Recommendation - APPLE INC.

Short term pick - Buy Apple Inc (APPL) @ $341.50, Target $359.90, Stop-loss $330.90

Apple Inc (APPL) is trading in higher top and higher bottom and formed the channel on daily chart. Below chart shows APPLE Inc is trading at the support level with huge volumes.

 Apple Inc. (Apple) with market cap of 315.6B, designs, manufactures and markets a range of personal computers, mobile communication and media devices, and portable digital music players, and sells a range of related software, services, peripherals, networking solutions, and third-party digital content and applications. It's products and services include Macintosh (Mac) computers, iPhone, iPad, iPod, Apple TV.

Call posted yesterday on twitter @snehalbrid

Marubozu Candlestick Pattern

Marubozu Candlestick: It indicates that the stock has traded in one direction throughout the trading session and closed at the day's high or low price.This candlestick pattern gives strong bull and bear signal.

• Bullish Marubozu Candlestick:
• It is formed when open - low and close - high are equal with huge volumes.
• The buyers control the price of stock from opening to closing session.

• Bearish Marubozu Candlestick:
• It is formed when close - low and open - high are equal with huge volumes.
• The sellers control the price of stock from opening to closing session.

Above charts shows that whenever Marubozu candlestick is formed ( Bullish or bearish) there is sharp rise or fall in the price. Hence it is a strong candlestick pattern and can be use in technical analysis.

Reserve Bank of India and Monetary Policy

The Reserve Bank of India (RBI) is the nation's Central Bank since 1935. The basic functions of RBI is

• To regulate issue of bank notes.
• Monetary stability
• Operating currency and credit system. 

Role of RBI:

• Monetary authority.
• Issuer of currency.
• Banker to banks.
• Regulator of the banking system.
• Manager of foreign exchange reserves.
• Regulator and supervisor of the payment and settlement systems.
• Developmental role.

RBI Central Board of Directors:

•  Official Directors:
• 1 Governor
• 4 Deputy Governor

• Non- Official Directors:
• 4 Directors-- representing each local board.
• 10 Directors-- experts in various sectors of the economy.
• 1 representative of the central government.

Monetary Policy:  is use of instruments under the control of central bank to regulate the availability, cost and use of money and credit to achieve specific economic objectives, such as low and stable inflation and promoting growth.

There are several direct and indirect instruments used in formulation and implementation of monetary policy.

Direct Instruments:

• Cash Reserve Ratio (CRR):
• is maintaining cash balance with RBI by banks.
• Varies between 3% - 15%
• Current CRR - 6%
• Statutory Liquidity Ratio ( SLR):
• is maintaining safe and liquid assets by banks such as government securities, gold and cash.
• Current SLR - 24%

Indirect Instruments:

• Repo Rate:
• is RBI lends money to commercial banks.
• Current repo rate - 6.50%
• Reverse Repo Rate:
• is RBI borrow excess funds from commercial banks.
• Current reverse repo rate - 5.50%

The Reserve Bank of India announces monetary policy review quarterly ( April, July, October and January). The day before the policy review  is to be announced, a detailed report on  Review of Macroeconomic and Monetary Developments is released on RBI website.

Technical Analysis : Part 8 ( Fibonacci Retracement)

Fibonacci Retracement:

• It is identified by mathematician Leonardo Fibonacci in the 13th century.
• Fibonacci sequence is the sum of the two preceding number. The Fibonacci numbers are: 0,1,1,2,3,5,8,13,21,34,55,89,144 etc .
• The characteristics of this numerical sequence is that each number is 1.618 times (approx) greater than the preceding number.
• Fibonacci ratios are 23.6%, 38.2%, 61.8%, 100% and 61.8% is also referred as " the golden ratio" or "the golden mean".
• Fibonacci retracement is created by taking two extreme points ( peak and trough) and dividing the vertical distance by fibonacci ratios to identify support and resistance.
• This tool is used for intra-day, short-term and long-term.

 

•  Above is the daily chart of TSL ( Trina Solar Ltd).
• R1, R2 and R3 indicates the resistance level at 61.8%.
• There is sharp fall in price after testing the resistance level of 61.8%.
• Many traders even use 50% and 78.6% retracement levels for analysis.
• 50% retracement level is used because of the overwhelming tendency for an asset to continue in a certain direction once it completes a 50% retracement.
• 78.6% level is used in commodity market because of high volatility.

Presentation Zen

I just finished reading Presentation Zen: Simple Ideas on Presentation Design and Delivery by Garr Reynold. This book provides guidelines for preparing, designing and delivering the presentation in simple and creative way. It includes practical examples, stories in simple terms which are easy to understand. I think this book is very useful for presenters and people who want to improve their presentation delivery skills. Here is what I learnt from this book.

Presentation has three phases: Preparation, Design and Delivery.

Phase I: Preparation

• Start with beginner mind because beginner's mind is fresh, enthusiastic and open to vast posibilities of ideas and solutions.
• Always plan away from computer. Plan with pen and paper or whiteboard. This will save time and also the analog approach to sketch out ideas and create a rough storyboard helps to solidify & simplify the message.
• Ask yourself two important question:
  
  • What's your point? 
  • Why does it matter?
  These questions will put presenter in audience shoes and will help him to understand what audience want and how effectively to convey the point.
• "Create a Document not a Slideument". Don't combine slide and document together. Always prepare presentation with these three components:
• Slides: for audience
• Notes: for presentor's reference
• Handouts: audience copy
• Six principles to remember while preparing for presentation:
• Simplicity will help to deliver message effectively to audience. Make presentation simple. Don't include everything, include only points containing of core message.
• Unexpectedness is violating people's expectation and creating curiosity. Making audience aware that they have a gap in their knowledge and then filling the gap with the answers to the puzzel (guiding them). 
• Concreteness is natural speech with real examples, not abstractions.
• Credibility is putting the terms that people can visualize. 
• Emotion, whenever possible put ideas in human terms by showing images or pictures rather than words. This will have more impact on audience. 
• Stories with real examples gets attention and are easier to understand than the list of rules. Story come in by information, emotion and visualization. It makes the presentation memorable.

Phase II: Design

• Design is not decoration. It is to make things more clearer and organize information. It is about making conscious decisions about inclusion and exclusion.
• Four design principles: Contrast, Repetition, Alignement and Proximity. 
• Techniques to prepare design:
• Images/ Pictures: Use of more images makes the presentation memorable and powerful. Image should cover entire slide and should have plenty of empty space so that text can fit comfortably with good contrast.
• Grids and the Rule of Thirds: Divide the slide into nine boxes just like tic-tac-toe board and adjust the text or image into 1/3rd portion of slide. This will help to create clean and simple presentation and also saves the time.
• Bullet points: are effective to summarize the key points. It is advisable to use bullet point followed by 1-7-7 rule. The rule means 1 idea per slide, only 7 lines and 7 words per line. But bullet points are not effective in live talk and should be avoided whenever possible.
• Logo: Logo's, trademarks and footers are not advisable to use in every slide because it's an unnecessary bombarding on audience. It should be display on first and last slide.

Phase III: Delivery

• Increase confidence by rehearsing more and more.
• Complete presentation before allotted time.
• It is better to leave audience satisfied yet yearning for a bit more, than leaving them stuffed and with feeling that they had more than enough.
• Audience must always see and hear presentor. Don't switch off lights and always use wireless mic whenever possible. This creates bonding between presenter and audience which results in effective presentation.

Along with explaining these phases, Reynolds also mentions about two popular events: PechaKucha and TED talks. These two events helps to spread ideas by delivering presentations.  

• PechaKucha presentation format is simple: 20 slides x 20 seconds. Each slide is allocated 20secs and is set to automatically move to next slide after 20sec. Presenter has to tell story in sync with the visuals in 6 minutes 40 seconds. PechaKucha is changing attitudes toward presentation in a wonderfully creative and unconventional way.
  
  

• TED talks is annual conference where world's most fascinating thinkers and doers are invited to share their great ideas in only 18 minutes. The time limitation usually results in very focused talks. TEDs mission is to "spread ideas", which they do by releasing best talks online on their site, so that ideas can reach wast majority of population around the world.
  
  

This book has provided a good balance of principles and concepts, inspiration and practical examples. I have never given thoughts on these details while preparing and delivering presentations in past. This book has given me insight into getting better. Thanks Reynolds!
 

Technical Analysis: Part 7 ( Head & Shoulder Pattern)

Head and Shoulder Pattern: Head and shoulder pattern is strong reversal pattern. Its formation consist of left shoulder, a head and a right shoulder and a line drawn as a  neckline which is support level of this pattern.

Important points to be noted:

• High volume at left shoulder, moderate volume at head & low volume at right shoulder.
• Sharp increase in the volume below the neckline indicates downtrend.
•  Downward sloping neckline indicates that the prices are making lower lows & is powerful head and shoulder pattern.

 Trading signal is shown in below chart.

 Inverted Head & Shoulder: This pattern is opposite of head & shoulder pattern. It forms in downtrend & after breaking the neckline moves upward with sharp rise in volume.

Technical Analysis: Part 6 (Chart Pattern)

Pennants Pattern:

• Pennants is a continuation pattern which is formed when there is a large movement in stock price, followed by a consolidation period with converging trend lines. This pattern forms with lower highs & higher lows, over one to five weeks.

Flag Pattern:

• Flag pattern is short term continuation pattern that mark a small consolidation before the previous move resumes. This pattern is usually preceded by a sharp advance or decline with heavy volume, and mark a mid-point of the move. A flag pattern is formed when parallel lines is drawn through the peaks & the troughs in a correction (or a rally during a down-trend)

  
Cup & Handle Chart Pattern:

• The cup & handle chart pattern is a bullish continuation patterns that takes the form of a consolidation period followed by a break out to the upside.

Important Characteristics of Cup & Handle:

1. Trend: A cup & handle formation should be followed by an uptrend.
2.  Shape: The cup must always precede handle. The cub should form a rounded bowl  or U shape, must avoid V shape cup.
3. Depth: The cup should not too deep. The handle should form in the top half of the cup pattern & should not be too deep.
4. Volume:  Volume should be low at the bottom of the cup & should rise when the stock moves up & test the old high.