Combining fundamental analysis with technical analysis....

Technical analysis and fundamental analysis are the two main schools of thought in the financial markets. Technical analysis looks at the price movement of a security and uses this data to predict its future price movements.

Fundamental analysis, on the other hand, looks at the past performance to anticipate the future prospects based on fundamentals...

I tend to believe that We have to marry the Technical Analysis with the Fundamental Analysis ... Good companies bought at a Technically Opportune time only will reward...

 

What I meant by marrying TA and FA means ... I tend to believe that the fundamentals are the ones driving the price ... But before we common people come to know the changing dynamics The insiders and resourceful people will know first... When we realise the value the stock would have climbed much higher ... that time we would not like to chase the missing bus...


When the momentum peaks and the insiders , experts and TV pundits started indicating the stock is going to be a multibagger .... the euphoria takes the price much beyond its fair value ... Every momentum has a tapering region and the pumping pundits will slowly start dumping ... The gullible investors will be struck....

 

@Karthikeyan


Best Example Kitex Garments .... These type of disasters can be avoided if we stick to few TA disciplines... Things look very obvious in Hindsight … Though

 

Pointer 1: After few years of consistent Top Bottom and Margin improvement the PE expansion happens from 5-6 to 10

Pointer 2: Again it climbs from 126 to 500 up on continuous good performance ... PE is @25 .

Ponter 3 : And due to positive market vibes and due to over anticipation that the dream run will continue unabated, it climbs up to 1050 amounts to PE of 50... Now it is much beyond its fair value A deep red candle bearish engulfing should hv rung the caution bell

Pointer 4 : Declining 30Wk EMA – Lock Profit – on the Fundamental side Topline expansion and PAT starts tapering.

Pointer 5. Instead of not buying at Stage 4 (https://rakesh-jhunjhunwala.in/forum/threads/few-golden-rules.1219/ ) Huge volumes – People buying at its Fair value again .. Instead of waiting for the favourable Technically opportune time indicated by Stage 1 Base formation.

 

Fundamental Analysis :

 

Thanks a lot for your detailed explanation. Being a novice, every answer throws up a few more questions.

Do you use the 30 week EMA crosover as the exit signal?

Do you wait for TA triggers like EMA crosover for initiating buying?

If someone wants to take position in Kitex now, in your opinion, one has to wait till the below mentioned conditions are met?

a) Price moving above 30 week EMA (which might have ensured sufficient Accumultion as propagated by Dow Theory)

b) formtion of top bottom or higher low

 

Good questions Karthik ...

I will use 30WEMA as an exit or Partial sell if Technical Weakness is accompanied by Fundamental deterioration

My Fair value calculation is @450 but waiting for proper technical entry ... May happen quickly if March Result is good or may delay further... But would like to buy / add to existing position only then.... But I do mistakes too

 

So, the Quarterly results must concur with TA and then only you decide on buying or selling?

 

Yes... Generally It does ...

 

Thanks a lot, Yembee