Isaac Newton ♥ StockViz

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How would Newton trade stocks if he were alive?

Having lost $2.72 million USD in today’s money due to speculation in The South Sea Company stock in the 1720s, he would be very vary about hyped-up stocks that go up without a reason. He claimed to have said: “I can calculate the motions of heavenly bodies, but not the madness of people.”

However, a little known fact is that Newton first invested a small amount prior to the South Sea bubble and exited at a profit in the early stages before the bubble really got going. Newton then sees his friends getting rich as the bubble really gets going and re-enters near the peak of the bubble with a lot of money. Newton had to exit broke after the stock falls roughly back to where he had initially invested just a small amount of money.

If Newton were to be alive today, he would using our Trailing Stop Loss alerts.

How are you protecting your profits?

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Analysis: LICHSGFIN

Today’s pick is LICHSGFIN [stockquote]LICHSGFIN[/stockquote]. The stock has been on a constant uptrend for the entire year coupled with many corrections. It touched its 52 week high of Rs. 287 in October. The stock is currently hovering around the same levels after experiencing a double bottom around Rs. 240 levels. In the last three months, the stock is up 6% vs. 8% of the Nifty’s.

LICHSGFIN technical chart

Oscillators RSI and CMO are deep inside the over-bought territory – a bearish sign for the scrip.

The MACD line and the signal line are moving parallel to each other not suggesting any direction for the stock. Also, both long-term and short-term GMMA lines are wide open, giving an extremely bullish signal.

LICHSGFIN correlation plot

LICHSGFIN’s average correlation of 0.62 with the Nifty is positive and strong. The stock will be replicating the movements of Nifty. [stockquote]NIFTYBEES[/stockquote]

LICHSGFIN volatility chart

LICHSGFIN has a historical volatility in the range of 0.3 to 0.8. The scrip’s volatility currently is in the lower range.

LICHSGFIN Fundamental

From a fundamental point of view, Globe Capital has a BUY on LICHSGFIN. The decrease in NPA ratio and an outlook to attain a higher net interest margin are expected to boost company’s profit organically.

To conclude, given these technicals, the stock is a short-term SELL. For the long-term the stock does not seem to have a visible resistance level (if it clears 287, the sky is the limit.) Also the fundamentals are bullish: long-term BUY

 

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Quantitative Option Strategies

The markets have been all around the place in the last few week. And this has created a lot of confusion in the minds of traders too. So, how do you make money in such scenarios?

The best way to be in the markets right now is to get exposure in the derivatives market. Here are a few options trade that made 33%, 19% and 7% when the markets went nowhere last week.

 ACC options position

LT Options position

BATAINDIA Options position

Even when the respective stocks were -1%, -2% and -3.3% there options position have made much more profits.

The ideas based on the algorithms helped us take these positions and carve out the profits even under such market conditions. You too can use these ideas to get more greens in your portfolio.

Open a StockViz Demat account today and go Pro!

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Analysis: TATACOMM (TCL)

Today’s pick is TATACOMM [stockquote]TATACOMM[/stockquote]. After an initial uptrend that lasted until February, the stock collapsed towards Rs. 200 levels. Testing it a couple of times times through July, the stock tried moving up but met with resistance around 260 levels and has been trading between Rs. 220 to Rs. 260 range since. In the last three months, the stock is down –7% against 8% rise of the Nifty’s.

TATACOMM technical chart

Oscillators RSI and CMO are nearing towards the over-sold territory. But they still have to cover some distance before they give any bullish sign.

The MACD line and the signal line are moving very close to each other, making it very unclear as to what might be in store for the stock for the short term.

The long-term GMMA and the short-term GMMA lines are also unable to give any directional suggestion as they are not well dispersed. Also, the 9×18 technical gave a near term bearish sign for the scrip just last week.

TATACOMM correlation chart

TATACOMM’s average correlation of -0.13 with the Nifty is negative. The stock will not be replicating the movements of Nifty given a negative correlation co-efficient. [stockquote]NIFTYBEES[/stockquote]

TATACOMM volatility chart

TATACOMM has a historical volatility in the range of 0.4 to 1.2. However in the last few years it has been in the 0.4 – 0.8 range. The scrip’s volatility currently is in the lower range.

TATACOMM analyst recommendations

Analysts have given an underperform rating to the scrip based on its expected earnings of the next 3 months.

Given these technicals and analysts outlook, the stock is a short-term SELL. A break out of the range-bound movement in any direction would suggest the longer-term direction for the scrip.

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Weekly Recap

NIFTY.2012-12-10.2012-12-14

The NIFTY ended on a negative tone, drifting down -1.12% for the week.
Biggest losers were BHEL (-7.45%), TATAPOWER (-4.64%) and NTPC (-4.41%).
And the biggest winners were BAJAJ-AUTO (+7.29%), BANKBARODA (+5.42%) fii.2012-12-10.2012-12-14and JINDALSTEL (+5.22%).
Decliners eclipsed advancers 30 vs 20
Gold: -0.01%, Banks: +0.24%. Infrastructure: +4.41%,
Net FII flows for the week: $1,070.86 mm (Equity) and $306.36 mm (Debt)

 
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