Sunday, March 7, 2010

Technicals and Charts....

I know there are many readers who don't like when I write against charts and technicals. When I elaborate their example they find it offended.I have also received some comments that Charts are not useless as I use to say.It has value and one can find it as a help and I remember someone also wrote me that he was able to sell everythiing in Jan 2008 and he was saved.I write against it becuase I have seen people being annihilated while following charts....Yes......ANNIHILATED...that is the word I would use......they get slauttered...Halal ho jate hai....charts ke nam pe......
I have some friends who reeligously follow them and they have told me that charts makes difference.I donno what  diference they got and how much they made good of that but I have always said and written here categorically that I do not believe in Charts and technicals and I will go on doing so.
I will never be able to believe that Charts makes the road and not the market.Chartist always have a point to prove that from charts reading one can be able to see where market is going and many here and many investor community and traders believes it as a fact.Technical analyst always says that from chart reading they can judge how the market will behave.But I have always written here and believed that fundamentals makes the movement and not the charts.
The problem with technicals analyst is ,they always say that they were correct.They never say they went wrong and that is natural according to me because if they do not stick with that then who will come to them?So I am not surprised when  I see a technical analyst saying ...I told so...and that  exactly happened.
I know there are some people who has that tendency to think that let technicals analyst say what they wants to and let us do what we wants....That is a good thinking but not all investor are such strong minded that they can ignore technicals.
I have got comments that Charts are never wrong but the readers are wrong.They do not understand it properly and hence they ends upgiving wrong signals.But I ask how many technical analyst are there who read the charts correct?If they are so good then why Stoploss always happens and then stock goes up?
I have experianced many times and have seen with others that SL is eaten and stock moves up?Now the meaning of SL is one need to sell if the stock goes below certain price as below that level that stock will still move further down, then why after going below SL, stock moves up?
When I give example of such type my readers feels offended.Like for example , Amit wrote me all levels and what will be the sensex and what will be the nifty and where they are headed...Now when I wrote that thing at the front page he didn't like it and end up writing me that I should have not done that...and that that guy was telling that market will not cross 4950! and ultimately that is also breached...and we are over 5k now.
Now I don't know the mentality of people.Instead of catching that guy by neck who misguided him he is tellling me not to have wrote what I did here.
I also wrote to Amit that he needs call that guy who recorded his voice and was betting that he is going to prove correct.Instead of that his answer was , He learnt a lesson! That is terrific.He( Amit) can write me that I should not have done that what I did, but is not ready to say anything to that guy!That is where my concern is.We are not ready to tell those who are proving wrong and instead we try to stop someone else.He actually sold almost eveything at that time after reading that guys analysis and he lost brokerage as he sold them and again after that guy prove wrong , he has to buy all those stock and again gave the brokerage.
I am not belittleing Amit here .What I wants to emphasize here is why don't you take the culprit by neck and ask him , instead saying I have learnt a lesson?
I wants to again write here that market is good and there is no need for any panic.Ups and Downs are part of market.Volatility will remain.These are all games operators play.If we have invested in fundamentally sound stocks then sooner or later the stock is going to go up.....


  1. Rajeev,

    Good POint. Charts are the result of yesterday human psychology which predict irregularity of the future of the market :). Dont Follow :)

  2. Rajeev,

    May i know your view on Consolidated Securities. :)

  3. rajeev bhai
    I saw recomendation on kirloskar ferro from one of the reputed analist on tv. Is there any news on this script, I hold qty on your recomendation.

  4. any call on vbc ferro alloys...holds a good stake in konaseema gas company...can this be a multibagger in the long term??


  5. Hi Rajeev,

    I would like to bring out a point here. This is just a reiteration.

    In Applied Science/Engineering/Statistics several Extrapolation methods are used when dependent value is not available for some range of independent variable.

    Some of the extrapolation methods are fairly simple, some are complex and some are customized as per the needs of the field/problem. Most of the extrapolation methods give fairly good result in 10% to 15% of previous data.

    However, extrapolation method gives just a hint on the possible values. These values need to be validated with the fundamentals.

    When we extend this to stocks, this becomes Technical Analysis.

    Keeping in mind that extrapolation works only in 10 to 15% of the range, suppose that the stock has a history of 5 years, technicals can give very wage value for max 6 months, subjected to a condition that there is no drastic change in the Trends/Company/Global Market.

    The following factors are prominent when we are looking at multi-baggers
    1. Less company/sector/product history
    2. Sudden change in Trends (Demand/Global markets)
    3. Extrapolation to more 100% time of company's history

    Hence, Technical Analysis is not effective in Multi-Baggers.

    Considering the above understanding, Technical Analysis can be used ONLY AS A HINT / WORD OF CAUTION.

    But, if fundamentals do not agree with technicals, then technical go for a Toss.

    Please comment on this and let me know if my understanding is correct.


  6. Hi Prashant,
    Technical analysis or charts gazing is never going to be finished because there are lots of people who follows it.
    Prashant, the beauty of chart is its reading.Its technical that makes IIM's, MBA's,IIT's look at it.They feel it challenging and hence they try to learn it and as everything gives some rate of success and when they are able to read one pattern successfully they start believing that Charts can give all future road.
    But that is never the case as has been seen by us since 2003.
    I have been telling this thing time and again that did chart said that there will be a 20% UC for sensex on Election day?
    What u have written is also correct.It is for very ST forecast and that too only 20% and not more.
    Operators sits with the charts when they move a perticular stock.They eat the SL and take away all the money and then take it up again.Try trading by yourself.80% chart pattern will go wrong and one can't boast for beiong 20% correct...
    You must have read what one of the reader wrote me about Nifty going to 3000 and sensex at 6000....and have you seen the audacity of the guy who claimed that....?He recorded the voice of Amit and challenged him that he will play when he proves correct....that is the problem here...I know the whole world of technical analyst were singing only one tune and that was we will see 12k and even less.....
    I just wants to only say that learned people must try to able to see how much chart is proving correct....but then if they speak against it then who will subscribe them?

  7. Deepak,
    I think VBC Ind also holds stake in Konessema Power and it is cheaper then VBC Ferro...

  8. Sandeep,
    I would like to read what he said for Kir Ferro....