The Hindu Business Line : Tech Tools

Should I start with R.N. Elliott's Wave theory first and then switch over to Glenn Neely's research? Or, Glenn Neely first and then to R.N.Elliot? Or, directly to Glenn Neely's Neo-Wave skipping R.N. Elliott's Classical Wave theory? Rakesh Ahuja.

Every Elliott Wave practitioner would have varying opinion about the subject. In my opinion, the classic Elliott Wave Theory should be read and understood first.

That is the original wave theory based on nature's laws. The rules and guidelines are few and simple in the Elliott Wave Theory.

After trying to apply the Elliott Wave theory in your trading for a year or two, read Glen Neely's Elliott Wave rules. Glen Neely in his initial work, Mastering Elliott Wave, has straightened out many of the complexities in the original Elliott Wave Theory and has laid down additional rules that make recognition of waves and patterns easier.

The third step would be to progress to Neo Wave, which is still in the developmental stage.

Please write the technical reasons for premium and discount seen in the spot and future prices. How can trend in the future prices be assumed technically through this mismatch of prices? Sanjib Ray.

The future of any stock normally trades at a premium to its spot price. The difference is accounted for by the financial costs such as interest on margin accounts, custodial costs (in case of securities in physical form) and other opportunity costs.

If the future trades at a discount to its spot price, this is known as a backwardation. This situation arises due to a demand supply mismatch and is not common.

The charts of cash market and future markets are different. Technical analysis of future charts is done in the same way as the cash market charts.

All the technical tools can be used just as effectively on future charts.

Can you please advise me what is the homework that should be done to enter the commodities markets? Where can I find the charts of actively traded commodities? Neha B. C.

It is always advisable to start trading in an unfamiliar market by doing paper trading for a few days. This makes the familiarisation process easier.

This helps the trader to adjust his trading methodology according to the speed with which the prices move, know how deep the stops should be and how long each trade should be held.

Two sites where charts of MCX can be accessed are — http://finance.yahoo.com/ and http://www.commodityindia.com/

I bought 125 shares of Satyam Computers at Rs 396. Should I buy more for medium-term at this level? Tell me the support and target level of this stock. Baljinder Singh

Satyam Computer (Rs 456.7): In our last review of this stock on October 15, we had expected a broad-based movement between Rs 350 and Rs 500. The stock is currently nearing the upper boundary at Rs 500. We had expected the fourth wave from 2003 lows to continue for one more year. But if the fourth wave has ended at Rs 280, then the target for the fifth wave falls at Rs 676 and then Rs 921. Medium-term investors can buy in dips with a stop at Rs 410. Do not make any fresh purchases if the stock dips below Rs 410. It can then head towards Rs 385.

Lokeshwarri S.K.

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