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By G
Kumar
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Stock Market Astrology
- Part XVI
In the stock market, there
are only 2 phases, the Impulse Phase and the Corrective Phase. Most
traders make money during the Impulse Phase and lose it during the
Corrective Phase.
Tide- Wave - Ripple
Theory - 3 Major Movements of the Ocean ( Stock Market )
The primary movement is the
Tide, the secondary movement is the Wave and tertiary movement, the
Ripple. The three movements of the Stock Market can be compared to the
three movements of the Ocean.
The Impulse Phase is based
on the Primary Trend. If it is a long upward movement, then the Impulse
Phase is an Uptide and if the primary movement is downward, then it is a
Downtide.
The Corrective Phase is the
Anti movement of the Primary Trend.
Impulse
Phase = Primary Trend.
Corrective Phase = Anti movement of the Primary Trend ( The
Dow Jones Theory states that this phase will last 3 to 4 weeks but we find
that in India it normally lasts for 7/8 days ).
This Corrective Phase normally occurs as a
secondary reaction during an Uptide and as a secondary rally during a
Downtide.
F & O ( Futures
& Options )
Option ( Call or Put ) should be taken at the
end of the Corrective Phase ( Secondary Reaction or Secondary Rally ) and
should be exercised during the Impulse Phase to make profit.
An option is a contract, which gives the buyer
( the holder ) the right. but not the obligation, to buy or sell specified
quantity of the underlying assets, at a specific strike price on or before
a specified time ( expiration date ).
In a Bear Market, Corrective Phase is Bullish
and vice verse.
In a Bear Market, Impulse Phase is
bearish.
Uptide - The Primary Upward
Movement
Downtide - The Primary Downward
Movement
While turnover in the Cash segment is 30000
crores per day, at Derivatives segment it is 18000 crores.
During Downtide, the best Option is Put. You
must watch the Resistance and the Support levels of the scrip you are
going to take the Option in. The SBI scrip reacted from 500 onwards and is
now at 430. If suppose you had taken SBI Put at 480, you still gain 50
rupees per share. The Resistance Level of SBI is 500 now and the Support
level is 407.
The Wave like Nature of the Stock
Market
The Stock market is like a Wave. It is ever
fluctuating. Even in a day it fluctuates.
We have to understand that the primary trend
now is Bullish, viz an Uptide. There was a secondary correction from
June 1 to June 11, when the market gained 200 odd points to reach 4960.
Then after the 7th day of correction or the Corrective Phase, it reacted
and now is at 4741 ! During these rallies, the intelligent sell off
their stocks. In a Bull Phase, secondary reactions last for 7 to 8 days.
These reactions are also very deceptive, giving the impression that the
market is falling. During these reactions, the intelligent accumulate
stocks and sell off at the peak of the primary trend.
In order to capitalise on market fluctuations, you have to do your homework properly. Study the scrip you want to play. Study its top and bottom levels. You can only short sell at the Resistance level and never at the Support level.
Summing up, we have to play the according to
the market and play it correctly using the Impulse Phase and avoiding the
Corrective Phase. People generally lose during the Corrective Phase. The
stock market is cyclical and the Impulse Phase is always replaced by a
Corrective Phase and vice verse. He who knows the cyclical nature of the
stock market alone can succeed ! Timing is everything and one can use the
end of both the phases for profit.
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