Noiselessness Newsletter Volume 6 24th May 2017 www.definedge.com Nifty P&F analysis Chart shown below is 10 x 3 Point & Figure chart of Nifty Broader market trend is bullish, price is trading above bullish 45 degree trend line Current formation is High Pole which indicates short term weakness Price has formed Triple top bullish formation above 9360 Bullish counts shown on the chart are still open 9250- 9300 is a reference zone. Price will breach bullish trendline and negate the bullish triple top formation hence it will turn bearish below it. www.definedge.com Below is a P&F X-percent breadth indicator of Nifty 50 Advantage of breadth indicator over price oscillator is that it shows the health of constituents and not just the index price. In P&F X-percent indicator, we call it a neutral zone when it is between 75 and 25. Above chart shows that breadth line has remained in comfortable zone since Feb 2017 when Nifty went up by ~900 points. Currently, it is at around 25 zone which is the extreme zone. When it approached the extreme zone, it indicates price or time correction hence positional trades can be avoided or allocation should be less. www.definedge.com Bank Nifty P&F analysis Below is a 0.50% x 3P&F chart of Bank Nifty showing short and medium term picture. Bullish count shown during last newsletter is achieved. Chart is bullish and price is trading above 45 degree line. Below is a relative strength chart of Bank Nifty against Nifty. Currently, Bank nifty is out-performing Nifty and remain bullish unless it closes below 22230. www.definedge.com Sector Relative Strength analysis Relative strength charts plot P&F of a ratio chart of two instruments. Price of numerator is outperforming denominator if ratio line is rising. Conversely, it is under-performing denominator if ratio line is falling. P&F formations help in identifying and scoring the sectors and it’s constitutes based on the RS score matrix. Read here to understand the methodology of scoring a chart based on P&F formation of last three columns. www.definedge.com www.definedge.com Nifty-500 Index: P&F Multi-column breakout list Below is the list of stocks from Nifty-500 stock group where Triple top bullish formation is active on higher box value (3% x 3 Point & Figure chart). Pattern is considered as active unless basic sell signal is generated in the chart. Sr Qualification Current Running G/L Stock Name Status No price price % 1 AEGISCHEM 106.9 184.7 72.78% Open 2 AIAENG 1041 1400 34.49% Open 3 AKZOINDIA 1441 1773.8 23.10% Open 4 AMTEKAUTO 39.13 33.95 -13.24% Open 5 APLAPOLLO 468.65 1332.3 184.28% Open 6 ASAHIINDIA 166.55 240.95 44.67% Open 7 ATUL 2453 2400 -2.16% Open 8 AXISBANK 428.9 499.3 16.41% Open 9 BAJFINANACE 924.9 1224.35 32.38% Open 10 BANKINDIA 127.65 141.2 10.61% Open 11 BEML 1104.35 1133.5 2.64% Open 12 BERGEPAINT 166.55 242.45 45.57% Open 13 BIOCON 1010.6 892.7 -11.67% Open 14 BRIGADE 182 245.8 35.05% Open 15 CCL 283.55 287.8 1.50% Open 16 CENTRALBK 110.15 104.9 -4.77% Open 17 DREDGECORP 455 554.45 21.86% Open 18 EIDPARRY 267.25 305.5 14.31% Open 19 ESCORTS 176.7 601.25 240.27% Open 20 EXIDEIND 166.55 222.15 33.38% Open 21 FCONSUMER 24.4 29.25 19.88% Open 22 FINCABLES 267.25 491 83.72% Open 23 FORTIS 204.85 194.35 -5.13% Open 24 GAIL 283.55 390.65 37.77% Open 25 GLAXO 3497.5 3017 -13.74% Closed 26 GODREJCP 1358.25 1758.35 29.46% Open 27 GREENPLY 204.85 275.15 34.32% Open 28 GVKPIL 7.3 5.7 -21.92% Closed 29 HDFCBANK 1137.5 1566.75 37.74% Open 30 HEROMOTOCO 2761 3567.6 29.21% Open www.definedge.com Sr Qualification Current Running G/L Stock Name Status No price price % 31 HSIL 319.15 337.75 5.83% Open 32 IGARASHI 668.15 820 22.73% Open 33 INDIACEM 95 184.55 94.26% Open 34 INDIGO 952.65 1057.75 11.03% Open 35 INDUSINDBK 981.2 1413.6 44.07% Open 36 IOB 29.15 25.25 -13.38% Open 37 IPAPPM 338.55 303.15 -10.46% Open 38 ITDCEM 113.45 172.95 52.45% Open 39 JSWSTEEL 100.8 189.6 88.10% Open 40 JYOTHYLAB 328.7 372.65 13.37% Open 41 KTKBANK 161.7 157.7 -2.47% Open 42 LT 1621.8 1684.45 3.86% Open 43 M&MFIN 300.8 296.5 -1.43% Open 44 MRF 54654 62519.7 14.39% Open 45 MRPL 113.45 123.3 8.68% Open 46 NH 338.55 295.5 -12.72% Open 47 NHPC 21.7 28.9 33.18% Open 48 PFC 92.25 146.15 58.43% Open 49 PFS 42.8 43.1 0.70% Open 50 PIDILITIND 752.05 720.75 -4.16% Open 51 RCF 51.05 75.5 47.89% Open 52 SAIL 54.2 57.45 6.00% Closed 53 SCHNEIDER 152.45 133.65 -12.33% Open 54 SHILPAMED 611.45 690.9 12.99% Open 55 SKFINDIA 1528.7 1551.2 1.47% Open 56 SOBHA 338.55 372.3 9.97% Open 57 SOLARINDS 708.85 824.5 16.32% Open 58 SUNTV 441.75 783.3 77.32% Open 59 SUPREMEIND 1010.65 1141.55 12.95% Open 60 SUVEN 187.45 174.1 -7.12% Open www.definedge.com Sr Qualification Current Running G/L Stock Name Status No price price % 61 SYMPHONY 1280.25 1314.95 2.71% Open 62 SYNDIBANK 75 75.75 1.00% Open 63 TATASPONGE 688.2 801.3 16.43% Open 64 TATASTEEL 441.75 483.35 9.42% Open 65 TECHNO 283.55 391.15 37.95% Open 66 THERMAX 924.9 982.7 6.25% Open 67 THOMASCOOK 223.85 208.25 -6.97% Open 68 TRIDENT 54.2 77.7 43.36% Open 69 UFLEX 292.05 340.1 16.45% Open 70 VSTIND 1772.2 3043.8 71.75% Open 71 ZEEL 441.75 509.15 15.26% Open www.definedge.com The Harami Candlestick Pattern Harami pattern is a reverse of the engulfing pattern. The Harami pattern is a small real body which is contained within a prior relatively long real body. Harami pattern is a reversal pattern that indicates trend change especially at market tops. Unlike engulfing pattern, color of real bodies is not important for Harrami pattern. However, when body of candle is green, it is a bullish Harami pattern and when it is red it is a bearish Harami pattern. Harami" is an old Japanese word for "pregnant." The long candlestick is "the mother" candlestick and the small candlestick as the "baby" or "fetus." This pattern is similar to Inside day bar pattern but major difference is that while a bar inside pattern requires the high and low be within the price sessions high and low, the harrami candlestick pattern required body of the candle (opening and closing range) to be within the prior tall body. The smaller the second real body, the more potent the pattern. A harami with a doji on the second session is called a harami cross. The harami cross is a more significant pattern than a regular harami pattern. Unlike the harami pattern, the harami cross is a major reversal pattern. www.definedge.com Below is chart of Nifty showing Harrami cross pattern. www.definedge.com What is Matrix and How to read it Double top buy and Double bottom Sell are basic P&F patterns - they indicate whether a particular chart is bullish or bearish. Though it is advisable to stick to one box-value and timeframe to derive consistent trading results, analysis of multiple timeframes help him in stock selection and identify candidates where multiple timeframe charts are in sync. In other words, when monthly , weekly and daily chart of a particular stock are bullish then it makes sense to trade bullish patterns of that stock even on lower timeframe. Below are the rules to determine the score in the Matrix Score is 2 if last signal is Double Top buy and last column is of X. Score is 1 if last signal is Double Top buy and last column is of O. Score is -2 if last signal is Double Bottom sell and last column is of O. Score is -1 if last signal is Double Bottom sell and last column is of X. www.definedge.com Score is 0 if there is no pattern over last three columns. This typically happens when there is a triangle pattern or a series of inside columns. Use this scoring methodology, we get to know the score of any stock in a given box-size. If one scans for 4-different box-values of a stock – one gets to know the total score of that stock across those 4-box sizes. If it is a bullish double top buy formation on all box-values with last column as 'X' - total score will be 8 (2 each), which the maximum score possible. That means, that chart is bullish across the box-values - vice versa for bearish formations. When score is 0 across the box- values, it shows significant convergence or consolidation.