#Darvas Box is used by 99% of stock traders in the world.
It is the simplest strategy of buy and hold.
But most people still don't know how to use it.
Here are 10 basics everyone should know:
Darvas Box is named after Nicolas Darvas, a dancer, and self-taught investor.
He discovered "Box Theory" after gaining experience from the market and he believed that the shares which move up and down the chart move in a specific box pattern.
There are some conditions of using Darvas Box and we will discuss only the buy strategy:
⚡️ Stock should be trading near all-time high levels
⚡️ Fundamentals of the company should be good
⚡️ Volumes play a crucial role
🧵 Here is Why Indian Chemical Stocks are Poised for a Bull Run:
A Detailed Analysis 🧵
[8 MULTI MONTH BREAKOUTS DISCUSSED IN THE END]
Credit : AMBIT ASSET MANAGEMENT
#ChemicalSector #BullRun #Investment #StockMarket
1/ 🚀 Historical Context: The Dream Run (FY17-22) The Indian chemical sector saw a dream run through FY17-22, with stocks rallying at a 48% CAGR compared to Nifty's 14% and Nifty 500’s 13%.
Key drivers included favorable global demand-supply dynamics, shutdown of Chinese capacities, India’s rising competitiveness, and increased R&D spending. This led to a significant re-rating of forward one-year PE ratios from 10x in 2013 to a peak of 46x.
- Origin: Charles Dow, co-founder of the Wall Street Journal and Dow Jones & Company, formulated Dow Theory in the late 19th century.
- Development: Dow's theory was based on his editorials in the Wall Street Journal where he analyzed the behavior of the stock market.
- Significance: This theory is the cornerstone of technical analysis, providing a systematic approach to understanding market trends and behaviors. It laid the groundwork for many other technical analysis theories.
2️⃣ Basic Principles of Dow Theory
- Market Discounts Everything: All available information, including news, earnings reports, and even future expectations, is already reflected in stock prices. Therefore, analyzing price movements alone can provide insights into market behavior.
- Three Trends:
- Primary Trends: Major movements lasting from months to years. They represent the overarching direction of the market.
- Secondary Trends: Intermediate corrections or reactions against the primary trend, lasting from weeks to a few months. They are often seen as pullbacks in an uptrend or rallies in a downtrend.
- Minor Trends: Short-term fluctuations lasting from days to a few weeks, often seen as noise within the larger trends.
- Trends Have Three Phases:
- Accumulation Phase: Informed investors start buying or selling stock against the prevailing trend.
- Public Participation Phase: The broader market catches on, and price movements become more pronounced.
- Distribution Phase: Informed investors begin to sell off their holdings to the less informed public, typically marking the end of the trend.
- Confirmation and Volume: A trend must be confirmed by price movements across major market indices and should be supported by trading volume.
- Trends Continue Until a Clear Reversal: Market trends are expected to persist until definitive signals indicate a reversal, even amidst temporary fluctuations.