We discuss Bollinger Bands in the latest at MarketVision. (Needs free registration)
Bollinger Bands
Today we take a look at Bollinger Bands. John Bollinger invented them in the early 80s, and they comprise a simple moving average with volatility envelopes around them. The idea is that the bands determine much of the range in which the stock should play – if it breaches these envelopes there is interesting trading action.
So a BBand(20,2) simply means take the 20 day moving average, and over the past, calculate 2 times the standard deviation around the moving average. (We have discussed how to calculate the Standard Deviation in a past Chronicle, and I’ve also written on Moving Averages)
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The Bank Nifty Trade I had mentioned in the last newsletter had to go out because of a stop loss – I took off half the position as I mentioned on Twitter and on my blog recently. I had kept half the position on “for fundamental reasons” – i.e. I knew the price action was against me but I still retained the But as the price walks up the upper band, and there’s an obvious W bottom now I believe the price action is getting worse for a short position, and am very cautious.
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The Great Fall of GTL and GTL Infra
Two Stocks – GTL and GTL Infra – have had the worst June in their history. GTL Fell from the 400 levels down to 97 yesterday, and GTL Infra from 32 down to 16. If you consider their highs of 477 and 50 respectively last year, the fall seems even larger. But what triggered the fall?
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India is losing the market for trading the Indian rupee
The recent order by the Competition Commission of India on NSE and MCX-SX has a bunch of difficulties based on a lack of understanding of new age industries where a pricing of zero is quite feasible and important, a focus on protecting a competitor instead of upholding competition, etc. I wrote about this in the previous blog post.
The most important problem with this order is that it represents a diversion away from the real story. The real story is that trading in the Indian rupee is leaving India.
Wadhwa Says Technology ‘Bubble’ to Burst - Video - Bloomberg
Vivek Wadhwa, director of research at Duke University and a columnist for Bloomberg Businessweek, talks about the valuation of technology companies. Wadhwa also discusses Zynga Inc. and Groupon Inc., initial public offerings by technology companies and secondary markets.
Videos
Past Short Takes:
- Reviewing a ULIP: HDFC SL Crest
- Monthly Income Plans
- Conversations: Manish Jain on What's Good About ULIPs
- What is VWAP?
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- MarketVision Chronicle: Breadth, Stocks Above Their Key MAs – April 2, 2011 In the last piece, I have spoken about valuation and...
- Four Stocks Making New Highs, Market Breadth and Index Technicals: MarketVision Chronicle March 19, 2011 Last weekend I had posted the MarketVision Chronicle and I...
- MarketVision Chronicle #2 is out: FII, Onion Prices and more… Read the MarketVision Jan 15 Chronicle with FII data, Onion...
- A New Look, Incentives To Fight and Scary T-Bill Auctions: MarketVision Chronicle The May 21 MarketVision Chronicle is out! (Needs free registration)...
- Budget Summary, Tax Sop-Madness and More: The MarketVision Chronicle – Mar 05, 2011 On March 5, the MarketVision Chronicle, which I edit, talks...
