollars or as a percentage of your portfolio, and re-assess them regularly. (For more information, see Calculating Risk And Reward.)

Do Your Homework

Before the market opens, what is going on around the world? Are overseas markets up or down? Are index futures such as the S&P 500 or Nasdaq 100 exchange-traded funds up or down in pre-market? Index futures are a good way of gauging market mood before the market opens. What economic or earnings data is due out and when? Post a list on the wall in front of you and decide whether you want to trade ahead of an important economic report. For most traders, it is better to wait until the report is released than take unnecessary risk. Pros trade based on probabilities. They don't gamble.

Trade Preparation

Before the trading day, reboot your computer(s) to clear the resident memory (RAM). Whatever trading system and program you use, label major and minor support and resistance levels, set alerts for entry and exit signals and make sure all signals can be easily seen or detected with a clear visual or auditory signal. Your trading area should not offer distractions. Remember, this is a business, and distractions can be costly.

Set Exit Rules
Most traders make the mistake of concentrating 90% or more of their efforts in looking for buy signals, but pay very little attention to when and where to exit. Many traders cannot sell if they are down because they don't want to take a loss. Get over it or you will not make it as a trader. If your stop gets hit, it means you were wrong. Don't take it personally. Professional traders lose more trades than they win, but by managing money and limiting losses, they still end up making profits.

Before you enter a trade, you should know where your exits are. There are at least two for every trade. First, what is your stop loss if the trade goes against you? It must be written down. Mental stops don't count. Second, each trade should have a profit target. Once you get there, sell a portion of your position and you can move your stop loss on the rest of your position to break even if you wish. As discussed above, never risk more than a set percentage of your portfolio on any trade.

Set Entry Rules

This comes after the tips for exit rules for a reason: exits are far more important than entries. A typical entry rule could be worded like this: "If signal A fires and there is a minimum target at least three times as great as my stop loss and we are at support, then buy X contracts or shares here." Your system should be complicated enough to be effective, but simple enough to facilitate snap decisions. If you have 20 conditions that must be met and many are subjective, you will find it difficult if not impossible to actually make trades. Computers often make better traders than people, which may explain why nearly 50% of all trades that now occur on the New York Stock Exchange are computer-program generated. Computers don't have to think or feel good to make a trade. If conditions are met, they enter. When the trade goes the wrong way or hits a profit target, they exit. They don't get angry at the market or feel invincible after making a few good trades. Each decision is based on probabilities.

Keep Excellent Records

All good traders are also good record keepers. If they win a trade, they want to know exactly why and how. More importantly, they want to know the same when they lose, so they don't repeat unnecessary mistakes. Write down details such as targets, the entry and exit of each trade, the time, support and resistance levels, daily opening range, market open and close for the day and record comments about why you made the trade and lessons learned. Also, you should save your trading records so that you can go back and analyze the profit or loss for a particular system, draw-downs (which are amounts lost per trade using a trading system), average time per trade (which is necessary to calculate trade efficiency) and other important factors, and also compare them to a buy-and-hold strategy. Remember, this is a business and you are the accountant.

Perform a Post-Mortem

After each trading day, adding up the profit or loss is secondary to knowing the why and how. Write down your conclusions in your trading journal so that you can reference them again later.

The Bottom Line
Successful paper trading does not guarantee that you will have success when you begin trading real money and emotions come into play. But successful paper trading does give the trader confidence that the system they are going to use actually works. Deciding on a system is less important than gaining enough skill so that you are able to make trades without second guessing or doubting the decision.

There is no way to guarantee that a trade will make money. The trader's chances are based on their skill and system of winning and losing. There is no such thing as winning without losing. Professional traders know before they enter a trade that the odds are in their favor or they wouldn't be there. By letting their profits ride and cutting losses short, a trader may lose some battles, but they will win the war. Most traders and investors do the opposite, which is why they never make money.

Traders who win consistently treat trading as a business. While it's not a guarantee that you will make money, having a plan is crucial if you want to become consistently successful and survive in the trading game.

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INDIAN GEMS AND JEWELLERY INDUSTRY SCENARIO

INDIAN GEMS AND JEWELLERY INDUSTRY SCENARIO

 India has a glorious historical past in diamonds and has revived the past tradition in the sixties when she entered the fray as a manufacturer exporter of cut and polished diamonds, and later on jewellery as well. After spending initial years in establishing the industry in a defined global market place, India established herself among the top manufacturer and exporter of cut and polished diamonds.  The main reason among others for her excellent growth is attributed to India's skills in converting small diamonds which had so far been discarded as uncuttable into gems.  Further India's advantage is its cheap labour, which gives a comparative price advantage.

 Today the gems and jewellery industry is India's second largest

 foreign exchange earner.

Suashish Jewellery Ltd

Listing Agreements:              Listing agreements entered into by the Company with BSE.

Suashish   Diamonds   Limited   is   a   public   limited  company   incorporated   on October   05,   1988   under   the  Companies Act, 1956    having its registered and corporate office at Mehta Mahal, 11th Floor, 15 Mathew   Road, Opera House, Mumbai 400 004, India.

Promoted by Rameshkumar S Goenka, Suashish Diamonds (SDL) was incorporated in Oct.'88 which imports rough diamonds, cuts and polishes them, and then exports them. Its clientele is spread across the US, Japan, Europe, east Asia and Israel. It is a privileged sight holder of the Diamond Trading Company (DTC), London, whereby it enjoys an uninterrupted supply of raw materials at competitive rates. SDL has been granted Star Trading House status under the export-import policy of the Government of India. It has established a 100% subsidiary  Suashish Diamonds  in Hong Kong. In Jan.'95, SDL came out with a public issue at a premium of Rs. 185, aggregating Rs.113.37 Cr, to set up three diamond cutting and manufacturing units at Ahmedabad; set up a laser processing unit; acquire premises; invest in a subsidiary company and to augment long-term working capital requirements. The total project cost was estimated at Rs.124.51 cr. The company bagged the prestigious award by Gem & Jewellery Export Promotion Council, as the second largest exported of Cut & Polished Diamonds for the year 1998-99 and certificate of merit for outstanding performance in the field of exports of cut & polished diamonds from the Govt. of Maharashtra for the same year. There are 9 subsidiary companies including 3 foreign subsidiaries at the end of financial year 2003-04. Suashish Jewellery Ltd has ceased to be a subsidiary of the company with effect from 07.01.2005.

 Net Foreign Exchange earnings of Gem & Jewellery

 -----------------------------------------------------------------------------------------------

 Year                                                       Net Earning i.e. excess of

                                                               exports over imports

                                                                    (Rs. in Crore)

------------------------------------------------------------------------------------------------

1984-85                                                                                     353.40                      

1985-86                                                                                     369.80                      

1986-87                                                                                     607.40                      

1987-88                                                                                     557.20                      

1988-89                                                                                     1261.10                    

1989-90                                                                                     1078.90                    

1990-91                                                                                     1420.60                    

1991-92                                                                                     1838.90                    

1992-93                                                                                     2045.80                    

1993-94                                                                                     4131.14                                             --------------------------------------------------------------------------------------------------

 

 During the year ended March 1994, Indian exports soared to US $

 4139.26 million - 27% higher than the previous year 1992-93 despite

 the fact that the world has witnessed a recession in the diamond

 industry during the same period.  The average price realisation was

 US $ 260 per carat. During the same period i.e. 1993-94 import of

 rough diamonds increased by 16% over the previous year to US $

 2793.52 million.

 GROWTH

 The export of cut and polished diamonds and the growth rate during

 last 10 years are given in the following table

 ----------------------------------------------------------------------------------------------------

 Year                                 Growth over                              Export Diamonds
                                                                                         (Rs. In Crores)

-----------------------------------------------------------------------------------------------------

 1984-85                              -                                            1172.08     

 1985-86                              + 14.7 %                               1344.25

 1986-87                             + 45.8 %                               1959.73     

 1987-88                             + 24.5 %                                2439.74     

 1988-89                             + 73.7 %                                4238.18     

 1989-90                             + 17.3 %                                4971.93

 1990-91                             -  4.7 %                                  4738.71                

 1991-92                            + 30.0 %                                 6162.64

 1992-93                            + 34.9 %                                  8316.15

 1993-94                            + 37.2 %                                11409.89                            

-------------------------------------------------------------------------------------------------------

 The Compounded Annual Growth Rate (CAGR) of the Indian industry's export of cut and polished diamonds over last 9 years i.e. from 1985-86 to 1993-94 works out to 28.77% p.a. and in the last 3 years i.e. from 1991-92 to 1993-94 it was 34.03% p.a.

 PRESENT BUSINESS

 At present, the Company buys 'Roughs' mainly from DTC and contracts out for cutting and polishing. The entire cut and polished diamonds are then exported to clients all over the world and in particular, to Hong Kong, U.S.A., Japan and Belgium. During the year 1993-94, the laser processing unit of the Company commenced its operations.

 Suashish Diamdeal (India) Limited (SDIL) Suashish Diamdeal (India) Ltd. is a 100% subsidiary company of Suashish Diamonds Limited. It was incorporated as a public limited company on 18th September, 1992 and has become a 100% subsidiary company of Suashish Diamonds Ltd. with effect from 24th May, 1993.The Company has commenced business operations in 1994-95. During the first 5 months ended August '94, the Company has made export of diamonds for Rs. 75.6 lacs apart from local sales of imported gold for Rs. 363.5 lacs. The Company has been issued a bulk licence under the Exim Policy of US,759,588.

 The financial highlights of the subsidiary company are as follows:

 The main objects of the subsidiary company to be purused are

 1.  To act as importers, exporters, manufacturers, processors, wholesalers, distributors, retailers, dealers and indenting agents of diamonds, synthetic stones, gems & jewellery precious and semi-precious stones.

 2.  To carry on, conduct, manage and administer the business of refining, boiling, processing, assorting, cleaning, classifying, clifting, blocking, polishing, preparing, chiselling, kerfing, cleaving, sawing, drilling, bruting through laser or other process cut or uncut coarse and or polished gems, diamonds including industrial diamonds.

 b) Suashish Jewellery Exports Limited (SJEL)  SJEL was incorporated on 28th October, 1992 to act as importers, exporters, manufacturers, wholesalers, distributors, retailers, dealers and indenting agents of jewellery, studded gold jewellery plain gold jewellery gems, diamonds, synthetic stones, precious and semi- precious stones. SJEL has become a subsidiary of SDL from 24th October, 1994. SJEL is setting up a jewellery manufacturing unit at Santacruz Electronics Export Processing Zone. The Company has not commenced commercial production till 31st August, 1994.

 c)        Suashish Diamonds (Hong Kong) Ltd. - Proposed subsidiary  The above Company has been incorporated on 23rd June, 1994 at Hong Kong and the proposed investment by SDL in the shares of the above Company is yet to be made. There is no holding company of Suashish Diamonds Ltd.

 2009 - Suashish Diamonds Ltd has informed that Mr. Mayank Pramodchandra Bajaj has been co-opted as an Additional Director of the Company with effect from June 25, 2009 by means of Circular Resolution passed by the Board of Directors of the Company. Mr. Bajaj shall act as Non-executive and Independent Director of the Company.

NSE:

Listed On                 :16:May:1995

Issue price                : 155

Face Value                : 10

Life time High          :200       7-Jun-95

Life time Low           :12.75    25-Sep-01

  

 Delisted On:

Jan 17,2002  Open16.00  LTP 16.00  Day's Range   16.00 16.45

BSE :

Incorporation Date                  : 05/10/1988

Public Issue Date                    : 27/01/1995

Book Closure Start Date         :23/09/2010

Book Closure End Date          : 29/09/2010

Face Value                              :10.0

Issue price                               : Rs. 185

Market Lot Of Equity Shares  :1

BSE Code                              :526733

BSE Group                            : B

Life time High        : 480   26-Aug-08

Life time Low         : 14     4-Oct-01

Share holders:

(in %)   Dec-10            Sep-10 Jun-10

Promoter          89.43   89.43   89.43

FII       --         --         --

DII       3.56     3.85     3.92

Others  7.01     6.72     6.65

Total    100.00 100.00 100.00

DIVIDEND

04/08/200818/09/2008                        Final18.75%                  54*1.87=100.98

08/03/200721/03/2007                        Interim15%                    54*1.50=081.00

07/04/200622/06/2006                        Final15%                        54*1.50=081.00

07/03/200517/06/2005                        Final15%                          54*1.50=081.00

03/07/2001                                          Final5%                            54*1.50=081.00

11/09/2001                                          Final5%                             54*1.50=081.00

18/04/2000                                          Interim10%                       54*1.00=054.00

18/06/1999                                          Final15%                          54*1.50=081.00

06/1998                                               Final15%                          54*1.50=081.00

                                                                                                          Total=721.98

Share Return:

BSE:

Assumed investment: Rs.10000.

Investment initiated on 1995.

Rs. 10000 worth of shares: 54(Per share Rs.185, 10000/155=54)

As on  28 Feb 2011  return of investment Rs.138.30

(as on 28 Feb 2011 Market price)*54shares=7468.2+721.98(dividend)=8190.18.

Same time Rs.10000 investment in gold.

As on 1995 gold price is Rs.32.43per grm, Rs.10000 worth of gold:308.35(Per grm gold 32.43,10000/32.43=308.35grm rounded of 308)

Return as on  2011 gold price is 1900 per grm (as on feb 2011 market gold price 1900 Per grm)308grm*1900=585200.

GOLD CHART

1994

1995-2010

2011

        

           Asian Star Company Ltd

1971

Asian Star Company was registered as a partnership firm in by the Shah family and Kothari family. The Promoters of the Company are the partners of the erstwhile firm, Asian Star Company and hail from North Gujarat.

- The company has processing facilities at Thala, Mandvi and Goregaon which have been taken on a leave and license basis from associate firms/group companies.

The Company's main activities are importing rough diamonds, cutting and polishing them and exporting of cut and polished diamonds. The Company is carrying out its processing activities from its facilities at Goregaon, Mumbai; Mandvi and Gopipura in Surat & Thala (Chikhli) in Gujarat. It also gets work done on a job work basis from contractors in Mumbai and Surat.

1990

In view of the growing business, both families mutually agreed to amicably separate the business and continue their business in diamonds. The Kothari family continued business under the name of P. D. Kothari & Co. and Asian Star Company has since established itself as a diamond processor engaged in the import of rough diamonds and the export of cut and polished diamonds.

1991

The Company has obtained NOC/Clearance Orders from the Pollution Control Board of Gujarat for the Surat facility vide registration No. 3500, dated 4th October, from the Mandvi Gram Panchayat for the facility at Mandvi.

The Company is Two Times Award winder for highest exports from Gem and Jewellery Export Promotion Council under the Non-DTC category for the year 1991-92 and 1992-93.

The Company is a recipient of National Export Award and Certificates of Merit from Ministry of Commerce for highest growth in exports in the year 1991-92 and 1993-94 respectively.

1993

However in January, on the basis of the Company's performance, DTC reconfirmed the Company as a "Sightholder".

1994

In four year it has secured 31st position of among the top 100 exporters (10th position in the diamond industry) in India for the year according to the report by Federation of Indian Export Organisation, New Delhi, dated September 18, 1995.

1995

The Company is formed by registration of the Partnership firm previously known as Asian Star Company into a Limited Company under Part IX of the Act on March 2, and was granted Certificate of Commencement on 7th March.

The Company has entered into contract with M/s. Rahil Agencies to process rough diamonds at its factories situated at Goregaon, Chikhli (Valsad) and Mandvi (Surat) as per agreements dated 1st February, for a period of five years.

The Company was registered as a public limited company under part IX of the Companies Act on 2nd March.

1996

 The Company entered the Capital Market with a Maiden Public Issue of 26,70,000 equity shares of Rs. 10/- each at a premium of Rs. 65/- per share, which was opened for Public subscription on 13th May.

1997

Indian Diamond Industry had witnessed a bad patch during last year as a result of uncertain market conditions created by breaking up of single channel supply, excessive supply in open market, high rate of interest on Post Shipment finance by Banks.

- The Branch office of the Company at Hong Kong and New York was closed during the year. With due approval of RBI and Government of India a wholly owned Subsidiary Company under the name of ASIAN STAR COMPANY LIMITED with a paid-up capital of US$ 500000/- (Rs. 17875000/- approx.) was incorporated at New York, U.S.A.

1998

1,06,71,200 No. of Equity Shares of Rs. 10/- each of the Company listed on Ahmedabad Stock Exchange be delisted on and from 1st April 1999.

The Company needs additional funds to meet the working capital it is therefore proposed to increase the limits as stipulated in the resolution.

During the year under review Indian Diamond Industry has witnessed a modest rise of 6% over the previous year despite the recession in most consuming centers as well as financial crisis in the Far East Countries.

The company has been awarded ISO : 9002 certification by RWTUV, ESSEN, West Germany.

Public Issue Date             : 13/05/1996

Book Closure Start Date  : 15/09/2010

Book Closure End Date   :  21/09/2010

Listing Price                     :  Rs.75

Face Value                        : 10.0

BSE Code                         : 531847

BSE Group                       : B

Life time high                   : Rs.1999    1-Oct-09

Life time Low                   : Rs.75        24-Jul-96

Year	Month	Dividend (%)
2010	May	20     133*2=266
2009	Aug	20     133*2=266.00
2008	Jun	20     133*2=266.00
2007	Jun	20     133*2=266.00
2006	Jul	20     133*2=266.00
2005	Jul	20     133*2=266.00
2004	Jun	20     133*2=266.00
2003	Jun	40     133*4=266.00
2002	Jun	10     133*1=133.00
2001	Jun	15     133*1.5=199.5
2000	Mar	75     133*7.5=997.5
1999	Aug	18     133*1.8=239.4
1998	Jul	8       133*0.8=106.4
1997	Nov	10     133*1.0=133.0
1997	Jul	15     133*1.5=199.5

                       Total = 3870.30

Share holding

(in %)   Dec-10            Sep-10 Jun-10

Promoter          74.97   74.97   74.97

FII       0.03     0.03     0.04

DII       4.47     4.47     4.46

Others  20.53   20.53   20.53

Total    100.00 100.00 100.00

Share Return:

Assumed investment: Rs.10000.

Investment initiated on 1996.

Rs. 10000 worth of shares: 133(Per share Rs.185, 10000/75=133)

As on  28 Feb 2011  return of investment Rs.1073

(as on 28 Feb 2011 Market price)*133shares=142709+3870.30(dividend)=146579.30.

Gold Return:

Same time Rs.10000 investment in gold.

As on 1996 gold price is Rs. 35.52per grm, Rs.10000 worth of gold:281.5(Per grm gold 32.43,10000/35.52=281.5grm rounded of 281)

Return as on  2011 gold price is 1900 per grm (as on feb 2011 market gold price 1900 Per grm)281grm*1900=533900.

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NEGATIVE VOLUME INDEX

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.

The interpretation of the NVI assumes that on days whenvolume increases, the crowd-following “uninformed” investors are in the market. Conversely, on days with decreased volume, the “smart money” is quietly taking positions. Thus, the NVI displays what the smart money is doing.In Stock Market Logic, Norman Fosback points out that the odds of a bull market are 95 out of 100 when the NVI rises above its one-year moving average. The odds of a bull market are roughly 50/50 when the NVI is below its one-year average. Therefore, the NVI is most usefuly as a bull market indicator.

Example:

The following chart shows Avon and its NVI. I drew “buy” arrows whenever the NVI crossed above its 1-year (255-trading day) moving average.

I drew “equal-signs” when the NVI fell below the moving average. You can see that the NVI did a great job of identifying profitable opportunities.

Calculation:

If today’s volume is less than yesterday’s volume then:
If today’s volume is greater than or equal to yesterday’s volume then:

If today’s volume is greater than or equal to yesterday’s volume then:


Because falling prices are usually associated with falling volume, the NVI usually trends downward.

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DOJI METHODS - Indicator

The Japanese developed a method of technical analysis to analyze the price of rice contracts. This technique is called candlestick charting. Steven Nison is credited with popularizing candlestick charting and has become recognized as the leading expert on their interpretation.Candlestick charts display the open, high, low, and closing prices in a format similar to a modern-day bar-chart, but in a manner that extenuates the relationship between the opening and closing prices. Candlestick charts are simply a new way of looking at prices, they don’t involve any calculations.Each candlestick represents one period (e.g., day) of data. Figure 45 displays the elements of a candle.

Interpretation

I have met investors who are attracted to candlestick charts by their mystique–may be they are the “long forgotten Asian secret” to investment analysis. Other investors are turned-off by this mystique–they are only charts, right? Regardless of your feelings about the heritage of candlestick charting, I strongly encourage you to explore their use. Candlestick charts dramatically illustrate changes in the underlying
supply/demand lines.

Because candlesticks display the relationship between the open, high, low, and closing prices, they cannot be displayed on securities that only have closing prices, nor were they intended to be displayed on securities that lack opening prices. If you want to display a candlestick chart on a security that does not have opening prices, I suggest that you use the previous day’s closing prices in place of opening prices. This technique can create candlestick lines and patterns that are unusual, but valid.
The interpretation of candlestick charts is based primarily on patterns. The most popular patterns are explained below.
Bullish Patterns

Long white (empty) line.This is a bullish line. It occurs when prices open near the low and close significantly higher near      the   period’s high.

Hammer.This is a bullish line if it occurs after a significant downtrend. If the line occurs after a significant up-trend, it is called a Hanging Man. A Hammer is identified by a small real body (i.e., a small range between the open and closing prices) and a long lower shadow (i.e., the low is significantly lower than the open, high, and close). The body can be empty or filled-in.

Piercing line.This is a bullish pattern and the opposite of a dark cloud cover. The first line is a long black line and the second line is a long white line. The second line opens lower than the first line’s low, but it closes more than halfway above the first line’s real body.

Bullish engulfing lines.This pattern is strongly bullish if it occurs after a significant downtrend (i.e., it acts as a reversal pattern). It occurs when a small bearish (filled-in) line is engulfed by a large bullish (empty) line.

Morning star.This is a bullish pattern signifying a potential bottom. The “star” indicates a possible reversal and the bullish (empty) line confirms this. The star can be empty or filled-in.

Bullish doji star.A “star” indicates a reversal and a doji indicates indecision. Thus, this pattern usually indicates a reversal following an indecisive period. You should wait for a confirmation (e.g., as in the morning star, above) before trading a doji star. The first line can be empty or filled in.
Bearish Patterns

Long black (filled-in) line.This is a bearish line. It occurs when prices open near the high and close significantly lower near the period’s low.

Hanging Man.These lines are bearish if they occur after a significant uptrend. If this pattern occurs after a significant downtrend, it is called a Hammer. They are identified by small real bodies (i.e., a small range between the open and closing prices) and a long lower shadow (i.e., the low was significantly lower than the open, high, and close). The bodies can be empty or filled-in.

Dark cloud cover.This is a bearish pattern. The pattern is more significant if the second line’s body is below the center of the previous line’s body (as illustrated).

Bearish engulfing lines.This pattern is strongly bearish if it occurs after a significant up-trend (i.e., it acts as a reversal pattern). It occurs when a small bullish (empty) line is engulfed by a large bearish (filled-in) line.

Evening star.This is a bearish pattern signifying a potential top. The “star” indicates a possible reversal and the bearish (filled-in) line confirms this. The star can be empty or filled-in.

Doji star.A star indicates a reversal and a doji indicates indecision. Thus, this pattern usually indicates a reversal following an indecisive period. You should wait for a confirmation (e.g., as in the evening star illustration) before trading a doji star.

Shooting star.This pattern suggests a minor reversal when it appears after a rally.The star’s body must appear near the low price and the line should have a long upper shadow.

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