Sensex Technical View by Twiggs Money Flow Indicator

The Sensex shows a strong bullish divergence on Twiggs Money Flow (13-Week), indicating reversal to an up-trend. Breakout above 10500 would confirm. Respect of resistance, however, would warn of another test of 8000.

Dow ZOnes Technical View

The Dow encountered short-term resistance at 8000, but declining volume indicates limited interest from sellers. Twiggs Money Flow (21_day) continues to respect the zero line from below; penetration of the rising trendline would warn of another down-swing, while breakout above zero would signal continuation of the rally. Buyers are driving the market and a test of 9000 is not out of the question, but long-term sentiment remains bearish and reversal below 6500 would offer a target of 5000.

CAIRN INDIA Traingle Breakout on Cards

Excellent Triangle Breakout Trade can be
Initiated in Cairn India Above 164 we can see 174 and coincidentally it is 61.8% Retracement SL should be 158.

Can Nifty Show a Dead CAT Bounce as its Global Peers

Closing of Nifty near its recent lower level around 2575 has left a hope of a bounce-back . Nature of this bounce can only be decided after viewing the intensity of it .Whenever the formation shown in figure emerges on the charts , it provides a strongchance of a bounce. If nifty would have closed below 2560 ,
This bounce may sustain , if and only if nifty cross and close above 2675 , around 100 points above current levels . If that happens , we may further witness a sharp upmove till 2900 . but lets not go far in positive anticipation .

Technical Views on HDFC BANK

11 Take-Aways from Buffett's Annual Letter

I took some time on Sunday afternoon to read Warren Buffett's annual letter. I don't make it an annual practice to read the Berkshire Hathaway (BRK. A) letter as many do (nor have I ever been to the shareholders' meeting which Buffett calls "Woodstock for Capitalists"). But given that 2008 was a year unlike any that I have ever witnessed, it seemed like the thing to do on a cold and snowy afternoon.

Buffett and his partner Charlie Munger are the most successful stock market investors of the 20th century and they have consistently outperformed the public markets as shown by this table (click to enlarge) of annualized returns that I put together with data from the first page of Berkshire's annual report (I love that Buffett starts with the numbers):

It is very interesting to me that the past five decades have seen the S&P significantly outperform the long term average for equities of around 7% per annum. Even with the miserable performance of the public markets this decade, we'd have to be flat for another decade at least for the markets to average 7% per annum from 1965 on.

But Buffett and Munger's performance is something else entirely. While it is correlated to the market for sure, it has been so consistently superior for so long that it is clear that they are doing something right (and better).

So with that in mind, here are my take aways from reading Warren's letter.

1) The economy - It's really bad. Warren says the "freefall in business activity" is "accelerating at a pace that I have never witnessed before."

2) TARP and related efforts to stablize the financial system - The Fed "stepped in to avoid a financial chain reaction of unpredictable magnitude. In my opinion, the Fed was right to do so." But it will "bring on unwelcome aftereffects." One likely consequence is "an onslaught of inflation." And "major industries have become dependent on Federal assistance, and they will be followed by cities and states bearing mind-boggling requests. Weaning these entities from the public teat will be a political challenge. They won't leave willingly." That last line is classic and true and Obama's greatest challenge.

3) Berkshire's two most important businesses are insurance and utilities, sectors that "produce earnings that are not correlated to those of the general economy."

4) Buffett and Munger are value investors and contrarians. Warren says "When investing, pessimism is your friend, euphoria the enemy" and "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down" and "Beware the investment activity that produces applause; the great moves are usually greeted by yawns." Words to live by.

5) Housing - Berkshire has exposure to the mortgage and housing market by virtue of its ownership of Clayton Homes, the largest company in the prefab home market. Buffett says "Enjoyment and utility should be the primary motives for [home] purchase, not profit or refi possibilities. And the home purchased ought to fit the income of the purchaser." And "an honest to God down payment of at least 10% [I think 20%] and monthly payments that can be comfortably handled by the borrowers income. That income should be carefully verified."

6) History as a predictor of the future - "If merely looking up past financial data would tell you what the future holds, the Forbes 400 would consist of librarians."

7) Quants - "Beware of geeks bearing formulas."

8) Lean and mean organizations - "BHAC: Who, you may wonder, runs this operation? While I help set policy, all the heavy lifting is done by Ajit and his crew. Sure they were already generating $24 billion of float along with hundreds of millions of operating profit annually. But how busy can that keep a 31-person group? Charlie and I decided it was high time for them to start doing a full day's work." Wow. I'm stunned. And now I have something other than Craigslist to use as an example of a lean and mean profit generating machine.

9) Bubbles and Panics - "The investment world has gone from underpricing risk to overpricing it." And "When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s. But the US Treasury bond bubble of late 2008 may be regarded as almost as extraordinary."

10) Derivatives - "Derivatives are dangerous" and "When Berkshire purchased General Re in 1998, we knew we could not get our minds around the book of 23,218 derivative contracts, made with 884 counterparties. So we decided to close up shop. Though we were under no pressure and we operating in benign markets as we exited, it took us five years and more than $400 million in losses to largely complete the task. Upon leaving, our feelings about the business mirrored a line in a country song: "I liked you better before I got to know you so well."

11) Risk and Responsibility - "It is my belief that the CEO of any large financial organization must be the Chief Risk Officer as well. If we lose money on our derivatives, it will be my fault."

I'll stop there because I really like lists with eleven entries. It's a quirk of my personality. All you have to do is read Warren's letter (or even my cliff notes version) to understand why he's the best investor of the past century. Common sense married with a native understanding of markets and value is what produces the returns at the top of this post. Everyone who invests and manages money for a living can take a lot away from Berkshire Hathaway and Warren and his partner Charlie.

By: Fred WIlson

Trading Ideas for 9-13 March Week

Hi all

Wish you all a Very Very Happy Holi

We had a so-so Week and will look to rock for the week coming forward

2800 CE was a spoil sport in our rocking Options call performance But we tried to cover our loss from ICICI Bank Short Call which gave us rs10 in intra day trade

Going Forward it is a Holiday Truncated Week, So we will take positions on Intra basis,

NIfty is ready for a bounce till 2700-2720 so it is better to play in 2700 CE buy that around rs 20-22

Stock Specific

SBIN stock is in Oversold Zone BOunce back to 1020-1030 is accepted in coming week

REl Capital looks week on chart can see RS 200 Short with sl of 310

INfy short around 1260 sl 1280

ICICI long can be intiated above 280 for a tgt of 320

Bank of India facing support @191 trade long above that and short below this


Regards,

Bramesh

Gold Weely Chart

Click on Image to Enlarge Breaking The Flag Pattern 1000 Dollars is a level to be seen

5 investment secrets of a self-made millionaire

I had been investing for a number of years before I learnt how to deal with risk. By solidly identifying some market opportunities I had achieved good results, but I treated finance as a game of chess, an exact discipline, where I expected to benefit from good decisions and suffer from poor ones.

1. How to deal with risk

This over-ambitious approach occasionally caused some bad habits. For instance, when I was not performing well, I made three basic mistakes:

• I let losing positions drag on for longer than I should, as I hoped that eventually, I would be proved right.
• I was a bit harsh on myself, and I assumed that to make a loss, must have missed something obvious.
• I let it depress me that many hours of work on research and analysis could actually lead to failure.

Equally, when I made profits, I was over-ambitious and assumed that my reasoning had been right. I thought I was a hero!

Backgammon rather than chess

Fortunately, it didn't take long before I evolved a different way of thinking. I realised that luck plays a role in the investment world. Profits can be simply due to good luck, and losses simply due to bad luck. Financial markets are more like a game of backgammon than a game of chess, because unpredictable events in the markets simulate the involvement of the dice.

With this discovery I started treating markets as partly random and accepted that there was always going to be risk. There is no perfect investment or trade. This approach helped my trading enormously.

• I stopped blocking the possibility of losses out of my mind like some dark fear, and I began to consciously anticipate them.
• I accepted that it would not always be possible to find a reason for a trade going wrong, apart from just chance. So I gave up over-analysing losses with endless post-mortems looking for my mistakes.
• I learnt to assess risks and look at factors like correlation and liquidity.
• Having consciously recognised risk, I reasoned that it was not always a good idea to try and minimise it. I knew that having identified some comparative advantages, I had to trust them to work over time.
• I accepted that even good ideas can lose money. That helped me to get better at cutting losing positions. Being wrong did not mean that I was a lousy trader. Even a trader with a comparative advantage will often make what is later found to be the wrong decision.

This attitude to risk is worth adopting. Accept that trading is unique�-- a doctor or a lawyer would quickly be out of business with the number of failures that are part of a trader's life.

2. Good ideas can lose money

In 1999 and early 2000, Warren Buffett was very sceptical about the rising valuations in the stock market, particularly those in the tech sector. Consequently, he didn't invest as aggressively as many other fund managers. Then, of course, in mid-2000 the share prices of many tech stocks collapsed to a fraction of their boom value.

It was a massive market crash, and the so-called 'Sage of Omaha' was proved right (yet again!). I'm sure, however, that even he must have felt some pressure when prices were relentlessly rising and his funds were under-performing. With his reputation though, his investors stuck with him through this difficult period, and he held firm. They believed that he had the right approach, even though he was not getting immediate results.

Analysis after a loss

If you've lost money on an investment, ask yourself questions such as:

• Were you pursuing a genuine opportunity?
• Did you understand how the market usually works?
• Did you back a big idea or market anomaly that you had identified?
• Was the potential reward worth the risk?

If you have let yourself down, learn from the experience and try not to do it again. But if the investment looks like it made sense, then try not to be put off. Accept that you cannot judge the quality of a single trade or investment by whether you made a profit or loss.

This approach is very disciplined. You do not want to change your investment style on the back of just a few disappointments.

The outcome of an investment or trade is not necessarily a true reflection of the merits of the original idea. Good ideas can lose money.

3. Wild swings and losses are uncomfortable, but they may offer the best rewards

While the markets have evolved and become increasingly sophisticated, there has been enormous scrutiny of just about every possible opportunity. Any obvious and reliable way to make money has now probably disappeared.

This means that there are fewer opportunities which offer smooth above-average returns. In fact, the opportunities likely to last longest are those which are the most uncomfortable. Would you be prepared to back an idea that would probably lose money eleven months out of twelve, even if it would probably pay off in the other month?

A lot of traders don't want that life. A lot of funds would be hammered with capital withdrawals by their investors. We live in a quarterly or annual reporting world. People evaluate performance over a given period and take action if results are not up to scratch.

By careful management of risk, however, you may be able to take on these uncomfortable types of investments. In the mid 1990s, I had "retired" and I only wanted to invest my own money. I continued to trade currencies and futures on my own account, and I also decided to start investing in early stage companies.

Early stage companies are often private companies which are not listed on any share market, although that is normally their aspiration. There are many of these little unlisted companies searching for financial backers, and they usually find it very difficult, since few investors are interested in them.

4. Opportunities may be found in areas that others find uncomfortable

One of my reasons for moving into this high risk sector, was that many people find the risk profile too uncomfortable. The majority of the companies fail, and the investor needs to select his investments extremely carefully, and trust that the winners will more than compensate for the losers.

Investors also have very little liquidity, and they may have to wait years for a chance to get some money back when the company floats on the share market or is acquired by another company.

This is why I came to the conclusion that good, small companies can be underpriced. This can be an advantage for anyone investing in start-ups if they are able to sort through the many companies looking for money and to choose the good over the bad. I have found the process is not that different to looking at the fundamentals driving currencies, interest rates or other markets, and over a ten year period, I have managed to achieve well over a 20 per cent�annual return despite the market collapse in 2000.

Not everyone though, can invest in unlisted companies. The minimum investment needed is at least 50 grand, and you probably need a network to make the introduction. However, I have also been able to apply the experience I have gained from dealing with unlisted companies to help me evaluate small companies which are already listed on the share market.

These are accessible to all investors. In a later chapter I will explore the fundamentals of small companies which I think are important for investors to assess. The small listed companies are also generally riskier than the big solid blue chip stocks, but by making an effort to investigate these opportunities and by managing your risk, you may find that these more uncomfortable investments offer a better price.

In general, keep a lookout for investments and trading styles that others don't like. It is logical that it may be here that you find the winners.

5. Diversify

The benefits of diversification are very well-known. There is a famous expression saying that diversification is the one "free lunch" for the investor. No collection of strategies would be complete without a mention of this easy meal. The world is risk averse. People want to avoid nasty surprises. Investors would prefer to have steady reliable returns, rather than potential wild swings of wins and losses.

Diversification can allow investors to reduce their risk without reducing their overall return. The idea of diversification is that it smoothes out the flow of wins and losses. It is unlikely that a variety of separate trading ideas will all win or lose at the same time. So even if we are placing riskier trades, it may not result in a riskier total portfolio.

I have discussed how I believe that uncomfortable trades with the big swings in wins and losses may offer the best rewards. So diversification is especially useful, because it may be possible to have a more comfortable existence, and still pocket the high return.

There are a few points to note about diversification:

• You can diversify within an asset class. For example, a stock portfolio can have a mix of some blue chips with some small stocks.
• Diversification across all asset classes (stocks, bonds, cash, gold, property, etc.) is more effective though, since the positions are less correlated.
• You shouldn't keep a losing position simply because another one is doing well. I was once very sloppy with a losing currency position, because I had a bond position that was profitable, and in aggregate I wasn't losing money. I realised later, that had I used my usual discipline I would have cut the losing position and been much better off.
• Every position in the portfolio should be based on its own merits.
• Remember that you can keep cash as one component in a diversified portfolio.
• Diversification is not an exact science. Since it is difficult to accurately measure risk, so for diversification a rough mix, based on instincts, is probably adequate.

(Excerpt from Taming the Lion: 100 Secret Strategies for Investing by Richard Farleigh, who made millions before he was 35 through shrewd investing. Published by Vision Books.)

Is Crude Ready for Bounce?

Financial Crisis explained in simple language

Raju is the proprietor of a bar in Hyderabad. In order to increase sales, he decides to allow his loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around and as a result increasing numbers of customers flood into Raju's bar. Taking advantage of her customers' freedom from immediate payment constraints, Raju increases his prices for wine and beer, the most-consumed beverages. Her sales volume increases massively. A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Raju's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the bank's corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide.

No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items.

One day, although the prices are still climbing, a risk manager (subsequently of course fired due to his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Raju's bar. However they cannot pay back the debts. Raju can not fulfil his loan obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %. The suppliers of Raju's bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor.

The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties (and vested interests). The funds required for this purpose are obtained by a tax levied on the non-drinkers.

BHEL Daily Charts

Twiggs Money Flow (21-Day) Indicator for BSE-30

The Sensex continues in a long, narrow consolidation — testing support at 8500. Rising Twiggs Money Flow (21-Day) indicates short-term buying pressure, but whether this is sufficient to overcome negative sentiment in international markets is questionable.

Nifty Weekly View and Tradig Ideas

Hi all

Hope all of you enjoyed good profits in 2800 CE and 2600 and 2700 PE almost 300% Profits for us in Feb series

HDFC given on Blog on Thursday evening gave almost 74 Bucks


Nifty is in a rangebound of 2720-2805 Range and my firm belief Markets are supreme and in short term it always move in a direction in which causes maximum pain to market players.

Put to call Ratio 1.4 which is at upper band

So lets wait for the Range to break for a Positional call Till than we should paly intra day only

Stock specific

Cairn India has formed a Bullish Engulfing Pattern and which can see a BOunce to 185-90 Levels in short term (1-2 weeks) Crude rising is Bullish for this scrip

ABAN offshore is to shorted on evry rise stock can go to sun 280 levels Looks very week on charts but can see a dead cat bounce so it is beeter to short on a bounce

Grasim stock is near its resistance to 1425-30 short at that level for a tgt of 1275-82 with a sl of 1475

NALCO buy if it breaks 210

No option call as of now as premium are bit high

Trade Less and Trade Safely with SL


Regards,

Bramesh

9985711341

S&P Long term Chart

Breaking of 737 can end Secular Bull Market in America