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Voltas, part of the consumer durable industry, has risen by about 18% in 1 month which helped the stock to break out from a falling trendline resistance that has opened room for the stock to head towards Rs 1,000. The stock price of Voltas, which makes household appliances, has rallied from Rs 776 recorded on January 23 to Rs 914 as on 22 February 2023 which translates into an upside of about 18%. However, from its 52-week high, the stock is still down more than 30% which effectively places the stock in a downtrend. But, the recent momentum seen in the stock suggests that bulls are trying to take control. The stock gave a breakout above the falling trendline which connects the highs of December as well as January 2023 on the daily charts. The up move has come with strong volumes. On the weekly charts, the stock has been forming higher highs and higher lows with strong volumes which suggests strength in the up move. In terms of price action, the stock is trading well above short and long-term moving averages placed at 5,10,20,30,50,100, and 200-DMA which is a positive sign for the bulls.

KPR Mill, part of the garment and apparel maker, picked up momentum in the last one month which helped the stock to break out from a descending triangle pattern on the weekly charts. The breakout has opened room for the stock to retest its 52-week highs in the next 2-3 months, suggests experts.

KPR Mill stock hit a 52-week high of Rs 704 on 18 April 2022 but it failed to hold on to the momentum. The stock reversed losses after hitting a low of Rs 479 on 26 December 2022. The stock rose more than 16% in the last one month which helped the stock to breakout from a descending triangle pattern which is a bearish pattern. A breakout suggests that bulls have taken control.

Descending triangle is a continuation of a bearish pattern where the next move will be in the primary trend.  The stock has a strong base near the 38.20% Fibonacci retracement level of the previous upward movement from 63 (March 2020) to 769 (January 2022).

In terms of price action, the stock is trading well above short and long-term moving averages such as 5,10,30,50,100, and 200-DMA on daily charts which is a positive sign for the bulls.

“KPR Mill stock has exhibited a bullish trend since March 2020, and despite a recent correction, it has not dropped below the 38.20% Fibonacci retracement level of the previous upward movement from 63 (March 2020) to 769 (January 2022),” Omkar Patil, Technical Research Associate at GEPL Capital, said. “This indicates that the prices have a favorable sentiment, and suggests a potential for further upward movement,” he said. “The stock KPR Mill has demonstrated a significant technical development on its weekly timeframe, as it has successfully broken out of a descending triangle pattern, Indicating continuation of the prior uptrend,” highlighted Patil. On the daily timeframe, the stock KPR Mill has been persistently trading near the upper Bollinger Band, indicating an increase in volatility for a potential upward movement. The RSI on the weekly timeframe has given a breakout too which shows strong bullish momentum. “Based on these technical indicators, it is expected that the stock's prices will continue to rise towards the level of Rs 700, with a recommended stop loss at Rs 550 on a closing basis,” recommends Patil.

Isaac Newton was a scientific genius at a time when scientists were often denounced as heretics. 

He had one antidote to this problem: He had to prove his theories beyond any doubt, which required obsessive precision. 

In his biography on Newton, Mitch Stokes writes:

[Newton] could make make measurements with such precision that few philosophers accused him of fabricating his results … Using only a compass an his eye, Newton would painstakingly hunt down the source of minute measurement discrepancies of less than one one hundredth of an inch … no one else in the seventeenth century would have paused for an error twice that size. 

Newton’s work rests on the idea that the physical world works in ways that are measurable, and, therefore, as long as you measure carefully enough you could learn anything about everything. Newton was so good at this that we named the field after him: Newtonian physics. 

Scientists viewed the physical world through that single lens for another two-hundred years. 

Then we discovered quantum physics. It upended everything. 

Quantum physics showed us that parts of the physical world resisted the precision Newton obsessed over. We began to learn that physical things could behave in ways we never thought possible. Ways that defied logic. Subatomic particle movements were messy and unpredictable. Quantum theory taught us that precise measurements can’t exist because the act of measuring something changes its movement. Walter Isaacson writes about the famous Heisenberg Uncertainty Principle in his biography of Albert Einstein: 

It is impossible to know, Heisenberg declared, the precise position of a particle, such as a moving electron, and its precise momentum at the same instant. The more precisely the position of the particle is measured, the less precisely it is possible to measure its momentum. An electron does not have a definite position or path until we observe it. This is a feature of our universe, he said, not merely some defect in our observing or measuring abilities. The uncertainty principle, so simple and yet so startling, was a stake in the heart of [Newtonian] physics. It asserts that there is no objective reality—not even an objective position of a particle—outside of our observations. 

The emergence of two types of physics taught scientists to be humble. Neither version is better than the other. You just have to know which one to use in the right circumstance. Newtonian physics is deterministic. It gives you perfect answers. Quantum physics is probabilistic. It only offers hints that can roughly set you in the right direction. 

It’s a great way to think about investing, where the same distinction applies.

Coca-Cola is fighting more than a decade of declining soda sales. Its stock is at an all-time high. 

Snap has built one of the most viral products of our time. Its stock is down almost 50% in the last six months. 

Good investing is about more than backing companies that perform well. It’s about backing companies that perform well within the context of the market’s current and future expectations. 

A company’s performance can be measured precisely. Accounting is exact. Books balance out down to the penny. Calculating and planning a company’s unit economics requires precision. Low-margin businesses require a precise grasp of the business’s cost structure. Bank of America knows exactly what will happen to earnings if 0.01% of borrowers default on their credit cards. Like Newtonian physics. 

Market expectations aren’t like that. Expectations are moods, and moods, almost by definition, are the gap between what’s happening and how people interpret what’s happening. They resist all attempts to figure them out in ways that make sense. They change constantly, without warning or reason. They can be different for two companies that look identical from the outside. At best, you can measure them with probabilities. Like quantum physics. 

Not distinguishing between the two in investing is dangerous. There are things we can know and measure perfectly, and things we have to think about probabilistically, if not philosophically. They are different skills that attract different people, many of whom don’t realize the need for an alternative set of thinking. 

Take future market returns. You only need to know three things to know exactly where stocks are going next: The dividend yield, earnings growth, and the change in valuation multiples. 

The dividend yield is easy. We can measure it today. Earnings growth is a little trickier, but we can make a decent estimate. What about the change in valuation multiples? God, who knows. If I’m trying to calculate how much stocks will return between now and 2027, I need to know what kind of mood people will be in in 2027. And no reasonable person can claim to do that. I don’t know what kind of mood I’ll be in tonight, let alone 200 million strangers ten years from now. 

The S&P 500 index earned $100 in profits in the year ended February 2014. The 10-year Treasury bond yielded 2.5% at the time. The index traded for 18.5 times earnings. It earned the same $100 in profits in the year ended March 2017, and the 10-year Treasury bond yielded the same 2.5%. Yet the index traded for 23.9 times earnings. 

The difference between the two earnings multiples reflects a change in investors’ moods. People felt better about their investments in 2017 than they did in 2014. Why? No one knows. No one can measure. Maybe it was because the pain of the 2008 financial crisis wears off over time. Maybe because more people had jobs. Maybe because the doom-and-gloom forecasts sounded plausible in 2014 but have grown old since then. Or maybe – probably – some unfathomably complex mix of what happens when tens of millions of people try to predict the future based on the unique lens of their own day-to-day experiences and adjust their investments accordingly. Whatever it was, it acts like quantum physics – not only unpredictable but unmeasurable, even if we know what we’re looking at.

That’s how markets work. It’s how a lot of things work. Richard Feynman, the physicist, once said: “Nature isn’t [Newtonian] dammit. If you want to make a simulation of nature, you’d better make it quantum. 

”Albert Einstein spent a lot of his career arguing against quantum theory. It seemed contradictory to everything we thought about physics. 

“One cannot make a theory out of a lot of ‘maybes’” he once told a group of physicists. “Deep down it is wrong, even if it is empirically and logically right. ”“Einstein, I’m ashamed of you,” said physicist Paul Ehrenfest, according to Isaacson’s biography. Fellow physicists said he was being as stubborn as others had been when disputing his theory of relativity. 

Einstein eventually came around. He nominated the two physicists who devised quantum theory for the Nobel Prize in 1933. He wrote in his nomination: “I am convinced that this theory undoubtedly contains a part of the ultimate truth. ”You could, in fact, make a theory out of maybes. 

The development of quantum physics next to Newtonian physics shows how hard it is to grasp that some things can be measured and are in our control, and somethings can’t, and aren’t. It’s especially hard to grasp when those things are in the same field. 

The same dissonance affects investors. 

Accepting that investing is made up of both precise facts and theories of maybes is the hardest thing for investors to grasp. Theories of maybes can often be distilled into probabilities. But this doesn’t solve the problem, because we can’t calculate the probabilities of things we don’t know. The history of markets is, and will always be, the story of things that were unprecedented until they happened. That’s hard to accept if you have a Newtonian physics mind. And many investors do. 

Getting comfortable with maybe requires two things: Humility, and room for error. Humility that there’s a lot of stuff we can’t know, and room for error to offer the only protection against that uncertainty. It’s the only way to survive in an industry where some of the most important variables can’t be calculated, measured, or fully understood. 

Newton, interestingly, figured this out. After allegedly losing a fortune investing, he said he could “calculate the motion of heavenly bodies, but not the madness of people. ”

"Nifty50 has clearly surpassed our expectations after extending the relief move beyond 17,350. We may see Nifty50 heading towards 17,500-17600. But we reiterate, the market is not completely out of the woods yet. Hence, it’s advisable to stay light after nearing this zone," said Sameet Chavan of Angel One. NEW DELHI: Nifty50 on Thursday climbed for the second straight day, breaching the recent swing high of 17,324 and also the resistance of 17,350. The index reclaimed the 17,400 mark on a closing basis and formed a bullish candle on the daily chart. Analysts believe the ongoing recovery can extend to the level of 17,600. Support for the index is seen at 17,250 level.

https://stocktwits.com/brainmassfinance

"Nifty50 has clearly surpassed our expectations after extending the relief move beyond 17,350. We may see Nifty50 heading towards 17,500-17600. But we reiterate the market is not completely out of the woods yet. Hence, it’s advisable to stay light after nearing this zone," said Sameet Chavan of Angel One.

https://www.tradingview.com/u/BrainmassFinance/

The 50-pack index might have embarked on a sustainable pull back rally as it has decisively closed above its 100-day exponential moving average, whose value is placed around 17,145 level, said Mazhar Mohammad of Chartviewindia.in.

https://www.instagram.com/brainmassfinance/ "A sustenance of 17,149 level may lead to a higher target of 17,570-660. Critical moving averages like 50- and 20-day are present in this range. Unless the supplies coming out of this critical resistance point are completely absorbed, the trend may not turn in favour of the bulls. Meanwhile, if the current recovery is owing to the weekly expiry related factors, weakness shall reemerge which may initially lead to the test of recent corrective swing low of 16,782," Mohammad said. https://t.me/tradewithraaj

For the day, the index closed at 17,401.65, up 234.75 points or 1.37 per cent. Gaurav Ratnaparkhi of Sharekhan said the index has also broken out from an Inside Bar pattern on the daily chart and is now headed towards its key daily moving averages, which are near 17,620-17,650.

"If the index manages to surpass these crucial short term moving averages, it will unlock significant upside potential for itself. On the other hand, the near term support zone now shifts higher to 17,200-17,250," he said.

facebook.com/brainmassfinance Independent Analyst Manish Shah said if the last four days of trading is taken into account, the index has formed a Bullish Tower Bottom pattern, which is a bullish configuration.

The gaming ecosystem is set to become more community-driven with the help of decentralized tech, empowering creators and coders.

People have talked in glowing tones about the transformative properties of blockchain since Satoshi Nakamoto launched Bitcoin (BTC) back in 2009 — books have been written, thousands of panels and presentations have complemented its prospects, costumed Bitcoin maximalists have flaunted their newfound wealth. Despite these commendations, the transformation has been slow.

However, whether the delay was due to the global COVID-19 pandemic, or just the time needed to create innovation, we are now on the cusp of change that is creating new economies and ways of human interaction. The Metaverse, with the powerful combination of game theory and blockchain, is creating tokenized incentivization in virtual worlds. Decentraland has already started to revolutionize people’s lives and interaction, and many similar platforms are being built. The Metaverse will grow to include multiple cross-chain possibilities as the virtual economy grows in importance.

NFTs and the gaming industry

GameFi, a term used to describe the burgeoning intersection between decentralized tech and the video game industry, is where the real value is being created. Nonfungible tokens (NFTs) allow players to own assets with tangible, real-world value and incentivise gamers to participate for longer periods of time, as well as allowing developers to create in-game economies which are based on the creativity and interactions of players as creators and owners.

Blockchain offers numerous advantages to GameFi:

Transparency: Making the gamification mechanisms clear, transparent and perhaps codified through a smart contract, users tend to trust more and therefore to invest more resources in terms of money and time.

Interoperability: The blockchain allows for the possibility of creating portability of virtual resources outside the limits imposed so far.

Liquidity: It is now possible to buy, sell and exchange assets outside of individual games.

Autonomous automation with smart contracts, which may enable multiple parties to interact with each other, even without human intervention.

NFTs can increase player engagement and create better gameplay experiences which, ultimately, increases the value of in-game NFTs and tokens. Players can now have agency within the games they want to play, and as to how these games evolve.

Axie Infinity came to prominence, in part, because of its social impact in keeping families out of poverty during the pandemic, and its player-created “scholar” program, which encourages community development, is growing fast. It's now a multi-billion-dollar, player-controlled game ecosystem.

BlackPool is another example of an early decentralized autonomous organisation (DAO) built for NFT gaming and trading. This platform is very much community-driven; it combines a passion for gaming and art with data analytics and machine learning to provide returns for users. BlackPool has also deployed Axie-like scholarship programs, opening up new income streams for the excluded. Blockchain enables participation, voting rights and monetization within an economy. It is also possible through interoperability to foresee the creation of networks of online communities, with exchanges and interactions among them.

Community first

The big story here is that we are seeing a move from “corporation first” to “community first.” The community forms around an idea or interest through engagement and collaboration with the community, and concepts emerge out of the community. It’s “community first” and “community fast!”

These communities are decentralized and community-governed — designs can be put to vote, and the artwork with the highest number of votes from the community can ultimately get accepted for the final design. Every time someone mints an NFT, the artists who worked on the asset earn royalties from it for each transaction. This will open up unexplored terrains of monetizing creative knowledge and skills. ‍

The create-to-earn model allows creators to take complete control of the game studios and directly participate in developing the game. This provides the community the opportunity to make in-game assets, create NFTs and sell them on secondary marketplaces. This is a powerful new creator economy that is emerging, in which players and coders can liberate their ideas, improve the in-game experience and monetize their intellectual capital. This makes the gaming ecosystem more community-driven, with content creators getting incentivized to enhance the overall playing experience. Anyone with basic coding skills can contribute to the game.

This will also drive new social networks to emerge between creators and fans. The attention economy will be replaced through social tokens in the Metaverse to bring a new immersive fan-run economy. Social tokens based around a brand, community or influencer will allow communities or celebrities to further monetize themselves. They will create bi-directional relationships between creators and consumers, with benefits on both sides. These Web 3.0 communities are collaborating, evangelizing and creating tribal network effects, all helping each other drive the value of their platform.

Digital communities are forming networks through token economies. The more players use or promote the community, the stronger the game and underlying blockchain become. The players are the stakeholders.

This creates the data infrastructure to enable a harmonized, interconnected Metaverse that further enables tokenized NFTs to include digital data rights, and to store, track and enforce those data rights. We are still in the early days of this transformation, and the future is in the hands of innovators and creators, and the community who support them. These communities are the new tribes of the Metaverse, and the only limit to what is possible is your imagination!

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

While the names of market gurus like Benjamin Graham, Warren Buffett and Peter Lynch are known by nearly everyone in the investing community, there are several traders who generate exceptional returns but do not want to come in the limelight. One such name is Ed Seykota, who may be one of the only traders who also wrote and starred in musical performance of his trading strategy " The Whipsaw Song".

Although almost completely unknown to the investment world, Seykota’s achievements rank him as one of the best trend followers and traders of his time. Seykota believes a trader’s psychology is the most important part of operating any trading system.

As a trend follower and money manager, he amassed millions in the 1970s and 1980s for his investors. He is basically a mechanical trend following trader who built the majority of his systems around exponential moving averages, with some reliance on pattern recognition. Seykota has always kept a low profile and caught the public eye only after his interview in Jack Schwager’s 'Market Wizards' books. He began his trading career in the 1970s, when he was hired by a major brokerage firm. It was in that brokerage firm that Seykota developed one of the first commercialized trading systems for managing money in the futures market.

After a few disagreements regarding the way management was interfering with his system, Seykota decided to part ways with them. Investors over the years have learnt many invaluable lessons by following his trading philosophy. Let's look at some of the trading rules that he mentioned in an interview with Jack Schwager.

Cut your losses Seykota believes that the most important trading rule is to cut losses because protecting one's capital is the primary job of a trader. He feels making money should be the secondary goal in the priority list of traders and they should embrace trading losses. He believes to stay ahead in the trading business, traders need to learn to lose like winners which means accepting losses the moment the market refutes their trade idea.

"If you make the mistake of hoping for the market to turn around in your favor, you’ve already lost. The best way to embrace trading losses is to have a plan. Combine that with small bets and you’ll be lightyears ahead of other traders. If you can’t take a small loss, sooner or later you will take the mother of all losses," he said in an interview in Jack Schwager’s 'Market Wizards' book series.

Seykota also believes that losing a trading position is aggravating, whereas losing one's nerve is devastating for a trading portfolio.

"The best way to ensure you never lose your nerve is to cut losses early. It’s one of the simplest ways to maintain your discipline and avoid emotional decision-making," he said.

Ride your winners

Seykota is of the view that trading isn’t about having a win rate of 70% or 80% but it comes down to how much investors make when they’re right and how much they lose when they’re wrong.

He feels the only way to achieve asymmetrical returns is to ride one's winners. Seykota feels trends tend to persist in all parts of life, and they also exist in the stock market. 

"Successful trend following is buying when you recognize a trend, and holding on until that trend has finally come to fruition and begins to change. Of course, once in a while, a trader is going to end up buying nearly the exact top in a market, but that's where risk management and stop losses come into play. The key to enjoying enormous returns in the stock market is riding out your winners, and being stubborn enough to hold onto positions to capture as much of the trend as possible," he said.

Seykota believes that investors make the mistake of holding on to their losers as it's uncomfortable to sell them. On the other hand, they sell their winners before they ever get big as they don't want those gains to erode.

Seykota is of the view that investors shouldn't get influenced by soothsayers and prognosticators as they provide fanatical calls that are often way out in the future and turn out to be eventually wrong.

"I usually ignore advice from other traders, especially the ones who believe they are on to a “sure thing”. The old timers, who talk about 'maybe there is a chance of so and so,' are often right and early," he said.

Keep bets small

Seykota feels that one of the best ways to keep emotions at bay while trading is to keep bets small by speculating with less than 10% of one's liquid net worth.

"Risk less than 1% of your speculative account on a trade. This tends to keep the fluctuations in the trading account small, relative to net worth. Risk no more than you can afford to lose, and also risk enough so that a win is meaningful. The solution is to risk just enough that a profitable outcome is meaningful but not so much that a loss forces you to lose your nerve," he said.

Follow your trading rules

According to Seykota trading rules are vital and are critical to one's success. He feels when traders sit down to place a trade, nobody tells them how much to risk or whether to buy or sell.

Seykota is also a huge believer in rules and everything he does is based on strict trading rules he’s outlined for himself which helps him stay calm even when things aren’t going his way.

"It’s a rule that defines how much you’re allowed to risk or what you’re supposed to do during a losing streak. They help keep you disciplined in a world without many boundaries," he said.

Know when to break the rules

Seykota is of the view that a balance between following rules and breaking them is very important.

"Sometimes I trade entirely off the mechanical part, sometimes I override the signals based on strong feelings, and sometimes I just quit altogether. If I didn’t allow myself the freedom to discharge my creative side, it might build up to some kind of blowout. Striking a workable ecology seems to promote trading longevity, which is one key to success," he said.

Seykota believes that the win rate for any trader is insignificant and what really matters is having an asymmetrical profit to loss ratio.

He feels finding a trading approach that fits one's personality is vital and sometimes intuition and “gut feel” can become one's most useful assets.

"I don’t think traders can follow rules for very long unless they reflect their own trading style. Eventually, a breaking point is reached and the trader has to quit or change or find a new set of rules he can follow. This seems to be part of the process of evolution and growth of a trader," he says.

Reduce your trading risk

Seykota is of the view that the three primary components of trading are (1) the long-term trend, (2) the current chart pattern, and (3) picking a good spot to buy or sell.

"Trading requires skill at reading the markets and at managing your own anxieties. Risk is the uncertain possibility of loss. If you could quantify risk exactly, it would no longer be a risk. Risk control has to do with your willingness to allow your stop to do its job," he said.

Have a winning mindset

Seykota believes a losing trader can do little to transform himself into a winning trader as a losing trader is not going to want to transform himself. 

But a winning trader will always be wanting to learn and would like to transform every bet into a profitable one.

Seykota is of the view that in the recipe for success investors shouldn't forget commitment and a deep belief in the inevitability of success.

Leave emotions aside while trading

Seykota feels investors shouldn't get emotionally attached to their trading bets as it may lead to huge losses.

“Dramatic and emotional trading experiences tend to be negative. Pride is a great banana peel, as are hope, fear, and greed. My biggest slip-ups occurred shortly after I got emotionally involved with positions,” he said.

Seykota is of the view that the market is always right and investors should make their trading bets without letting their emotions get the better of them.

“If you want to know everything about the market, go to the beach. Push and pull your hands with the waves. Some are bigger waves, some are smaller. But if you try to push the wave out when it’s coming in, it’ll never happen. The market is always right,” he said.

Asia-Pacific Short Term Update:

"Prices are breaking lower in the #Nifty index... We are short-term #bearish on the Nifty with a break of 17,500 expected in the coming days."