ReneSola Ltd ( SOL) - Target Acheived

Short term pick : Buy Renesola Ltd., (SOL) @ $ 8.95, Target $ 9.99, Stoploss $ 8.40 - 

(Call generated on 07th March 2011)

The stock has traded below the stop loss of $8.40 on 09th March. Only two days the stock traded below the stoploss and the low was $8.08. 

Today the stock is 8% up and the target of $9.99 is acheived in just 17 trading sessions.

High Probability Trading Strategies

Today I finished reading " High Probability Trading Strategies" by Robert C. Miner. This book accompanies with 2 hrs video CD which includes examples of how to apply the high probability trading strategies for many markets and time frames with bar-by-bar and step-by-step recording. Also the author has devoted an entire chapter called "Real Traders, Real Time" with trade examples submitted by his past students.

The book includes four key factors of dual time frame momentum, pattern, price and time. 

Here is what I learnt from this book.

• Dual Time Frame Momentum Strategy:

• A Larger time frame to identify trade direction and a smaller time frame for trade execution setups.
• Traders with different time frame.
• Positional trader  : weekly and daily charts
•  Swing trader      :  Daily and hourly charts
• Day trader           :  60 mins and 15 mins
• Main Indicators:
• Stochastic: It includes overbought(OB) and Oversold (OS) zones. Line above 75% indicates overbought and below 25% oversold. 
• MACD Histogram: It measures the difference between two moving averages.

• Pattern Recognition for Trends and Corrections:

• ABC correction: It is a frequent type of correction for all markets and all time frame in 3 swings. Below are some guidelines.

• The Wave-C should exceed the extreme of Wave-A.
• If the market trades back into the range of Wave-A, the minimum conditions for a correction are complete.
• A trade beyond the Wave-B extreme is a pattern signal that the correction should be complete.

• Five- wave patterns ( Eilliot Wave): The five wave trend pattern make five sections and the section do not overlap, is called an impluse wave. Some of the guidelines are below.

• Wave -2 cannot trade beyond the beginning of Wave -1.
• Wave - 3 cannot be the shortest in price of waves 1, 3, and 5.
• Wave - 4 cannot make a daily close into the closing range of Wave-1.

• Beyond Fibonacci Retracement: 

• Alternate Price Projections (APP): 
• It compares the price range of swings in the same direction also called as price extensions.
• Frequently used APP are 61.8%, 100% and 162%.
• APP made of three pivot points, the price range between two pivots is measured and projected from a third pivot.

• Internal Retracement:
• are 38%, 50%, 61.8% and 78.6%
• The  38.2% level is temporary support or resistance.
• The 78.6% retracement is typically the maximum retracement for a correction. If a market closes above the 78.6% retracement, typically it is not making a correction but will continue to trend to a new high or low.

• External Retracement:
• are 127%, 162% and 262%.
• are important to help identify the final section of a trend or countertrend.
• are not used on their own for price targets, but to confirm an alternate price projection and or internal retracement.

• End Of Wave-C:
• ABC correction ends with Wave-C, which should include internal retracement and an APP.
• Internal retracement are first in the order of importance of the three sets of projections, since most corrections end near one of the four internal retracement.

• Entry Exit Strategies and Position size:

• Trailing One Bar Entry and Stop:
• Following a smaller time frame momentum reversal in the direction of the larger time frame.
• The entry price is trailed one tick above/below the last completed bar.
• When the trade entry order is executed, the initial protective stop is placed one tick below/above the swing high/low made prior to entry.

• Position Size:
• Formula to calculated position size is:

Available Capital X 3% / Risk per Unit = Maximum position size.

• Exit Strategy Concept:
• Use of Trailing stop, never exit at a predetermined price target.

All four strategies momentum, pattern, price and time together help to develop a trading plan that includes entry and exit strategies and trade management.

This book is not difficult to read and understand, but the reader must spend time learning and practicing each strategy. I took almost 2 month to read this book and currently practicing and implementing each strategy.

This is very practical book and would recommend to every trader and investor. The author also post blog on his website http://www.highprobabilitytradingstrategies.com/blog/

Thanks Robert!!!

RBI's Credit Policy

The Reserve Bank of India has raised repo and reverse repo rates by 25 basis points each on March 17, 2011. The repo rate is 6.75%, reverse repo rate 5.75% and the CRR has been left unchanged at 6%.

 RBI's monetary policy review:

• GDP growth for 2010-2011 to be 8.6%.
• High commodity prices pose threat to GDP growth.
• IIP is weak, but other indicators like tax, exports, credit point to growth momentum.
• March 2011 whole sale price inflation expected at 8% vs earlier estimate of 7%.
• Increase in oil, fertilizer subsidies could put pressure on expenditure.
• Current Account Deficit (CAD) estimated to be lower, at 2.5% of GDP.
•  Focus on longer term capital inflows to sustain balance of payments.
• Non- food credit growth at 23%, estimate of 20% in Feb (YOY).
• Net liquidity injection through Liquidity Adjustment Facility down on higher govt spending.
• Till March 16: Rs. 68000cr Vs February: Rs. 79000cr Vs January: Rs. 93000cr.
• Temporary pressure on liquidity in second half of March due to advance tax payment.

Mr. Rajiv Kumar ( Director General, FICCI) said:

Below link shows industry experts views on 25 bps rate hike:

http://www.moneycontrol.com/video/economy/howindustry-experts-viewing25-bps-rate-hike_530149.html

Recommendation - ReneSola Ltd ( SOL)

Short term pick : Buy Renesola Ltd., (SOL) @ $ 8.95, Target $ 9.99, Stoploss $ 8.40

SOL with market cap of 777.6M is trading at the support level of 61.8% ( $8.90)  Fibonacci retracement level and corrected  more than 60% in past few days .Below daily chart shows gap down opening on 01st March 2011.
52 week high - $15.34
52 week low - $ 4.72

ReneSola Ltd. (ReneSola) is a manufacturer of solar wafers and producer of solar power products based in China. The Company possess a global network of suppliers and customers that include some of the global manufacturers of solar cells and modules.

Doji Candlestick Pattern

A doji represents an equilibrium between supply and demand, a tug of war that neither the bulls nor bears are winning. All dojis are marked by the fact that opening and closing prices are almost same . There are 4 types of doji.

• Common Doji:
• is sign of indecision or reversal in the market.
• is more significant in up-trending market than in downward moving market.

• Long Legged Doji:
•  has long upper and lower shadow.
• When close below the midpoint of the candle indicates weakness. 

•  Dragonfly Doji:
• occurs when price open at high and closes at high.
• looks like "T" with long lower shadow and no upper shadow.
• indicates that the sellers drove the prices lower, however at the end of session buyers pushed the prices back to the opening level and formed the shape of "T".

•  Gravestone Doji:
• is bearish reversal pattern that mainly occurs in the top of uptrend.
• occurs when open and close near to the bottom of the trading session ( day's low price).

Above patterns are useful in technical analysis, however other indicators such as RSI, Stochastics should be consider while trading.

Apple INC - Target Acheived

Call posted on 23rd Feb 2011- Target acheived of APPL $359.90

short term pick-- buy Apple (APPL) @ 341.05 Stoploss 330.90Target 359.90

Above is daily chart of Apple Inc. Target of $ 359.90 acheived in 8 trading session.

Dark Cloud & Piercing Line Candlestick

Dark Cloud Candlestick:

• is reversal pattern followed by uptrend.
• Stock opens with gap up and closes below the midpoint of previous bullish candle.
• Must have closing price within the price range of the previous day.

 

Piercing line candlestick:

• is opposite to Dark cloud
• is followed by downtrend and is bullish pattern.
• Stocks opens with gap down and closes above the midpoint of previous bearish candle.
• Must have the closing price within the price range of the previous day.

 These patterns are mostly found in daily and weekly charts and are strong candlestick patterns.