On the apparently fantastic news of enormous capital infusion into Public Sector Banks, on 25th Oct 2017, Indian Banks surged. The Indian government had just announced USD 32.4 Billion recapitalization plan for the banks.
Investors and rating agencies were competing with each other about how great it was for the Indian Banking Industry. Moody's said, "INDIA'S CAPITAL INFUSION PLAN IS A SIGNIFICANT CREDIT POSITIVE FOR INDIAN PUBLIC SECTOR BANKS". Breakingviews published an article with the headline "Investors embrace Indian bank recap on any terms". All the news channels were subtly telling retail traders to Buy the Stocks. Banks surged.
Who was buying on the news? Many retail traders for certainty. However, not CUE 360° traders. CUE traders don't like to chase a Market. And they would rather trust the data than to Buy on the news or others' opinion of how great this was for the Banking Stocks in India.
Some of my friends, who are not able to get rid of their dependence on other analysts and news channel's view on a Stock, sometimes say something like this "That news worked this time." Or "That free Stock Tip from the brokerage/analyst on the web gave me profit". I tend to point out that is not impossible.
When some retail traders chase the news, it is likely they are Buying at the Ask. And that in itself propels price higher. Those who are lucky to buy before others have profit. Those poor souls who Buy late end up being the losers. And I always ask them - why would you chase a Stock? Would you do that when buying anything else? Or you would wait patiently for the price to come to reasonable valuation?
They tend to agree at an intellectual level that it is better to wait for optimal Valuation. However, putting that in practice is another thing. A little bit of help from a Robust System with the backing of Reliable Data is needed for the confidence to make own decisions.
Let’s come back to the Indian Public Sector Banks. We will review several of them using CUE Charts first.
Allahabad Bank (ALBK.NS) jumped up on the recapitalization news on 25th Oct. Where is it today? Almost back to where it started. After the initial “chasing” driven move up, it only fell. There was no rally whatsoever.
Oriental Bank Of Commerce (ORBC.NS) shows the same picture.
Andhra Bank (ADBK.NS)? Same again.
Even the largest Public Sector Bank, State Bank of India (SBI.NS) could not go up any further after the initial two days “chasing” fed rally.
CUE Traders, instead of taking Long based on news, might have followed what the Chart Signals were telling. And what CUE Charts pointed to was to keep away from Buy. What is more? There were several Swing Short Trade Setups in several of these banks, like the ones marked on Allahabad Bank Hop On Daily Chart below.
After the "chasing" driven rally, Allahabad Bank did not go up at all. Instead, it declined and declined severely. The people who bought after the news are probably still holding, saying "in the Long-Term" the Stock will go up. Meanwhile, they are stuck with a hugely losing trade and with capital locked in that.
Bearish Headwind (red diamond) could successfully predict the impending reversal and caught the very top.
The magenta color Candle marked on the chart that occurred in the Stock’s down-trend represented Optimal Swing Short opportunities. All those trades were profitable Short opportunities. And could be decided using CUE Unambiguous Checklists exactly when the magenta Candles appeared. There were three such Shorting opportunities.
As the Stock is continuing to fall as of 16th January (today), partial Short Position may still be held to let profit run. The trades could be made entirely Risk-Free by booking partial profit by now and using CUE Protection to apply Protect Profit Stop.
Similar Short Opportunities were probably there in other Public Sector Banks as well. So much for the herd mentality and following the lofty pronouncements of the rating agencies and analysts.
Now, could the Stocks go up? The certainly could. And that would have also shown up on the same CUE Charts, and we could Buy if there were Optimal Buy Points. But there were not any. Not on CUE Technical Charts.
What about the Stock’s Fundamentals? Here you could use CUE Vital. CUE Vial allows Fundamental and Peer Analysis of Global Stocks. Including India Stocks (India is within our globe!). What does the Fundamental Scorecard says about the banks that I have mentioned on this blog? Here is the snapshot of CUE Vital's tool's Vital Statics pane.
All the Stocks are Overvalued. The magenta color on Valuation Scores instantly shows that the Stocks are Overvalued even now. When the prices shoot up after the capitalization, they were probably worse off. Overvaluation was another warning sign for CUE 360° Traders to avoid Buying the Stocks.
What was the result of the Bank Stocks over last two months? In CUE Edge I drilled down to identify the Stocks in Banking Industry and looked at the Performance pane, as shown below.
Over last two months, ten Banks declined by more than 10%, substantial declines. How many were Public Sector Banks? Almost all of them!
India’s Banking Index Bank Nifty has under performed the Broad Market since November 2017. You could check that out instantly from the Relative Performance Indicator on CUE Charts. Overall, however, Bank Nifty did not decline much. Neither did it go up? How was that possible? That happened because, on aggregate, Non-Public Sector Banks made up for the loss of the Public Sector Banks. You could figure that out instantly from CUE Systems.
Isn’t it like a trick? Recapitalization of Public Sector Banks was supposed to lift those Stocks and sustain their rally. It did not. Instead, Private Sector Banks did better. And all that while, news media was telling you to buy Public Sector Banks, often, subtly. Through their positive coverage of the recapitalization.
CUE Traders knew better than to fall for such tricks. Instead, they used 360° Analysis to see what was going on and saved their account. They did not see any CUE Long Trade Setup on charts. They saw Short Trade Setups. And Fundamentally, they saw the Stocks were Overvalued. Not a good time to Buy.
There are many such examples where following your analysis based on Reliable Data and Robust Analytics and Charts; you could be much better off than following so-called pundit’s views.
Similar 360° Analysis of the USA and India market are regularly shared through the CUE Sight 360° Mobile App and Forum. You might check that App out for yourself on this page.
Superior Profit Investors join every week on Saturday for a Live Class where we discuss previous week's market and look for trading opportunities for next week.
We had our last class on 13th Aug, Saturday.
One of our traders from Australia was keen on Day Trading Forex using Real-Time Charts. We pulled out some Live Charts and discussed some ways of how to profitably trade Forex using CUE. Here is a summary of that for those who could not join us in Live Class.
Forex is one of the slowest moving instruments in the Market. The perceived high profit (or loss) in a short time comes from higher leverage. That tends to attract many traders to Forex with the hope of making a significant profit starting with a small capital. As our trader friend told in the class: "Profit is easy to come and easy to go in Forex."
Well, in reality, for most (if not all !) beginning Forex traders with small capital and lack of system and discipline, profit is more "easy to go" and "difficult to come".
I encourage new traders first to prove to themselves that they can make a profit in less leveraged instruments. Like, using Stock. Or may be using defined risk Options. Once a beginning trader can get consistent profit in less leveraged instruments, she may move on to high leveraged instruments. Be it Forex. Or Future.
The reason for this advice is to establish the technical aspect of trading firmly in trader's brain. So much so that in front of the live market the trader does not think. Traders' response to market moves become automatic. Like walking on the street. Once that happens, the trader is ready to take on higher leveraged instruments. It is like learning to drive slowly first. Without making an accident. Or at least one that is not fatal. And then only - if one wishes so - to move to higher speed cars.
Besides, the greater leverage of Forex (and Future) and the fact that these Markets are open 24 hours, make lifestyle and psychological aspect of handling them more difficult.
With that note, let us look at some ways a Superior Profit Trader takes Day Trade on Forex. This illustration is right from our last Live Class.
Below is a CUE At A Glance view of AUDUSD (the pair selected by our Australia trader in the Live Class).
The Memory Resistance lines in Weekly and Daily were already there long before the Candles came and hit them from below. And we knew beforehand that the Memory Resistance was around the level 0.77300 approximately. They were already there before the price comes to them. And we could plan our trade at that price level.
The Memory liens have zero lag. This zero lag nature is a significant advantage of the Memory line in Day Trading. Compare this to most other traditional indicators that have lag and hence tend to be ineffective in Day Trading.
In Superior Profit Way, we use several Zero Lag indicators for Day Trading. Memory Line is one. Others include Watermark on Daily Chart, and Daily Range, Early Range, Power Range on Intraday Real Time Chart.
Also, we use Stretch Release on Real Time Chart for Day Trading. This CUE indicator is very responsive; has tiny lag. Making it suitable for Day Trading.
In the At A Glance chart, we saw that the Memory Resistance Levels in Weekly and Daily charts were same. And that gave us additional confidence to look for Low-Risk Short Trade on AUDUSD at the Memory line price level.
To execute our trade, we drew a horizontal line at the Resistance price level of 0.77300 on Real Time Chart using 10 Minute intervals (we could use 5 minute or other Real Time interval as well) and waited patiently for the price to come up to this level and then tilt down; showing that Memory Resistance was working. And then take our Low-Risk Short Trade.
Below is the 10 Minute chart on AUDUSD with the Resistance level drawn on it. Following the marked comments numbered 1 to 7, we can see how we confidently Shorted AUDUSD as a Day Trade at the pre-planned price level and booked profit.
In the above Real Time chart, we did not use powerful CUE Stretch Release indicator. Neither did we use our Candle painters; Traffic Light or Flow coloring.
Let us look at another Day Trade opportunity the same AUDUSD presented a shortly after we booked profit in the last illustrated Short trade.
Below is AUDUSD chart on next day using CUE Fine Tune Template. Now we have Flow Candle coloring on the chart. And we also have Stretch and Stretch Release indicators drawn on the Candles.
Following the notes numbered 1 to 6 we can see how; again; we entered and exited a Short Day Trade on AUDUSD profitably.
Let us make some noteworthy comments based on the way the two Superior Profit Date Trades were executed. They apply to all Superior Profit Trades we take. And need to be emphasized even more strongly for higher leverage instruments like Forex and Future etc.
1) Having a prior idea of Trade Direction is necessary. In both the examples, we used Memory Resistance to decide our Short Trade Direction.
2) We wait patiently for Price to give us the signal that Resistance is holding before triggering the trade. In the first example, we waited for Price to come back below Resistance Price Level. In the second case, we waited for Stretch Release arrows to appear.
3) We pre-define the Stop Level. And put a Hard Stop Order as soon as our Short Entry fills. In both our Short Day Trades, AUDUSD did not trigger the Stops.
4) We pre-define our Initial Profit Target and put Profit Taking Limit Order at that level. We book profit without being greedy. At least on half position size. And move our Stop on remaining position to make sure it is a Risk-Free trade from then onwards.
5) We don't overtrade. Once we complete our planned Day Trade, we stop.
These were just two examples of how Superior Profit Traders take profitable Day Trade on Forex every day.
Once you study the CUE System using the detail training material at Superior Profit Education Center, you will learn several additional ways to pre-plan and execute Day Trades confidently.
And you can take the Day Trades on Forex, Future, Stock or any other instrument that fits your risk tolerance and lifestyle.
There are several possibilities.
One might start trading with a paper money account. Practicing the learning to see if one is able to make money in such simulation account. If one is able to make money, it might be time to move on to a real money account. Probably starting slowly with small quantities and gradually increasing size as one becomes more experienced.
Whether one is novice or experienced, it is still necessary to remain alert. And keep the investing blueprint fresh in mind. For Superior Profit Investors, that blueprint would be the CUE Chart Signals and the CUE Guidelines for Trend Following Go With Flow, Trend Reversal Headwind and Bounce trades among others.
We, at Superior Profit, have started a novel and publicly accessible way to keep that blueprint fresh in a traders mind.
Using Quiz Playground. Where we present regular stock market quizzes - in different markets / time frames / instruments / sectors / industries etc. And invite you - serious traders and investors to respond to them. Challenging a traders ability to make a decision on the "right edge of the chart" - not looking at past chart and make easy decisions where one "could have bought and made a lot of money". Right edge of the chart is always more challenging. And the quizzes will make us get used to that. And to investing profitably as a result of that.
You reap multiple benefits by taking the quizzes.
One benefit is to test oneself. To see for oneself how confident one is while answering the quiz. Whether one is able to follow the disciplined way or succumbing to temptation to hop on a trade prematurely Is one able to stand aside when the chart is not clear? Is one able to commit to a trade without second guessing when the signals are aligned?
Second benefit - once multiple traders start responding to the same quizzes - is to see how different traders approach the same situation on the chart. Invaluable learning may be grasped from that. And one might even fine tune one's own approach from that learning.
Thirdly, you might have another golden opportunity. To gather appreciative Thumbs Up from fellow traders worldwide who are also looking at the same quiz. Once sufficient Thumbs Up is collected by you, you might be even invited to join Superior Profit Graduates Club - where all traders share their investment ideas using CUE Trading System. This is an opportunity to join smart and disciplined traders from all over the world.
Needless to say, we encourage you to give Thumbs Up to a response that you like - that is if you find the response disciplined and detailed and accurate as per (say,) Superior Profit Investment Guidelines.
Note that it does not matter if the quiz is on a stock / market that you trade or not. The aim here is to sharpen trading skills that are applicable across stocks / markets. And you would learn something through the quizzes irrespective of what stock / market the quizzes are based on.
Finally, it is of course fun to take the quizzes. Sometimes to make mistake and laugh about it and make sure next time in quiz and in real investment we are more disciplined and more careful.
The quiz on Gold Miners went like this (the actual quiz is accessible through this link):
"Here is the Superior Profit Industry Group Ranking of 158 groups ... (full list at http://www.superiorprofit.co/) showing Gold Mining is deteriorating fast for last 2 weeks. While other Metals and Mining groups are holding strong."
"What would you do with Gold Mining stocks?".
I would not like to give the answer here and ruin your fun answering the quiz in your own way. I rather would have you try the quiz (and indeed the other quizzes) in the Superior Profit Quiz Playground (also accessible from home page: http://www.superiorprofit.co/).
You might answer through the poll answer mechanism as well as "reply" to the quiz with detail explanation/CUE Charts etc. if you would like.
Superior Profit Investors regularly look at Broad Market State through Market Internals. These are posted regularly in Superior Profit home page as well as in Broad Market forum. Superior Profit traders also look at Sector and Industry Analysis and Ranking which are posted at Superior Profit home page as well as in Sector & Industry Analysis forum.
The Industry Ranking mentioned in the quiz is part of that Market/Sector/Industry weekly review by our traders. By looking at the analysis/ranking at Superior Profit site.
Now - let us have a look at the Industry Ranking that was mentioned in the quiz.
It is clear that Nonferrous, Aluminium and Industrial Metals and Mining groups (marked by tag 1 in the snap) are performing very strongly since last 6 months and are continuing to do so. They mostly held to a rank of 10 or better in last 6 months period. Very good rank considering that the best possible rank is 1 and worst possible rank is 158. For last 2 weeks and for last 1 week, these three Industry Groups are holding on to the top 3 Ranks among all the 158 industry groups. Their strength is undeniable. And if one is holding Long position in a stock in those Industry groups, one might feel confident to let profit run (of course booking some profit when the time is right - using CUE Hop Off Template for example ...).
Now about Gold Mining group: Marked by tag 2 in the snapshot, Gold Mining started out strong. Ranking between 1 to 4 for most of last 6 months. But in last 2 weeks Gold Miners Rank fell to 55. That was a sharp decline relative to other industries. But it did not stop the decline there. In the week that just passed (ending on 15th July 2016), Gold Miners Rank fell to 136. That is continued sharp decline in ranking for 2 weeks in a row.
All that is clear from the Industry Group Ranking. And it only takes few moments to read that conclusion from the Ranking Table.
What is however not clear immediately is whether individual Gold Mining Stocks are falling? Or that they are still rising but rising slower than other Industry Groups' stocks.
To know that, one might look at some actual Gold Mining Stock charts through CUE At A Glance template.
Note: If you are trading in another country, you might look at some Gold mining stock traded in that country as well. Metals and Mining companies tend to follow a global trend.
Here is one such view on well known gold miner Goldcorp (GG) using CUE At A Glance template. Weekly chart using Backdrop template on the left and Daily chart using Hop On template on the right in the snapshot below.
Reading the chart above, a Superior Profit trader immediately recognizes that it is time to book profit in existing Long positions. As the chance of falling down outweighs that of going up through the Weekly Memory Resistance and breaking out of Daily Triangle pattern in short term.
That is, it might be wiser to book profit now - full or partial ... or at minimum to tighten Stop.
One might look at few other Gold Miners. Probably the conclusion would be similar or it might be different. We have to see from those individual charts.
As for Shorting, for Goldcorp at least, the time has not come yet. It need to fall below the Daily Memory Support and then give a Low Risk Entry opportunity. It would probably be a Go With Flow Trend Following Short opportunity that our traders could identify easily using Metastock CUE Explorers.
Seeing that the Gold Miners Rank fall down sharply will let our traders take the Short confidently when and if that signal comes in coming days.
In this way, Superior Profit traders are alert about what is happening in Broad Market, Sector and Industry. And yet, wait patiently for an actual trade opportunity to come in a stock. They don't hurry into a trade just looking at the Broad Market/Sector/Industry performance.
One might say, Superior Profit traders are able to see the forest and also look at the trees at the same time.
I encourage you to keep taking the quizzes at Superior Profit home page (for now, you might have a go at all past quizzes are accessible from Quiz Playground)and sharpen your skill and also to help others sharpen their skills.
And have fun while doing it.
Note: If you are new to CUE charts, you may learn about ALL the CUE Templates and Indicators mentioned here in our Education Center.
What is new in the latest upcoming release of CUE Trading System?
Quite a few changes actually. Having one singular theme in common. To making investing more easy and unambiguous. All using color coding and some very fine programming under the hood.
When are these enhancements available? For CUE traders who procured the system from Superior Profit Store, the changes will be available from Superior Profit Client Download page starting from Monday 20th June 2016. For CUE System procured through other channels, clients would be notified by respective channels as soon as they are available for download.
Feel free to Contact Us for any query you might have on these enhancements.
Here is a list of the changes:
We started the post with What Is New.
It is now time to WIN. And keep winning.
While our developers were working on these new enhancements, our traders were conducing the marathon four hour session of Superior Profit University Batch 1 Session 5 (final session). In that session we had gone through many live charts. Including some that looked interesting through Superior Profit Analysis.
We had mentioned Oil Services Industry in that class. A group that has languished while Oil has recovered considerably from its low point.
Why don't we then look at a Oil Services company to hone our skill with the latest CUE Charts?
Below is the CUE At A Glance view of RIG, Transocean - a large oil services company in USA Market.
Weekly Backdrop Bullish. Daily Traffic Bullish.
Does it look like a Go With Flow Trend Following Long Opportunity for a stock that is coming out of Pendulum Low in Weekly (Headwind is Cyan !). The stock is supported by Memory Support in both Weekly and Daily charts. With next Memory Resistance in Daily chart more than 25% of stock move away. And the Weekly beginning of up move is preceded by by a Headwind Bullish force of 26th Feb 2016 - which, incidentally, caught the Absolute Low of RIG (how nice !). RIG is clearly out performing broad market (S&P500) as seen from Relative Performance.
All that information gleaned from this single CUE At A Glance Template in minutes (in fact Superior Profit Traders after some practice can read it in less than a minute ... easily).
You may apply the other latest CUE charts (Decision, Clear Chart, Option Trading) on this symbol to decide if you have a winning opportunity here.
You will probably find that the usual easy and unambiguous way of making investment decisions using CUE charts got a bit easier with these carefully crafted enhancements.
Valentine's day is coming and love is in the air. If you switch on television, it is difficult not to notice the advertisements on all sorts of stuff targeted at lovers keen to celebrate the upcoming Valentine's day. There are certainly advantages in real life if you are following your lover with care and appreciation. Valentine's day gift being only one of them ...
In Superior Profit, our traders seem to be hooked to another kind of love and affection. Towards the stock market. And those of us who follow our stocks and ETFs and Futures regularly reap handsome benefit. Today was another such day.
Let me explain ...
During the weekend I had met with couple of stock market lovers at the newly opened shiny shopping mall in South Kolkata in India where I am traveling now. Over a cup of coffee we were going through some stocks.
Nifty (Thomson Reuters symbol NIFc1) chart came to our notice. Nifty is the Indian stock market benchmark Index. And Nifty Futures and Options are traded heavily - like any other major market indices.
We had some interesting reading from Hop On chart of Nifty Futures. As shown below.
As we can see, since late Oct, 2015 Nifty is in downt trend forming Lower Highs in a waterfall pattern (marked as point A). Taking a Short Trend Following Trade at each of those peaks would have generated handsome profit for Swing Traders.
CUE chart also has a powerful Trend Reversal Headwind signal (showed as green or red diamonds on the Candle chart) that shows potential reversal points - catching the almost top or bottom in a stock's short term move.
During this downtrend since Oct'15, , we had two instances of Bullish Headwind (marked as point B). In both instances, taking Long Swing Trade would result in significant profit. The chart also shows a Bearish Headwind signal (marked as point C) . This had coincided with Trend Following Go With Flow Short signal (signified by magenta color Candle). That would be a clear Short Swing Trade opportunity which resulted in handsome profit again.
All those trades were in the past as we were perusing the chart. In real life, we trade at the right edge of the chart. Where things may seem blurry to most trading systems and traders. But not so in our CUE system and not to our Superior Profit traders !
At the right side of the chart - during weekend we looked at the Friday's data bar (marked as point D).
I had commented to my fellow coffee/stock lovers that Friday's bar ended right at the declining Memory line while Nifty was in overall downtrend. It had come to Value Area - an optimal place to take a trade.
That could give us a very nice opportunity to Short it on Monday using Real Time chart provided proper CUE trade signals showed up in the Fine Tune Real Time 5 Minute chart.
As it happened, on Monday (8th Feb 2016) Nfity opened near Friday's Close. Went sideways for a while and then fell in afternoon trading. Monday's bar turned magenta in the Daily Hop On chart (marked as point E) which would be a Go With Flow Trend Following Short signal in Nifty.
Some traders could have entered the Short Swing Trade at End of Day on Monday. Some may enter it at Tuesday's Open.
However, one of our traders happen to be alert to the potential of Short trade during Monday itself based on our weekend coffee / trade discussion. And using Real Time Fine Tune template (not shown here) had entered the trade in the afternoon. Right when it started the down move. How was it possible to catch the very beginning of the move in Intraday chart? That was possible by useing CUE charts's Stretch Release signal.
[To learn more about CUE Trading System you may refer to our Education Center where all the training videos and books etc. are provided on a complimentary basis to stock market lovers like yourself !]
By end of the day the position (using Nifty Feb 7500 Put) had more than 70% profit - opening price being 101.43 INR and Last Trade price being 173.7. The brokerage snapshot is shown below.
While the traders who entered trade at End of Day today or those who would enter tomorrow using Real Time chart may also have sizeable profit, this Stock Loving trader is well ahead of them. Having already secured 70%+ profit in the trade while others are seating at breakeven or might not have entered the trade at all. This trader could have also booked some profit today itself. Closing enough position so that the remaining quantity becomes a "guaranteed free trade".
This trader was able to be ahead of others - by simply following his love - and tracking a handful of symbols regularly - Nifty being one of them.
And having an unambiguous and easy to use system (CUE System of course!) allowed the trader to make decisions quickly and enter the trade at an optimal point.
Does your system allow you to reap similar profit in such a confident and easy way following your love?
Citizen of Main Street.