Baria Planning Solutions Essay

The company Baria Planning Solutions is a specialty provider of spend analysis and management services to its customers. BPS was an early entrant into the market but rapid market growth in the past few years has attracted larger software companies to the market. In order to remain competitive against larger companies BPS has expanded beyond the energy sector to acquire other industry-niche providers. Once additional industry sector firms were acquired BPS was tasked with integrating parts of their operations across sectors to ensure operating efficiency. Each industry firm provided services to address the same general type of customer needs but they all differed in technology requirements and service delivery. These differences made it difficult to integrate operations between industry sectors. At the most recent year end the company realized a drop in new client sales and client renewal rates. The sales support team had faced challenges meeting the deadlines promised to clients and as a result they could not capture new sales or retain existing clients. Initial Assessment: Sales opportunities varied between quarters and across industries. BPS has not yet effectively designed the sales support process to meet varying demand levels throughout the year, therefore causing delays in the process. Variation in demand throughout the year caused the industry groups in the proposal support division to have inconsistent productivity levels. Capacity was being inefficiently utilized in the proposal process. As a result the sales support division had trouble meeting proposed deadlines. This then resulted in customer dissatisfaction as well as delays in assisting the salespeople. BPS believed an industry centered approach would be beneficial and provide a competitive advantage but they did not adequately structure their operations to support such a centric process. The sales support process is fragmented and there is no evidence of shared responsibility or employee empowerment. Because the process is fragmented adequate resources  should be provided at each stage in the process and utilized at an efficient level to meet demand. The acquisitions made by BPS are the precedent reason why the sales team is divided by industry sector and the sales leaders believe it is important to maintain an industry specific orientation. The sales team is divided by industry sector while the sales support team only has one of its divisions divided by industry sector. The salespeople have not been able to receive sales support assistance in a timely manner. Directors have suggested the sales support team organize into divisions by industry sector to provide more focused and dedicated support assistance to the sales division. The sales operations group leader disagreed with the proposal to separate sales support by industry division based on the belief that such a structural change would require hiring additional staff. The director of the sales operations group and the previous director of sales support played an influential role in the implementation of the current hybrid structure of the sales support group. In an effort to streamline the sales support group after the acquisition, all functions within sales support were integrated into teams that could serve all industry sectors acquired except for the proposal support group. The reasoning behind the proposal group separation was to allow BPS to continue offering and industry centered, consultative sales process. The hybrid structure was unique to the market, as most similar companies were organized into geographic divisions. BPS believed they could differentiate themselves from competitors with an industry centered niche. However, the industry specific focus could quite possibly be the reason why the sales support team hasn’t been able to meet deadlines and has been missing out on new sales and renewal opportunities. The entrance of competitors in the market has increased customer buying power and their evaluation of alternatives when buying business solutions. Quality assurance of the proposed value BPS offered was an emerging requirement for customers. BPS adopted a solution selling process to meet customer quality expectations and expected the additional performance would create demand which in turn would increase new sales and renewal rates. Because solution selling was a consultative sales process, a considerable amount of additional effort was required in the pre-contractual stage of the sales process to demonstrate value to customers in the proposal. It is important to have the proposal ready in time for the customer. Any delay  will discredit the quality and service promised in the initial selling process resulting in lower customer retention rates. Alternatives Assessment: *Hire additional resources to handle the large workload place on the proposal support staff. Sales support is a service process that requires human capital rather than physical capital. If additional resources are acquired they should be additional staff. Additional capacity should first be added at the bottleneck before it can effectively be added to other divisions. *Integrate all areas of sales support and get rid of the industry centered structure of proposal support. BPS has relied on the unique industry-centric organization of their sales support and salespeople for competitive advantage. Customer surveys to gauge how much they actually value the industry niche approach could be useful in determining what effect any deviation from industry focus would have on demand for BPS services. *Organize all sales support divisions into industry centered processes. This would likely require a significant amount of time and resources dedicated to training and salary expenses. This would be a mid range solution. For now the focus should be on immediate solutions. *Continue or discontinue with the solution selling process. The current trends of consumer choice in the industry, BPS should continue using the solution selling process. In such a service sector, customer satisfaction is vital to stimulate future demand especially if there are other available alternatives. *Cross-train or hire new employees to meet demand and improve utilization. It is relatively inexpensive to cross-train employees [($105,000/52)*3=$6,058] but additional hires might be necessary to meet the demand that cross training cannot. Analyzing utilization rates would help to make this decision. Final Recommendation: In the service sector, demand management involves scheduling customers while capacity management involves scheduling the workforce. Often in the service sector managing demand is not feasible, so companies must focus time and resources on managing capacity. The Theory of Constraints provides a useful framework to address the issues faced by BPS. There is obviously a constraint in the sales support process that must be identified. Exhibit 4  in the case shows the maximum sales support hourly times spent on each function fall outside of 3 standard deviations from the mean amount of time spent on each function. Once the sales support has been redistributed to the highest demand industry sector each quarter, the process should be able to handle the capacity required to fulfill the requests in a more efficient timely manner. Thus, the seasonal variations in demand can be met and assignable variation can be eliminated. The process time variation is expected to be reduced and more reliabl e utilization estimates can be determined. The utilization rates shown in Exhibit 7 of the case should be calculated for each quarter to identify how much pressure there is on a division each quarter and how feasible it is for the division to handle their workload without delay during each quarter. By doing so, it becomes apparent that the seasonal variations in the workload are the reason in proposal delays because the current staffing levels make it impossible to complete such variable demands. The utilization rates by division by quarter are displayed in Appendix 1. Cross training workers and/or hiring additional workers would enhance the capacity to meet the demand. The industry sector proposal divisions are the constraint in the system and can be fixed by offloading the work or increasing the capacity. Adding human resources and distributing them throughout the division will decrease the effect they have on the proposal delays. To improve utilization of resources the following scheduling and staffing requirements are recommended and the subsequent utilization rates are shown in Appendix 2. Hire two part time workers and cross train two full time workers. For a total equivalent of 14 workers on the Proposal support team. In Q1 move 2 full time people from government to retail. Place one part time worker in energy and one part time worker in government. In Q2 no full time workers will change but one part time worker will go to retail and the other will go to energy. In Q3 move 1 full time person from retail to government. Place one part time worker in government and the other in retail. In Q4 move 1 full time person from government and 1 full time person from retail to manufacturing. Place one part time worker in retail and the other in manufacturing. For now, only the proposal support staff will be redistributed. Ongoing quality management will indicate the need for additional staffing changes. By redistributing the proposal staff each quarter, utilization becomes more efficient and capacity is more  consistent with expected demand. Variation due to seasonality should be eliminated. Continuous quality improvement through monitoring the sales support process will provide additional information as to how capacity can be further managed. Process cycle time will provide evidence of the proposed utilization improvements. Customer service is an important aspect of quality than BPS will need to access often if they want to continue with a solution selling process. The solution selling process is essential to the value proposition and will enable BPS to remain competitive in the spend analysis service sector. Utilization improvementswill result in improved cycle times by eliminating variation in the process. Minimizing delays will create value to the customer as well as to BPS and improve customer satisfaction which will almost guarantee increased win and renewal rates.

Evidences and Reflections of an Artist

Gianlorenzo Bernini (1598-1610) was more than the greatest sculptor of the Baroque period. He was also an architect, painter, playwright, composer and theater designer. A brilliant wit and caricaturist, he wrote comedies and operas when not carving marbles as easily as clay. More than any other artist, with his public foundations, religious art, and designs for St. Peter’s, he left his mark on the face of Rome (Strickland and Boswell, 1992). â€Å"The Ecstasy of St. Theresa† and â€Å"Apollo and Daphne† are evidences of Bernini’s outstanding skills.Bernini’s marble sculpture, â€Å"The Ecstasy of St. Theresa†, represented the saint swooning on a cloud with an expression of mingled ecstasy and exhaustion on her face. Since the Counter Reformation Church stressed the value of its members reliving Christ’s passion, Bernini tried to induce an intense religious experience in worshipers (Strickland and Boswell, 1992). On the other hand, few works in the history of sculpture are more admired for the sheer skill of their carving than Bernini’s â€Å"Apollo and Daphne†.Bernini began the â€Å"Apollo and â€Å"Daphne† in 1622 and had largely completed it by 1624, the last year of his employment with Cardinal Scipione Borghese. The â€Å"Apollo and Daphne† has come to stand as the perfect antithesis to the modernist principle of â€Å"truth to materials†, the ultimate illustration of the artist defying his medium’s very nature (Sofaer, 2007). For both works, Bernini used all the resources of operatic stagecraft, creating a total artistic environment (Strickland and Boswell, 1992). Being able to observe Bernini’s extraordinary skills in art is a truly noteworthy and significant experience.Just watching his works through the video made me feel the ecstasy, the pursuit and the love contained within those works. Somehow, it makes me want to sculpt a masterpiece of my own, reflec ting my own skill and my own knowledge. Michaelangelo Merisi da Caravaggio’s (1571-1610) genius resided in his ability to overlay one principle upon another, to cross aesthetic boundaries seamlessly while seldom calling attention to the means by which he did so. Moreover, even when he was painting the human figure, Caravaggio was a still-life painter at heart.Caravaggio’s â€Å"Basket of Fruit† has been dated by modern scholars to the years 1593 to 1600, with most placing it closer to the end than the beginning of the first phase of his career. If indeed datable to the moment of his emergence as a public painter in the Contarelli Chapel, the little picture was not one of the realistic depictions of â€Å"flowers and fruit†. Coming at a critical juncture in his professional career, one can imagine the â€Å"Basket of Fruit† serving as a polemical expression of his ideas on the nature of creativity itself.In this work, he blended the lowly method of Ligozzi’s mimetic and didactic illustrations with higher-minded emulations of ancient literary and visual sources, prompted perhaps by his awareness of the current fashion for Northern still-life painting among collectors like Del Monte himself (Varriano, 2006). In the first Roman years, Caravaggio was isolated. He was rushed to hospital for a malaria attack, as witnessed in the famous self-portrait â€Å"Sick Bacchus† in the Galleria Borghese (Pomella, 2004). The â€Å"Sick Bacchus† is a meditation on the theme of â€Å"love’s sting†, that is, on the woes of love gone awry.During the Baroque, the awareness of point of view led, for the first time in Western history, to something which can be considered today as self-reflection, a self-consciousness of the human individual (Bal, 1999). Studying â€Å"The Incredulity of Saint Thomas’, also known as â€Å"Doubting Thomas†, it may come as no surprise to learn that Caravaggio failed to w in the commission to paint a resurrection for the Jesuits. By the time he had completed this painting, Caravaggio’s notion of a â€Å"religious† image had already worried Counter-Reformation churchmen.His reputation for painting in a style which has neither sacred, nor profane, but a hybrid of the two, had attracted uneasy commentary among potential ecclesiastical patrons. In this respect, the â€Å"Incredulity of St. Thomas† might almost be read as gauntlet thrown in the face of counter-reformation orthodoxy. This works is an evidence for Caravaggio’s decision to explore the central mystery of the Christian faith, the incarnation and the resurrection, with what might, tendentiously, be termed an almost Protestant literal-mindedness (Porter, 1997).To be able to understand the personality of Caravaggio through his works, as observed from the video, is an unforgettable occurrence for me. It had shown me that sometimes, there are certain things which artists have to do that defies the society and still, defines them as a whole individual or as a skilled artist. It also made me understand that most of the time, the paintings or artworks do not simply show particular sceneries or another model, but reflects the skills, personality and visions of the creator itself. References Bal, M. (1999). Quoting Caravaggio: Contemporary Art, Preposterous History.Chicago: The University of Chicago Press. Pomella, A. (2004). Caravaggio: Art Courses. ATS Italia Editrice. Porter, R. (1997). Rewriting the Self: Histories from the Renaissance to the Present. New York: Routledge. Sofaer, J. (2007). Material Identities. Australia: Blackwell Publishing Ltd. Strickland, C. and J. Boswell. (1992). The Annotated Mona Lisa: A Crash Course in Art History from Prehistoric to Post-modern. Missouri: Andrews McMeel Publishing. Varriano, J. (2006). Caravaggio: The Art of Realism. Pennsylvania: The Pennsylvania State University Press.

Portfolio Construction Using Technical and Fundamental Analysis Essay

CHAPTER ONE: INTRODUCTION 1.1 Background of the Organization Smart Equity Brokers Pvt. Ltd. & Smart Commodity Brokers Pvt. Ltd. was established on 1st May 2006 as Smart Equity Brokers Pvt. Ltd., by a young Chartered Accountant, Mr. Arun Khera, supported by Mr. Ravi Raj Jain, both having a rich experience & exposure to capital, derivative & commodity market. The Company acquired the membership of : ïÆ'Ëœ Bombay Stock Exchange [BSE] in 2006 ïÆ'Ëœ National Stock Exchange [NSE] in 2006 ïÆ'Ëœ National Commodity & Derivative Exchange [NCDEX] in 2003 ïÆ'Ëœ Multi Commodity Exchange [MCX] in 2006 ïÆ'Ëœ Derivatives Segment [NSE], Clearing Member in 2006 Smart is a full service brokerage house providing comprehensive advisory services to its clients under one roof, enabling you to manage all your financial needs. We have expertise in advisory services in both cash and derivatives sides of the capital markets. Smart also provides commodity trading through its group subsidiaries, and is a member of the MCX and NCDEX. The services are offered under total confidentiality and integrity with the sole purpose of maximizing returns to our customer base is a mix of institutional, high net worth, and retail investors. This diversified base of customers, together with our wide gamut of services, provides us with the necessary stability and strength to weather the volatility much better than that of the competitors and also maintain high standards of customer service levels throughout. Smart meets the support needs of this investor base through execution skills driven by an experienced sales team and research-backed advice generated by a team of experienced analysts. Smart advisory services range from investing, trading, research, financial planning and portfolio management, which are offered, to a large number of high net worth individuals and corporate. Mission:- To provide research-driven, unbiase d investment advise with the objective of achieving sustainable superior investment returns for our clients. To provide flawless execution support to meet diverse client needs on a platform of professionalism and integrity. Our Values To be fair, empathetic and responsive in serving our customers. To respect and reinforce our fellow employees and the power of teamwork. To strive relentlessly to improve what we do and how we do it. To always earn and be worthy of our customer’s trust. 2 1.2 Introduction of the Study This project is being done to construct portfolio of clients with the help of fundamental and technical analysis. Also analyse their portfolio by valuating those companies where they have already invested using specific valuation model. Then find out whether it is right time to invest in those companies using technical analysis. Also calculating the returns they are getting and suggest for higher return. Fundamental Analysis gives us the idea what to buy or what to sell, while Technical Analysis tells us the timing when to buy or when to sell. In this project I am mainly focusing on how to provide a holistic view to the clients, specifically HNIs (High Net-worth Individuals), on investing in equity market i.e. stock market. The main motive of this research is to check whether fundamental analysis and technical analysis together is useful to provide better suggestion for investments. 1.3 Learning Objectives of the project The  project  undertaken  during  the  period  of  internship  was  Ã¢â‚¬Å"Portfolio  Construction  using  Fundamental  and  Technical  Analysis†. The  learning  objectives  of  the  internship  are  as  follows:- ­Ã¢â‚¬  ïÆ'Ëœ Understanding  the  various  activities  in  a  Broking  Firm ïÆ'Ëœ To  get  acquainted  with  theall  workings  of  online  trading ïÆ'Ëœ To  gain  practical  knowledge  in  share  trading ïÆ'ËœTo  analyze  the  financial  market  &  share  movements  in  order  to  study  of  prospects  of  investing  in  a  particular  stock. ïÆ'Ëœ To  understand  the  working  in  the  derivatives  market. 1.4 Need of the Project Portfolio Construction is all about investing in a range of funds that work together to create an investment solution for investors. Building a portfolio involves understanding the way various types of investments work, and combining them to address your personal investment objectives and factors such as attitude to risk the investment and the expected life of the investment. When building an investment portfolio there are two very important considerations. †¢ The first is asset allocation, which is concerned with how an investment is spread across different asset types and regions. †¢ The second is fund selection, which is concerned with the choice  of fund managers and funds to represent each of the chosen asset classes and sectors. Both of these considerations are important, although academic studies have consistently shown that in the medium to long term, asset allocation usually has a much larger impact on the variability of a portfolio’s return. To help in ch oosing a 3 suitable asset allocation we have created a Risk Profiler that helps identify your attitude to risk and therefore better identify a combination of investments to build a portfolio. With such a vast number of investment funds to choose from, spanning the full range of asset classes and world markets it is easy to become confused when choosing which investments to make. It is even more difficult to choose the right combination of investment to potentially meet your investment goals. The tool, which we use so as to build the portfolio, is technical and fundamental analysis. 1.5 Scope of Project – extent and limitation The study will help the organization to know the present condition of the portfolio construction and expectations of the clients towards portfolio The willingness of the clients and to implement portfolio system which is effective for the clients Limitations of the Study: This project is being done with the help of historical data like annual reports of the company. So, the availability of data is the limitation of this project. Also this project needs a lot of time to analyzing data. As the project is based on secondary data, possibility of unauthorized information cannot be avoided. The report is basically is made between the horizon of three months and the situation of market is very dynamic so the conclusion or the return might not reflect the true picture. 4 CHAPTER TWO: METHODOLOGY 2.1 Research Design The methodologies used for portfolio construction are technical and fundamental analysis. While constructing the portfolio it was kept in mind that it was basically built for investing purpose. 2.2 Data Collection method and instruments All the data, graph and charts are collected from secondary sources. The instruments used are iChart Java application to construct charts and graphs. 2.3 Analysis Techniques and Procedure Fundamental analysis is the foundation of solid investing. It helps you determine the underlying health of a company by examining the business’ core numbers: its income statements, its earnings releases, its balance sheet, and other indicators of economic health. From these â€Å"fundamentals† investors evaluate if a stock is under- or overvalued. Fundamental analysis begins with an individual stock, but it also extends to that company’s larger context. It explores questions like these: Is the company competitive within its industry? Is that industry growing or shrinking, compared to other sectors? Shares of companies with strong fundamentals will tend to go up over time, while fundamentally weak companies will see their stock prices fall. This makes fundamental analysis especially valuable to long-term investors. Fundamental analysis is one school of investing research. It contrasts with another popular approach, technical analysis, which focuses not on business fundamentals but on stock-price action as reflected in charts. Technical analysts look for recognizable patterns in price charts that will help them estimate the stock’s future price movement. Fundamental analysis helps you determine if a company is a good or poor investment choice. Imagine you’re a venture capitalist or a bank, who must decide if that company is worthy of a loan or equity investment. How can you evaluate  whether this particular company deserves your investable capital? Fundamental analysts consider the following in making their decision to invest (or not): ïÆ'Ëœ Is the company making a profit consistently? (While this is naturally the most important question for investors, it’s important to consider the answer in a bigger context. A single profitable quarter for a new company might be a fluke. In the same regard, a drop in profitability for an established blue-chip company might just be a temporary setback.) ïÆ'Ëœ Is that profit growing or declining over time? ïÆ'Ëœ Is the company holding its own relative to the competition? Is it a leader in its sector? Is that sector growing or declining in importance to the overall economy? ïÆ'Ëœ Can the company pay its bills adequately? If you were to dismantle the company’s operations today, what would be the intrinsic value of its assets versus the value of its debts? Fundamental Analysis Tools ïÆ'Ëœ Earnings per Share – EPS ïÆ'Ëœ Price to Earnings Ratio – P/E ïÆ'Ëœ Projected Earning Growth – PEG ïÆ'Ëœ Price to Sales – P/S ïÆ'Ëœ Price to Book – P/B ïÆ'Ëœ Dividend Payout Ratio ïÆ'Ëœ Dividend Yield ïÆ'Ëœ Book Value ïÆ'Ëœ Return on Equity Earnings per Share – EPS The portion of a company’s profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company’s profitability. Calculated as: 5 When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period. Diluted EPS expands on basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number. Price to Earnings Ratio – P/E Price/Earnings or P/E ratio is the ratio of a company’s share price to its earnings per share. It tells whether the share price of a company is fairly valued, undervalued or overvalued. Formula P/E Ratio = Current Share Price Earnings per Share Current share price is obtained from secondary markets like BSE, NSE, etc. while EPS is calculated as (net income minus preferred dividends)/weighted average number of shares outstanding. Leading and Trailing P/E Ratio If the EPS is the figure for the current period the P/E ratio is called trailing P/E ratio. For better analysis the EPS should be the one expected to prevail in the next reporting period, say next year. P/E ratio calculated based on expected P/E ratio is called leading P/E and is a more meaningful estimate of the company’s justified P/E ratio. Analysis If the justified P/E calculated using dividend discount analysis is higher than the current P/E ratio the share is undervalued and should be purchased. If the justified P/E is lower than P/E ratio the share is overvalued and should be sold. Projected Earning Growth – PEG 6 A stock’s price to earnings ratio divided by the growth rate of its earnings for a specified time period. The price/earnings to growth (PEG) ratio is used to determine a stock’s value while taking the company’s earnings growth into account, and is considered to provide a more complete picture than the P/E ratio. While a high P/E ratio may make a stock look like a good buy, factoring in the company’s growth rate to get the stock’s PEG ratio can tell a different story. The lower the PEG ratio, the more the stock may be undervalued given its earnings performance. The calculation is as follows: (P/E ratio)/Annual EPS Growth Price to Sales – P/S Investors are always seeking ways to compare the value of stocks. The price-to-sales ratio(Price/Sales or P/S) provides a simple approach: take the company’s market capitalization (the number of shares multiplied by the share price) and divide it by the company’s total sales over the past 12 months. The lower the ratio, the more attractive the investment. As easy as it sounds, price-to-sales provides a useful measure for sizing up stocks. But investors need to be mindful of the ratio’s potential pitfalls and possible unreliability. Dividend Payout Ratio Dividend payout ratio is the ratio of dividend per share divided by earnings per share. It is a measure of how much earnings a company is paying out to its shareholders as compared to how much it is retaining for reinvestment. Formula Dividend Payout Ratio = Dividend per Share Earnings per Share Dividend payout ratio can also be calculated as total dividends divided by net income. Analysis A shareholder has two sources of return, namely periodic income in the form of dividends and capital appreciation. Dividend payout ratio tells what percentage of total earnings the company is paying back to shareholders. A healthy dividend payout ratio leads to investor confidence in the company. Plowback ratio (also called retention rate) is equals 1 − payout ratio and it equals the earnings retained divided by total earnings for the period. 7 Book Value 1. The value at which an asset is carried on a balance sheet. To calculate, take the cost of an asset minus the accumulated depreciation. 2. The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities. 3. The initial outlay for an investment. This number may be net or gross of expenses such as trading costs, sales taxes, service charges and so on. Also known as â€Å"net book value (NBV).† Return on Equity Return on equity or return on capital is the ratio of net income of a business during a year to its stockholders’ equity during that year. It is a measure of profitability of stockholders’ investments. It shows net income as percentage of shareholder equity. Formula The formula to calculate return on equity is: ROE = Annual Net Income Average Stockholders’ Equity Net income is the after tax income whereas average shareholders’ equity is calculated by dividing the sum of shareholders’ equity at the beginning and at the end of the year by 2. The net income figure is obtained from income statement and the shareholders’ equity is found on balance sheet. You will need year ending balance sheets of two consecutive financial years to find average shareholders’ equity. Analysis Return on equity is an important measure of the profitability of a company. Higher values are generally favorable meaning that the company is efficient in generating income on new investment. Investors should compare the ROE of different companies and also check the trend in ROE over time. However, relying solely on ROE for investment decisions is not safe. It can be artificially influenced by the management, for example, when debt financing is used to reduce share capital there will be an increase in ROE even if income remains constant. Technical Analysis can be defined as an art and science of forecasting future prices based on an examination of the past price movements. Technical analysis is not astrology for predicting prices. Technical analysis is based on analyzing current demand-supply of commodities, stocks, indices, futures or any tradable instrument. Technical analysis involve putting stock information like prices, volumes and open interest on a chart and applying various patterns and indicators to it in order to assess the future price movements. The time frame in which technical analysis is applied may range from intraday (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes or hourly), daily, weekly or monthly price data to many years. There are essentially two methods of analyzing investment opportunities in the security market viz fundamental analysis and technical analysis. You can use fundamental information like financial and non-financial aspects of the company or technical information which ign ores fundamentals and focuses on actual price movements. The basis of Technical Analysis What makes Technical Analysis an effective tool to analyze price behavior is explained by following theories given by Charles Dow: †¢ Price discounts everything †¢ Price movements are not totally random †¢ What is more important than why CANDLE CHARTS What is a chart? Charts are the working tools of technical  analysts. They use charts to plot the price movements of a stock over specific time frames. It’s a graphical method of showing where stock prices have been in the past. 8 A chart gives us a complete picture of a stock’s price history over a period of an hour, day, week, month or many years. It has an x-axis (horizontal) and a y-axis (vertical). Typically, the x-axis represents time; the y-axis represents price. By plotting a stock’s price over a period of time, we end up with a pictorial representation of any stock’s trading history. A chart can also depict the history of the volume of trading in a stock. That is, a chart can illustrate the number of shares that change hands over a certain time period. Candlesticks Formation Candlestick charts provide visual insight to current market psychology. A candlestick displays the open, high, low, and closing prices in a format similar to a modern-day bar-chart, but in a manner that extenuates the relationship between the opening and closing prices. Candlesticks don’t involve any calculations. Each candlestick represents one period (e.g., day) of data. The figure given below display s the elements of a candle. 9 , A candlestick chart can be created using the data of high, low, open and closing prices for each time period that you want to display. The hollow or filled portion of the candlestick is called â€Å"the body† (also referred to as â€Å"the real body†). The long thin lines above and below the body represent the high/low range and are called â€Å"shadows† (also referred to as â€Å"wicks† and â€Å"tails†). The high is marked by the top of the upper shadow and the low by the bottom of the lower shadow. If the stock closes higher than its opening  price, a hollow candlestick is drawn with the bottom of the body representing the opening price and the top of the body representing the closing price. If the stock closes lower than its opening price, a filled candlestick is drawn with the top of the body representing the opening price and the bottom of the body representing the closing price. Each candlestick provides an easy-to-decipher picture of price action. Immediately a trader can see and compare the relationship between the open and close as well as the high and low. The relationship between the open and close is considered vital information and forms the essence of candlesticks. Hollow candlesticks, where the close is greater than the open, indicate buying pressure. Filled candlesticks, where the close is less than the open, indicate selling pressure. Thus, compared to traditional bar charts, many traders consider candlestick charts more visually appealing and easier to interpret. 10 Why candlestick charts? NIFTY (Daily) Candlestick Chart What does candlestick charting offer that typical Western high-low bar charts do not? Instead of vertical line having horizontal ticks to identify open and close, candlesticks represent two-dimensional bodies to depict open to close range and shadows to mark day’s high and low. For several years, the Japanese traders have been using candlestick charts to track market activity. Eastern analysts have identified a number of patterns to determine the continuation and reversal of trend. These patterns are the basis for Japanese candlestick chart analysis. This places candlesticks rightly as a part of technical analysis. Japanese candlesticks offer a quick picture into the psychology of short term trading, studying the effect, not the cause. Applying candlesticks means that for short-term, an investor can make confident decisions about buying, selling, or holding an investment. Candlestick analysis One cannot ignore that investor’s psychologically driven forces of  fear; greed and hope greatly influence the stock prices. The overall market psychology can be tracked through candlestick analysis. More than just a method of pattern recognition, candlestick analysis shows the interaction between buyers and sellers. A white candlestick indicates opening price of the session being below the closing price; and a black candlestick shows opening price of the session being above the closing price. The shadow at top and bottom indicates the high and low for the session. 11 Japanese candlesticks offer a quick picture into the psychology of short term trading, studying the effect, not the cause. Therefore if you combine candlestick analysis with other technical analysis tools, candlestick pattern analysis can be a very useful way to select entry and exit points. One candle patterns In the terminology of Japanese candlesticks, one candle patterns are known as â€Å"Umbrella lines†. There are two types of umbrella lines – the hanging man and the hammer. They have long lower shadows and small real bodies that are at top of the trading range for the session. They are the simplest lines because they do not necessarily have to be spotted in combination with other candles to have some validity. Hammer and Hanging Man Hammer Hanging Man Candlesticks Hammer Hammer is a one-candle pattern that occurs in a downtrend when bulls make a start to step into the rally. It is so named because it hammers out the bottom. The lower shadow of hammer is minimum of twice the length of body. Although, the color of the body is not of much significance but a white candle shows slightly more bullish implications than the black body. A positive day i.e. a white candle is required the next day to confirm this signal. Criteria †¢ The lower shadow should be at least two times the length of the body. †¢ There should be no upper shadow or a very small upper shadow. †¢ The real body is at the upper end of the trading range. The color of the body is not important although a white body should have slightly more bullish implications. †¢ The following  day needs to confirm the Hammer signal with a strong bullish day. Signal enhancements 1. The longer the lower shadow, the higher the potential of a reversal occurring. 2. Large volume on the Hammer day increases the chances that a blow off day has occurred. 3. A gap down from the previous day’s close sets up for a stronger reversal move provided the day after the Hammer signal opens higher. Pattern psychology 12 The market has been in a downtrend, so there is an air of bearishness. The price opens and starts to trade lower. However the sell-off is abated and market returns to high for the day as the bulls have stepped in. They start bringing the price back up towards the top of the trading range. This creates a small body with a large lower shadow. This represents that the bears could not maintain control. The long lower shadow now has the bears questioning whether the decline is still intact. Confirmation would be a higher open with yet a still higher close on the next trading day. Hanging man The hanging man appears during an uptrend, and its real body can be either black or white. While it signifies a potential top reversal, it requires confirmation during the next trading session. The hanging man usually has little or no upper shadow. Soybean Oil-December, 1990, Daily (Hanging Man and Hammer) 13 Dow Jones Industrials-1990, Daily (Hanging Man and Hammer) Shooting star and  inverted hammer Other candles similar to the hanging man and hammer are the â€Å"shooting star,† and the â€Å"inverted hammer.† Both have small real bodies and can be either black or white but they both have long upper shadows, and have very little or no lower shadows. Inverted Hammer Description Inverted hammer is one candle pattern with a shadow at least two times greater than the body. The small body identifies this pattern. They are found at the bottom of the decline which is evidence that bulls are stepping in but still selling is going on. The color of the small body is not important but the white body has more bullish indications than a black body. A positive day is required the following day to confirm this signal. Signal enhancements 1. The longer the upper shadow, the higher the potential of a reversal occurring. 2. A gap down from the previous day’s close sets up for a stronger reversal move. 14 3. Large volume on the day of the inverted hammer signal increases the chances that a blow off day has occurred 4. The day after the inverted hammer signal opens higher. Pattern psychology After a downtrend has been in effect, the atmosphere is bearish. The price opens and starts to trade higher. The Bulls have stepped in, but they cannot maintain the strength. The existing sellers knock the price back down to the lower end of the trading range. The Bears are still in control. But the next day, the Bulls step in and take the price back up without major resistance from the Bears. If the price maintains strong after the Inverted Hammer day, the signal is confirmed. Stars A small real body that gaps away from the large real body preceding it is known as star. It’s still a star as long as the small real body does not overlap the preceding real body. The color of the star is not important. Stars can occur at tops or bottoms. Shooting star Description The Shooting Star is a single l ine pattern that indicates an end to the uptrend. It is easily identified by the presence of a small body with a shadow at least two times greater than the body. It is found at the top of an uptrend. The Japanese named this pattern because it looks like a shooting star falling from the sky with the tail trailing it. Criteria 1. The upper shadow should be at least two times the length of the body. 2. Prices gap open after an uptrend. 15 3. A small real body is formed near the lower part of the price range. The color of the body is not important although a black body should have slightly more bearish implications. 4. The lower shadow is virtually non-existent. 5. The following day needs to confirm the Shooting Star signal with a black candle or better yet, a gap down with a lower close. Signal enhancements 1. The longer the upper shadow, the higher the potential of a reversal occurring. 2. A gap up from the previous day’s close sets up for a stronger reversal move provided. 3. The day after the Shooting Star signal opens lower. 4. Large volume on the Shooting Star day increases the chances that a blow-off day has occurred although it is not a necessity. Pattern psychology During an uptrend, the market gaps open and rallies to a new high. The price opens and trades higher. The bulls are in control. But before the close of the day, the bears step in and take the price back down to the lower end of the trading ra nge, creating a small body for the day. 25 This could indicate that the bulls still have control if analyzing a Western bar chart. 16 However, the long upper shadow represents that sellers had started stepping in at these levels. Even though the bulls may have been able to keep the price positive by the end of the day, the evidence of the selling was apparent. A lower open or a black candle the next day reinforces the fact that selling is going on. Two candles pattern Bullish engulfing A â€Å"bullish engulfing pattern† consists of a large white real body that engulfs a small black real body during a downtrend. It signifies that the buyers are overwhelming the sellers Engulfing Bullish engulfing Description The Engulfing pattern is a major reversal pattern comprised of two opposite colored bodies. This Bullish Pattern is formed after a downtrend. It is formed when a large 17 white candlestick that completely eclipses the previous day candlestick follows a small black candlestick. It opens lower that the previous day’s close and closes higher than the previous day’s open. Criteria 1. The candlestick body of the previous day is completely overshadowed by the next day’s candlestick. 2. Prices have been declining definitely, even if it has been in short term. 3. The color of the first candle is similar to that of the previous one and the body of the second candle is opposite in color to that first candle. The only exception being an engulfed body which is a doji. Signal enhancements 1. A small body being covered by the larger one. The previous day shows the trend was running out of steam. The large body shows that the new direction has started with good force. 2. Large volume on  the engulfing day increases the chances that a blow off day has occurred. 3. The engulfing body engulfs absorbs the body and the shadows of the previous day; the reversal has a greater probability of working. 4. The probability of a strong reversal increases as the open gaps between the previous and the current day increases. Pattern psychology After a decline has taken place, the price opens at a lower level than its previous day closing price. Before the close of the day, the buyers have taken over and have led to an increase in the price above the opening price of the previous day. The emotional psychology of the trend has now been altered. When investors are learning the stock market they should utilize information that has worked with high probability in the p ast. Bullish Engulfing signal if used after proper training and at proper locations, can lead to highly profitable trades and consistent results. This pattern allows an investor to improve their probabilities of been in a correct trade. The common sense elements conveyed in candlestick signals makes for a clear and concise trading technique for beginning investors as well as experienced traders. Bearish engulfing A â€Å"bearish engulfing pattern,† on the other hand, occurs when the sellers are overwhelming the buyers. This pattern consists of a small white candlestick with short shadows or tails followed by a large black candlestick that eclipses or â€Å"engulfs† the small white one. Bearish Engulfing 18 19 Piercing The bullish counterpart to the dark cloud cover is the â€Å"piercing pattern.† The first thing to look for is to spot the piercing pattern in an  existing downtrend, which consists of a long black candlestick followed by a gap lower open during the next session, but which closes at least halfway into the prior black candlestick’s real body. Description The Piercing Pattern is composed of a two-candle formation in a down trending market. With daily candles, the piercing pattern will often end a minor downtrend (a downtrend that lasts between six and fifteen trading days). The day before the piercing candle appears, the daily candle should have a fairly large dark real body, signifying a strong down day. Criteria 1. The downtrend has been evident for a good period. 2. The body of the first candle is black; the body of the second candle is white. 3. A long black candle occurs at the end of the trend. 4. The white candle closes more than halfway up the black candle. 5. The second day opens lower than the trading of the prior day. Signal enhancements 1. The reversal will be more pronounced, if the gap down the previous day close is more. 2. The longer the black candle and the white candle, the more forceful the reversal. 3. The higher the white candle closes into the black candle, the stronger the reversal. 4. Large volume during these two trading days is a significant confirmation. Pattern psychology 20 The atmosphere becomes bearish once a strong downtrend has been in effect. The price goes down. Bears may move the price even further but before the day ends the bulls enters and bring a dramatic change in price in the opposite direction. They finish near the high of the day. The move has almost negated the price decline of the previous day. This now has the bears concerned. More buying the next day will confirm the move. Being able to utilize information that has been used successfully in the past is a much more viable investment strategy than taking shots in the dark. Keep in mind, when you are given privileged information about stock market tips, where you  are in the food chain. Are you one of those privileged few that get top-notch pertinent information on a timely manner, or are you one of the masses that feed into a frenzy and allow the smart money to make the profits? Bearish Harami In up trends, the harami consists of a large white candle followed by a small white or black candle (usually black) that is within the previous session’s large real body. Description Bearish Harami is a two candlestick pattern composed of small black real body contained within a prior relatively long white real body. The body of the first candle is the same color as that of the current trend. The open and the close occur inside the open and the close of the previous day. Its presence indicates that the trend is over. Criteria 1. The first candle is white in color; the body of the second candle is black. 2. The second day opens lower than the close of the previous day and closes higher than the open of the prior day. 3. For a reversal signal, confirmation is needed. The next day should show weakness. 4. The uptrend has been apparent. A long white candle occurs at the end of the trend. Signal enhancements 1. The reversal will be more forceful, if the white and the black candle are longer. 2. The lower the black candle closes down on the white candle, the more convincing that a reversal has occurred, despite the size of the black candle. Pattern psychology 21 The bears open the price lower than the previous close, after a strong uptrend has been in effect and after a long white candle day. The longs get concerned and start profit taking. The price for the day ends at a lower level. The bulls are now concerned as the price closes lower. It is becoming evident that the trend has been violated. A weak day after that would convince everybody that the trend was reversing. Volume increases due to the profit taking and the addition of short sales. Bullish Harami A candlestick chart pattern in which a large candlestick is followed by a smaller candlestick whose body is located within the vertical range of the larger body. In downtrends, the harami consists of a large black candle followed by a small white or black candle (usually white) that is within the previous session’s large real body. This pattern signifies that the immediately preceding trend may be concluding, and that the bulls and bears have called a truce. Description The Harami is a commonly observed phenomenon. The pattern is composed of a two candle formation in a down-trending market. The color first candle is the same as that of current trend. The first body in the pattern is longer than the second one. The open and the close occur inside the open and the close of the previous day. Its presence indicates that the trend is over. 22 The Harami (meaning â€Å"pregnant† in Japanese) Candlestick Pattern is a reversal pattern. The pattern consists of two Candlesticks. The first candle is black in color and a continuation of the existing trend. The second candle, the little belly sticking out, is usually white in color but that is not always the case. Magnitude of the reversal is affected by the location and size of the candles. Criteria 1. The first candle is black in body; the body of the second candle is white. 2. The downtrend has been evident for a good period. A long black candle occurs at the end of the trend. 3. The second day opens higher than the close of the previous day and closes lower than the open of the prior day. 4. Unlike the Western â€Å"Inside Day†, just the body needs to remain in the previous day’s body, where as the â€Å"Inside Day† requires both the body and the shadows to remain inside the previous day’s body. 5. For a reversal signal, further confirmation is required to indicate that the trend  is now moving up. Signal enhancements 1. The reversal will be more forceful if the black candle and the white candle are longer. 2. If the white candle closes up on the black candle then the reversal has occurred in a convincing manner despite the size of the white candle. Pattern psychology After a strong down-trend has been in effect and after a selling day, the bulls open at a price higher than the previous close. The short’s get concerned and start covering. The price for the day finishes at a higher level. This gives enough notice to the short sellers that trend has been violated. A strong day i.e. the next day would convince everybody that the trend was reversing. Usually the volume is above the recent norm due to the unwinding of short positions. When the second candle is a doji, which is a candle with an almost non-existent real body, these patterns are called â€Å"harami crosses.† They are however less reliable as reversal patterns as more indecision is indicated. 23 Doji Doji lines are patterns with the same open and close price. It’s a significant reversal indicator. The Importance of the Doji The perfect doji session has the same opening and closing price, yet there is some flexibility to this rule. If the opening and closing price are within a few ticks of each other, the line could still be viewed as a doji. How do you decide whether a near-doji day (that is, where the open and close are very close, but not exact) should be considered a doji? This is subjective and there are no rigid rules but one way is to look at a near-doji day in relation to recent action. If there are a series of very small real bodies, the near-doji day would not be viewed as significant since so many other recent periods had small real bodies. One technique is based on recent market activity. If the market is at an important market junction, or is at the mature part of a bull or bear move,  or there are other technical signals sending out an alert, the appearance of a near-doji is treated as a doji. The philosophy is that a doji can be a significant warning and that it is better to attend to a false warning than to ignore a real one. To ignore a doji, with all its inherent implications, could be dangerous. The doji is a distinct trend change signal. However, the likelihood of a reversal increases if subsequent candlesticks confirm the doji’s reversal potential. Doji 24 sessions are important only in markets where there are not many doji. If there are many doji on a particular chart, one should not view the emergence of a new doji in that particular market as a meaningful development. That is why candlestick analysis usually should not use intra-day charts of less than 30 minutes. Less than 30 minutes and many of the candlestick lines become doji or near doji Doji at tops A Doji star at the top is a warning that the uptrend is about to change. This is especially true after a long white candlestick in an uptrend. The reason for the doji’s negative implications in uptrend is because a doji represents indecision. Indecision among bulls will not maintain the uptrend. It takes the conviction of buyers to sustain a rally. If the market has had an extended rally, or is overbought, then formation of a doji could mean the scaffolding of buyers’ support will give way. Doji are also valued for their ability to show reversal potential in downtrend s. The reason may be that a doji reflects a balance between buying and selling forces. With ambivalent market participants, the market could fall due to its own weight. Thus, an uptrend should reverse but a falling market may continue its descent. Because of this, doji need more confirmation to signal a bottom than they do a top. What are support and resistance lines? Support and resistance represent key junctures where the forces of supply and demand meet. These lines appear as thresholds to price patterns. They are the respective lines which stops the  prices from decreasing or increasing. A support line refers to that level beyond which a stock’s price will not fall. It denotes that price level at which there is a sufficient amount of demand to stop and possibly, for a time, turn a downtrend higher. Similarly a resistance line refers to that line beyond which a stock’s price will not increase. It indicates that price level at which a sufficient supply of stock is available to stop and possibly, for a time, head off an uptrend in prices. Trend lines are often referred to as support and resistance lines on an angle. Support A support is a horizontal floor where interest in buying a commodity is strong enough to overcome the pressure to sell. Support level is the price level at which sufficient demand exists to, at least temporarily, halt a downward movement in prices. Logically as the price declines towards support and gets cheaper, buyers become more inclined to buy and sellers become less inclined to sell. By the time the price reaches the support level, it is believed that demand will overcome supply and prevent the price from falling below support. 25 Support does not always hold true and a break below support signals that the bulls have lost over the bears. A fall below support level indicates more willingness to sell and a lack of willingness to buy. A break in the levels of support indicates that the expectations of sellers are reducing and they are ready to sell at even lower prices. In addition, buyers could not be coerced into buying until prices declined below support or below the previous low. Once support is broken, another support level will have to be established at a lower level ITC showing support and resistance Resistance 26 A resistance is a horizontal ceiling where the pressure to sell is greater than the pressure to buy. Thus a Resistance level is a price at which sufficient supply exists to; at least temporarily, halt an upward movement. Logically as the price advances towards resistance, sellers become more inclined to sell and buyers become less inclined to buy. By the time the price reaches the resistance level, it is believed that supply will overcome demand and prevent the price from rising above resistance. Resistance does not always hold true and a break above resistance signals that the bears have lost over the bulls. A break in the resistance level shows more willingness to buy or lack of incentive to sell. Resistance breaks and new highs indicate that buyer’s expectations have increased and are ready to buy at even higher prices. In addition, sellers could not be coerced into selling until prices rose above resistance or above the previous high. Once resistance is broken, another resistance level will have to be established at a higher level. What Does a Technical indicator offer? Technical analysts use indicators to look into a different perspective from which stock prices can be analyzed. Technical indicators provide unique outlook on the strength and direction of the underlying price action for a given timeframe. Why use indicators? Technical Indicators broadly serve three functions: to alert, to confirm and to predict. Indicator acts as an alert to study price action, sometimes it also gives a signal to watch for a break of support. A large positive divergence can act as an alert to watch for a resistance breakout. Indicators can be used to confirm other technical analysis tools. Some investors and traders use indicators to predict the direction of future prices. Tips for using indicators There are a large number of Technical Indicators that can be used to assist you in selection of stocks and in tracking the right entry and exit points. In short, indicators indicate. But it doesn’t mean that traders should ignore the price action of a stock and focus solely on the indicator. Indicators just filter price action with formulas. As such, they are derivatives and not direct reflections of the price action. While applying the indicators, the analyst should consider:  What is the indicator saying about the price action of a security? Is the price action getting stronger? Is it getting weaker? The buy and sell signals generated by the indicators, should be read in context with other technical analysis tools like candlesticks, trends, patterns etc. For example, an indicator may flash a buy signal, but if the chart pattern shows a descending triangle with a series of declining peaks, it may be a false signal. An indicator should be selected with due care and attention. It would be a futile exercise to cover more than five indicators. It is best to focus on two or three 27 indicators and learn their intricacies inside and out. One should always choose indicators that complement each other, instead of those that move in unison and generate the same signals. For example, it would be redundant to use two indicators that are good for showing overbought and oversold levels, such as Stochastic and RSI. Both of these indicators measure momentum and both have overbought/oversold levels. Types of indicators Indicators can broadly be divided into two types â€Å"LEADING† and â€Å"LAGGING†. Leading indicators Leading indicators are designed to lead price movements. Benefits of leading indicators are early signaling for entry and exit, generating more signals and allow more opportunities to trade. They represent a form of price momentum over a fixed look-back period, which is the number of periods used to calculate the indicator. Some of the wellmore popular leading indicators include Commodity Channel Index (CCI), Momentum, Relative Strength Index (RSI), Stochastic Oscillator and Williams %R. Lagging Indicators Lagging Indicators are the indicators that would follow a trend rather then predicting a reversal. A lagging indicator follows an event. These indicators work well when prices move in relatively long trends. They don’t warn you of upcoming changes in prices, they simply tell you what prices are doing (i.e., rising or falling) so that you can invest  accordingly. These trend following indicators makes you buy and sell late and, in exchange for missing the early opportunities, they greatly reduce your risk by keeping you on the right side of the market. Moving averages and the MACD are examples of trend following, or â€Å"lagging,† indicators. Oscillators Relative Strength Index (RSI) The RSI is part of a class of indicators called momentum oscillators. There are a number of indicators that fall in this category, the most common being Relative Strength Index, Stochastic, Rate of Change, Williams %R. Although these indicators are all calculated differently, there are a number of common elements to their use which shall be discussed in the context of the RSI. What is momentum? Momentum is simply the rate of change – the speed or slope at which a stock or commodity ascends or declines. Measuring speed is a useful gage of impending change. For example, assume that you were riding in a friends’ car, not looking at what was happening ahead but instead just at the speedometer. You can see when the car starts to slow down and if it continues to do so you can reasonably assume it’s going to stop very shortly. You may not know the reason for it coming to a stop†¦it 28 could be the end of the journey, approaching and intersection or because the road is a little rougher ahead. In this manner watching the speed provides a guide for what may happen in the future. An oscillator is an indicator that moves back and forth across a reference line or between prescribed upper and lower limits. When an oscillator reaches a new high, it shows that an uptrend is gaining speed and is likely to continue. When an oscillator traces a lower peak, it means that the trend has stopped accelerating and a reversal can be expected from there, much like a car slowing down to make a U-Turn. In the same way watching a stock for impending momentum change can provide a glimpse of what may happen in the future – momentum oscillators, such as RSI are referred to as trend leading indicators. The chart below illustrates the typical construction of the RSI which oscillates between 0% and 100%. You will notice there is a pair of horizontal reference lines: 70% ‘overbought’ and 30% ‘oversold’ lines. The overbought region refers to the case where the RSI oscillator has moved into a region of significant buying pressure relative to the recent past and is often an indication that an upward trend is about to end. Similarly the oversold region refers to the lower part of the momentum oscillator where there is a significant amount of selling pressure relative to the recent past and is indicative of an end to a down swing. Application of RSI RSI is a momentum oscillator generally used in sideways or ranging markets where the price moves between support and resistance levels. It is one of the most useful technical tool employed by many traders to measure the velocity of directional price movement. Overbought and Oversold The RSI is a price-following oscillator that ranges between 0 and 100. Generally, technical analysts use 30% oversold and 70% overbought lines to generate the buy and sell signals. ïÆ'Ëœ Go long when the indicator moves from below to above the oversold line. ïÆ'Ëœ Go short when the indicator moves from above to below the overbought line. Note here that the direction of crossing is important; the indicator needs to first go past the overbought/oversold lines and then cross back through them. 29 Silver Chart showing buy and sell points and also the failure in trending market What is the MACD and how is it calculated? The MACD does not completely fall into either the trend-leading indicator or trend following indicator; it is in fact a hybrid with elements of both. The MACD comprises two lines, the fast line and the slow or signal line. These are easy to identify as the slow line will be the smoother of the two. NIFTY chart below illustrates the basic MACD lines The procedure for calculating the MACD lines is as follows: Step1. Calculate a 12 period exponential moving average of the close price. Step2. Calculate a 26 period exponential moving average of the close price. Step3. Subtract the 26 period moving average from the 12 period moving average. This is the fast MACD line. Step4. Calculate a 9 period exponential moving average of the fast MACD line calculated above. This is the slow or signal MACD line. Sampling Plan The companies are selected from top 50 blue chip companies, and then fundamental analysis is done and then the technical analysis Limitations As we know that equity market is highly unpredictable and its really hard to predict the future trend of the equity so all the analysis that is done just gives the high probability of the trend that is going to happen, it does not give any surety. 30 CHAPTER 3: FINDINGS AND ANALYSIS 3.1 Findings Fundamental Analysis 31 Technical Analysis SBI SBI-I 32 SBI –II Chart SBI-I shows different support and resistance level for last two years. Chart SBI-II shows the morning star which is encircled. 33 JINDAL STEEL The above chart shows inverted hammer with DOJI. 34 VOLTAS The above chart shows two inverted hammer. 35 BHEL The above chart shows inverted hammer with bullish candle. 36 HPCL The above chart shows DOJI. 37 3.2 Analysis Fundamental Analysis As we have analyzed from the list of companies on basis of fundamental grounds. It tells us the company on which we should invest. The companies are:- SBI 38 From the above figures one can come to following conclusion:ïÆ' ¼ As a company should have high EPS and so is the case with SBI whose EPS is 256.11 ïÆ' ¼ Its P/E ratio is relatively lesser than other companies ïÆ' ¼ Positive PEG is a good sign. ïÆ' ¼ P/B is less than 1 which says it is undervalued so its high time to buy shares of this company. ïÆ' ¼ And on other grounds it has fair figures. BHEL From the above figures one can come to following conclusion:ïÆ' ¼ EPS is relatively high as compared to its per share price. ïÆ' ¼ Low P/E and P/S ratio which is always good. ïÆ' ¼ Good dividend payout ratio, dividend and return on equity. HPCL From the above figures one can come to following conclusion:ïÆ' ¼ EPS is relatively high as compared to its per share price. ïÆ' ¼ Its P/E ratio is relatively lesser than other companies ïÆ' ¼ P/B value is lesser which gives a clear indication that the prices will rise in future. ïÆ' ¼ Dividend is relatively higher. Technical analysis On the basis of technical analysis one can come to the following conclusion:SBI From the chart SBI-II its seen that there is formation of morning star which is a sign of trend reversal. And from here it is expected that it will go bullish. We can also see that RSI is in upward direction which indicates that it will go bullish and even MACD is in favor of bullish nature. So it is very strongly recommended that one should invest in this share and should hold as long as there is a sign of trend reversal. JINDAL STEEL As from the chart we have seen that inverted hammer has occurred long before followed by bullish candle which was the sign of buying but not it has reached to such a level at which it can reverse anytime. The RSI is also high and MACD can anytime go for selling indication. 39 VOLTAS From the chart of Voltas it is very clearly indicated that there are two inverted hammer and the hammer is followed by a green candle and thus we can say it has taken the bullish trend. We can also see that RSI is in upward direction which indicates that it will go bullish and even MACD is in favor of bullish nature. So it is very strongly recommended that one should invest in this share and should hold as long as there is a sign of trend reversal. BHEL From the chart of Bhel it is very clearly indicated that there is a inverted hammer followed by a green candle and thus we can say it  has taken the bullish trend. We can also see that RSI is in upward direction which indicates that it will go bullish and even MACD is in favor of bullish nature. So it is very strongly recommended that one should invest in this share and should hold as long as there is a sign of trend reversal. HPCL From the chart of HPCL there is formation of a DOJI candle which is one of the strongest sign o f trend reversal and for bullish trend to come in. We can also see that RSI is in upward direction which indicates that it will go bullish and even MACD is in favor of bullish nature. So it is very strongly recommended that one should invest in this share and should hold as long as there is a sign of trend reversal 40 CHAPTER FOUR: CONCLUSIONS AND RECOMMENDATIONS 4.1 SUMMARY This project is being done to construct portfolio of clients with the help of fundamental and technical analysis. Also analyze their portfolio by valuating those companies where they have already invested using specific valuation model. Then find out whether it is right time to invest in those companies using technical analysis. Also calculating the returns they are getting and suggest for higher return. As we can see we have come up with certain companies which have strong possibilities to do well. The different tools and indicators play a very vital role in analyzing the companies as well as forecasting their price behavior. 4.2 RECOMMENDATIONS AND CONCLUSION Recommendations The final portfolio that I came up with is 1. SBI 2. JINDAL STEEL 3. VOLTAS 4. BHEL 5. HPCL Conclusion In this project we have found out that both the analysis fundamental and  technical analysis can be used for the same purpose as to build a portfolio but they and completely different. One should not try to relate these two analysis with each other as it could lead to blunder. Both of the analysis are independent of each other. Both the analysis just gives a possibility that which option one should go for in case one wants to invest. It doesn’t confirms the result as they are just expected result.

The emerging role of the nuclear medicine practitioner- enablers and Research Proposal

The emerging role of the nuclear medicine practitioner- enablers and barriers - Research Proposal Example There are three major types of people who are working and under the field of nuclear medicine, and they include, the nuclear physician, the nuclear medicine technologist, and the nuclear pharmacist. The nuclear physicians are responsible in diagnosing and treating a patient. Furthermore, they have the responsibility of carrying out research in this field of nuclear technology. The technician on the other hand, works with a patient, and he or she is a specialized individual who assists the physician in diagnosing and treating a patient. The pharmacist on the other hand, involves himself in the procurement, control, and distribution of radio-pharmaceutical products (Laake, Benestad & Olsen, 2007). This is an indication that this field on nuclear medicine is an independent specialty, and well organized, and hence it can cater for the needs of its patients. This paper is a proposal on the researcher to be carried out on the enablers and barriers to the practice of nuclear medicine. This paper takes a stand that in as much as there are some factors responsible for promoting the practice of nuclear medicine, there are also some barriers. One of the major challenges facing nuclear medicine is based on the dangers of radiation. Radiation is a very serious issue, and can have a very negative impact on the health of an individual. This includes the development of chronic diseases such as cancer, which are always difficult to treat. Furthermore, it is highly expensive to train nuclear medicine experts, and this is the reason there is a shortage of nuclear medicine practitioners in the world (Moniuszko & Patel, 2011). There is also a dilemma on where to place this field of nuclear medicine. This is because there is confusion on whether to categorize nuclear medicine under the field of medicine, or to give it an independent specialty.

My Electronic Dictionary is Very Important to Me Essay

My Electronic Dictionary is Very Important to Me - Essay Example Chomsky continued that he â€Å"can find definitions for four or five words in one minute†. As an international student, the author understands and agree with Chomsky love of words. Knowing the meaning of various new words is essential for learning proper English. It is impossible to carry around a huge dictionary with me all the time. However, an electronic dictionary is something that helps me avoid all of the inconveniences. Everyone can benefit from the use of an electronic dictionary because â€Å"students and scholars of language, the electronic versions open up to our possibilities for the exploitation of dictionary texts that the print versions could not begin to offer". The reporter highlights that  "I use it to learn new words and I am not shy about using it in the conversations. How can I communicate effectively with people around me if I do not know the meaning of the words they say? I am very happy that I finally purchased an electronic dictionary. The dictionary is my constant companion and is always with me always. In many conversations, it helped me to find the right terms to use and not to make a fool of myself by saying something inappropria te. While my electronic dictionary is easy to use, the purchase of it was not quite as easy One day, when I went shopping with my parents to one of the department stores in our neighborhood, I saw an electronic English dictionary that was destined to be mine. It was well designed and offered amazing features. These characteristics caught my attention immediately. The dictionary, literally, mesmerized me with its smooth silvery case. I could not divert my eyes from it. I went closer to the shelf where it laid to have a better look at it. The list of available features in the dictionary was no less astonishing than its looks."

Organizational Culture In The Toyota Company Case Study

Organizational Culture In The Toyota Company - Case Study Example When Toyota built plants in the west, they attempted to copy Toyota’s production system details without studying the difference between how workers in the East felt about their work compared to their Western counterparts. This difference can be referred to as employee engagement. Western employers have begun to realize the huge value to be realized from engaging their workforce. However, apart from running surveys aimed at discovering how engaged their employees are, not many are aware of how to synthesize engagement. When Toyota’s cars were recalled, those recalled had been made in the West. The recalls did not happen to vehicles manufactured in the East since the employees could have spotted them due to their engagement. Employees in the West might have noticed the faults, but due to their disengagement, did not report it. Negative reports regarding Toyota came to such functions as customer satisfaction, risk analysis, and government. The corporate culture at Toyota needs increased evaluation instead of making assumptions that their culture is aligned to that of the West. Their corporate culture bred leaders whose most pressing concern was saving face, which led to the postponement of making the recalls. These problems have proved to be problematic for Toyota because they do not dismiss a worker because of temporary absence resulting from illness or injury. Additionally, the scope of this provision granting increased protection to officials of the unions, as well as members, should see an increase due to the initial adverse action cases brought before the appellate court. If, as claimed by the unions, those dismissed happen to be union representatives, then Toyota is in for a rough ride. Toyota has been swamped by this culture clash because of the lack of communication and consultation. Traditionally, Toyota has prided itself on its communicative skills with its workforce and its exemplary teamwork.

Approaches to Teaching Grammar Article Example | Topics and Well Written Essays - 3000 words

Approaches to Teaching Grammar - Article Example The apparent limitation of the syllabus was that students were not involved in learning the language due to the monotonous nature of activities. Secondly, adults feel that the language they are learning is not preparing them for the world. The skills of language; reading, writing, speaking and writing were taught in isolation and in a very set manner. Since, we use more than one skill at a time, learners were forced to focus on one skill and the integration of skill development was missing. Speaking was ignored like in any traditional classroom, due to its difficult nature of assessment and requires a competent teacher. All the focus is on writing as it is considered the most important academic skill. The main reason for learning English language is instrumental. Like other countries, this country is also facing recession and employment rates are constantly fluctuating rather deteriorating. Students want to learn the language to seek new opportunities around the world. When this Institution will activate my syllabus, they have to consider that it is learner centered where adults come to discuss debate, interact socially and philosophically and begin to work in teams. The main aim of the course is to make it motivating and interesting for the students. Target Learners First thing to be kept in mind is that the students are a part of society and we have to touch English in the manner it is appropriate. Culture of target language will also be exposed to students to a certain degree. Learning English for my target students is not a total new experience as they have completed their twelve years of education, where weekly 120 minutes were given to language teaching. But the medium of instruction remains Arabic.... First thing to be kept in mind is that the students are a part of society and we have to touch English in the manner it is appropriate. The culture of target language will also be exposed to students to a certain degree. Learning English for my target students is not a totally new experience as they have completed their twelve years of education, where weekly 120 minutes were given to language teaching. But the medium of instruction remains Arabic. Language development is to the extent where the students understand instructions and follow them appropriately, but with some emphasis on repetition of instructions. The students can read and comprehend with the teacher’s help. Teacher is always in control and there aren’t many opportunities for learners to talk about their lives, opinions, and experiences. Teacher takes most of the time explaining to the learners how to go about the written activities. Learners listen to the teacher and do accordingly; obviously repetition o f instructions is in demand. Learners have very less room for creativity and expression. Activities are monotonous and last for the whole period. All the activities revolve around making the learner write in the end. Learners feel bored and there is no excitement as the classes have routine and learners know what is going to happen next. The learners do not find authentic language to use it outside the class but they are able to write an application, letters and etc. What they lack is confidence in talking in English along with the experience.

A musical score of Citizen Kane utilizing Gorbman methodology Essay

A musical score of Citizen Kane utilizing Gorbman methodology - Essay Example This research will begin with the statement that Ð µhe notion that music in films usually has powerful effects on its viewers in indisputable. However, the careful examination of the reason behind the effects is greatly ignored. People tend to correlate previously unassociated pieces of drama to what is heard in a film music. Basically, any kind of music played in a film has to have a purpose. Every spontaneous melody or pre-composed piece is a potential option for a cinematic soundtrack (Patrik 45). One has to ask how and why people are so interested in combining drama and music in a film. While it is evident that the full emotional effect of a movie scene is carried through the successful interpretation of audio and visual information, the music in the movie still carries a significant effect for the interpretation of the director’s intent and style. The objective of this paper is to provide an analysis of the musical score of the movie Citizen Kane by utilizing Gorman and Kassabian methodologies.

Leadership Essay Example | Topics and Well Written Essays - 500 words - 42

Leadership - Essay Example This kind of leader does not involve the employees in decision making and rather decisions are made at the top and followed by the employees. McGregor categorized second kind of leaders as leaders who follow theory Y. These leaders are those who believe that employees are interested in working. These leaders empower their employees and provide them with the responsibility as well as the authority to make decisions and implement them in order to complete tasks (Jewell et al., 1994). Unlike leaders who follow Theory X, these leaders do not believe in excessive supervisor of the followers and believe that followers should have the freedom to work on their own. Due to empowerment as well as lower level of supervision, followers feel motivated to work on their own and they solve problems as well as perform tasks in a creative manner. The leadership style that James Cain of Water Brands Group follows is open-minded leadership style. This leadership style is based on McGregor’s leadership theory called theory Y. McGregor proposed that, leaders who follow theory Y leadership tend to empower employees. Similarly, Cain who follows an open-minded leadership style provides empowerment to his followers and employees (Pandit, 2005). He does not believe in making decisions on his own. Instead Cain involves his employees in the decision making process by carefully listening to them and then involving their ideas in the making decisions and solving problems faced by the organization. Theory Y states that employees are naturally interested in working and are ready to take responsibility. Cain is following theory Y because he believes that the people working for him and his followers are the assets of his organizations. This means that he has immense trust in the followers and is quite confident about their knowledge, skills and abilities. Due to this

My First Conk from Malcolm X Essay Example | Topics and Well Written Essays - 250 words

My First Conk from Malcolm X - Essay Example Blacks thus degrade their natural bodies without realizing that such degradations are embarrassing as Malcolm says that it seems foolish to see women having green and pink wigs to look like whites. Moreover, none of the blacks are ever thinking of gaining similar education or intelligence as that of the whites (Malcolm, 131). Conked hair and wigs illustrates that blacks have been brainwashed because even in the modern world, most blacks still feel inferior to the whites. Blacks are always ready to endure the pain of conk hair even after knowing that it does not make a black person more adorable. This is based on the argument by Malcolm that no woman will admire a man based on his hair appearance no matter how well the conk is; it does not add any value to the man (Malcolm, 136). In conclusion, before Malcolm realized that conk hair was a degradation of his natural body, he was willing to endure the pain to look like the whites but after he discovered that blacks had been brainwashed to think they are inferior to the whites, he has never had a conk (Malcolm, 141). All black individuals need to do as Malcolm did and instead of trying to be like the whites, they should instead study hard to better than the

Democratic Origins and Revolutionary Writers, 1776-1820 Essay Example for Free

Democratic Origins and Revolutionary Writers, 1776-1820 Essay James Fenimore Cooper (Photo courtesy Library of Congress) The hard-fought American Revolution against Britain (1775-1783) was the first modern war of liberation against a colonial power. The triumph of American independence seemed to many at the time a divine sign that America and her people were destined for greatness. Military victory fanned nationalistic hopes for a great new literature. Yet with the exception of outstanding political writing, few works of note appeared during or soon after the Revolution. American books were harshly reviewed in England. Americans were painfully aware of their excessive dependence on English literary models. The search for a native literature became a national obsession. As one American magazine editor wrote, around 1816, Dependence is a state of degradation fraught with disgrace, and to be dependent on a foreign mind for what we can ourselves produce is to add to the crime of indolence the weakness of stupidity. Cultural revolutions, unlike military revolutions, cannot be successfully imposed but must grow from the soil of shared experience. Revolutions are expressions of the heart of the people; they grow gradually out of new sensibilities and wealth of experience. It would take 50 years of accumulated history for America to earn its cultural independence and to produce the first great generation of American writers: Washington Irving, James Fenimore Cooper, Ralph Waldo Emerson, Henry David Thoreau, Herman Melville, Nathaniel Hawthorne, Edgar Allan Poe, Walt Whitman, and Emily Dickinson. Americas literary independence was slowed by a lingering identification with England, an excessive imitation of English or classical literary models, and difficult economic and political conditions that hampered publishing. Revolutionary writers, despite their genuine patriotism, were of necessity self-conscious, and they could never find roots in their American sensibilities. Colonial writers of the revolutionary generation had been born English, had grown to maturity as English citizens, and had cultivated English modes of thought and English fashions in dress and behavior. Their parents and grandparents were English (or European), as were all their friends. Added to this, American awareness of literary fashion still lagged behind the English, and this time lag intensified American imitation. Fifty years after their fame in England, English neoclassic writers such as Joseph Addison, Richard Steele, Jonathan Swift, Alexander Pope, Oliver Goldsmith, and Samuel Johnson were still eagerly imitated in America. Moreover, the heady challenges of building a new nation attracted talented and educated people to politics, law, and diplomacy. These pursuits brought honor, glory, and financial security. Writing, on the other hand, did not pay. Early American writers, now separated from England, effectively had no modern publishers, no audience, and no adequate legal protection. Editorial assistance, distribution, and publicity were rudimentary. Until 1825, most American authors paid printers to publish their work. Obviously only the leisured and independently wealthy, like Washington Irving and the New York Knickerbocker group, or the group of Connecticut poets known as the Hartford Wits, could afford to indulge their interest in writing. The exception, Benjamin Franklin, though from a poor family, was a printer by trade and could publish his own work. Charles Brockden Brown was more typical. The author of several interesting Gothic romances, Brown was the first American author to attempt to live from his writing. But his short life ended in poverty. The lack of an audience was another problem. The small cultivated audience in America wanted well-known European authors, partly out of the exaggerated respect with which former colonies regarded their previous rulers. This preference for English works was not entirely unreasonable, considering the inferiority of American output, but it worsened the situation by depriving American authors of an audience. Only journalism offered financial remuneration, but the mass audience wanted light, undemanding verse and short topical essays not long or experimental work. The absence of adequate copyright laws was perhaps the clearest cause of literary stagnation. American printers pirating English best-sellers understandably were unwilling to pay an American author for unknown material. The unauthorized reprinting of foreign books was originally seen as a service to the colonies as well as a source of profit for printers like Franklin, who reprinted works of the classics and great European books to educate the American public. Printers everywhere in America followed his lead. There are notorious examples of pirating. Matthew Carey, an important American publisher, paid a London agent a sort of literary spy to send copies of unbound pages, or even proofs, to him in fast ships that could sail to America in a month. Careys men would sail out to meet the incoming ships in the harbor and speed the pirated books  into print using typesetters who divided the book into sections and worked in shifts around the clock. Such a pirated English book could be reprinted in a day and placed on the shelves for sale in American bookstores almost as fast as in England. Because imported authorized editions were more expensive and could not compete with pirated ones, the copyright situation damaged foreign authors such as Sir Walter Scott and Charles Dickens, along with American authors. But at least the foreign authors had already been paid by their original publishers and were already well known. Americans such as James Fenimore Cooper not only failed to receive adequate payment, but they had to suffer seeing their works pirated under their noses. Coopers first successful book, The Spy (1821), was pirated by four different printers within a month of its appearance. Ironically, the copyright law of 1790, which allowed pirating, was nationalistic in intent. Drafted by Noah Webster, the great lexicographer who later compiled an American dictionary, the law protected only the work of American authors; it was felt that English writers should look out for themselves. Bad as the law was, none of the early publishers were willing to have it changed because it proved profitable for them. Piracy starved the first generation of revolutionary American writers; not surprisingly, the generation after them produced even less work of merit. The high point of piracy, in 1815, corresponds with the low point of American writing. Nevertheless, the cheap and plentiful supply of pirated foreign books and classics in the first 50 years of the new country did educate Americans, including the first great writers, who began to make their appearance around 1825. THE AMERICAN ENLIGHTENMENT The 18th-century American Enlightenment was a movement marked by an emphasis on rationality rather than tradition, scientific inquiry instead of unquestioning religious dogma, and representative government in place of monarchy. Enlightenment thinkers and writers were devoted to the ideals of justice, liberty, and equality as the natural rights of man. Benjamin Franklin (1706-1790) Benjamin Franklin, whom the Scottish philosopher David Hume called Americas first great man of letters, embodied the Enlightenment ideal of humane rationality. Practical yet idealistic, hard-working and enormously successful, Franklin recorded his early life in his famous Autobiography. Writer, printer, publisher, scientist, philanthropist, and diplomat, he was the most famous and respected private figure of his time. He was the first great self-made man in America, a poor democrat born in an aristocratic age that his fine example helped to liberalize. Franklin was a second-generation immigrant. His Puritan father, a chandler (candle-maker), came to Boston, Massachusetts, from England in 1683. In many ways Franklins life illustrates the impact of the Enlightenment on a gifted individual. Self-educated but well-read in John Locke, Lord Shaftesbury, Joseph Addison, and other Enlightenment writers, Franklin learned from them to apply reason to his own life and to break with tradition in particular the old-fashioned Puritan tradition when it threatened to smother his ideals. While a youth, Franklin taught himself languages, read widely, and practiced writing for the public. When he moved from Boston to Philadelphia, Pennsylvania, Franklin already had the kind of education associated with the upper classes. He also had the Puritan capacity for hard, careful work, constant self-scrutiny, and the desire to better himself. These qualities steadily propelled him to wealth, respectability, and honor. Never selfish, Franklin tried to help other ordinary people become successful by sharing his insights and initiating a characteristically American genre the self-help book. Franklins Poor Richards Almanack, begun in 1732 and published for many years, made Franklin prosperous and well-known throughout the colonies. In this annual book of useful encouragement, advice, and factual information, amusing characters such as old Father Abraham and Poor Richard exhort the reader in pithy, memorable sayings. In The Way to Wealth, which originally appeared in the Almanack, Father Abraham, a plain clean old Man, with white Locks, quotes Poor Richard at length. A Word to the Wise is enough, he says. God helps them that help themselves. Early to Bed, and early to rise, makes a Man healthy, wealthy, and wise. Poor Richard is a psychologist (Industry pays Debts, while Despair encreaseth them), and he always counsels hard work (Diligence is the Mother of Good Luck). Do not be lazy, he advises, for One To-day is worth two tomorrow. Sometimes he creates anecdotes to illustrate his points: A little Neglect may breed great Mischief. For want of a Nail the Shoe was lost; for want of a Shoe the Horse was lost; and for want of a Horse the Rider was lost, being overtaken and slain by the Enemy, all for want of Care about a Horse-shoe Nail. Franklin was a genius at compressing a moral point: What maintains one Vice, would bring up two Children. A small leak will sink a great Ship. Fools make Feasts, and wise Men eat them. Franklins Autobiography is, in part, another self-help book. Written to advise his son, it covers only the early years. The most famous section describes his scientific scheme of self- improvement. Franklin lists 13 virtues: temperance, silence, order, resolution, frugality, industry, sincerity, justice, moderation, cleanliness, tranquility, chastity, and humility. He elaborates on each with a maxim; for example, the temperance maxim is Eat not to Dullness. Drink not to Elevation. A pragmatic scientist, Franklin put the idea of perfectibility to the test, using himself as the experimental subject. To establish good habits, Franklin invented a reusable calendrical record book in which he worked on one virtue each week, recording each lapse with a black spot. His theory prefigures psychological behaviorism, while his systematic method of notation anticipates modern behavior modification. The project of self-improvement blends the Enlightenment belief in perfectibility with the Puritan habit of moral self-scrutiny. Franklin saw early that writing could best advance his ideas, and he therefore deliberately perfected his supple prose style, not as an end in itself but as a tool. Write with the learned. Pronounce with the vulgar, he advised. A scientist, he followed the Royal (scientific) Societys 1667 advice to use a close, naked, natural way of speaking; positive expressions, clear senses, a native easiness, bringing all things as near the mathematical plainness as they can. Despite his prosperity and fame, Franklin never lost his democratic sensibility, and he was an important figure at the 1787 convention at which the U. S. Constitution was drafted. In his later years, he was president of an antislavery association. One of his last efforts was to promote universal public education. Hector St. John de Crevecoeur (1735-1813) Another Enlightenment figure is Hector St. John de Crevecoeur, whose Letters from an American Farmer (1782) gave Europeans a glowing idea of opportunities for peace, wealth, and pride in America. Neither an American nor a farmer, but a French aristocrat who owned a plantation outside New York City before the Revolution, Crevecoeur enthusiastically praised the colonies for their industry, tolerance, and growing prosperity in 12 letters that depict America as an agrarian paradise a vision that would inspire Thomas Jefferson, Ralph Waldo Emerson, and many other writers up to the present. Crevecoeur was the earliest European to develop a considered view of America and the new American character. The first to exploit the melting pot image of America, in a famous passage he asks: What then is the American, this new man? He is either a European, or the descendant of a European, hence that strange mixture of blood, which you will find in no other country. I could point out to you a family whose grandfather was an Englishman, whose wife was Dutch, whose son married a French woman, and whose present four sons have now four wives of different nations. Here individuals of all nations are melted into a new race of men, whose labors and posterity will one day cause changes in the world. THE POLITICAL PAMPHLET: Thomas Paine (1737-1809) The passion of Revolutionary literature is found in pamphlets, the most popular form of political literature of the day. Over 2,000 pamphlets were published during the Revolution. The pamphlets thrilled patriots and threatened loyalists; they filled the role of drama, as they were often read aloud in public to excite audiences. American soldiers read them aloud in their camps; British Loyalists threw them into public bonfires. Thomas Paines pamphlet Common Sense sold over 100,000 copies in the first three months of its publication. It is still rousing today. The cause of America is in a great measure the cause of all mankind, Paine wrote, voicing the idea of American exceptionalism still strong in the United States that in some fundamental sense, since America is a democratic experiment and a country theoretically open to all immigrants, the fate of America foreshadows the fate of humanity at large. Political writings in a democracy had to be clear to appeal to the voters. And to have informed voters, universal education was promoted by many of the founding fathers. One indication of the vigorous, if simple, literary life was the proliferation of newspapers. More newspapers were read in America during the Revolution than anywhere else in the world. Immigration also mandated a simple style. Clarity was vital to a newcomer, for whom English might be a second language. Thomas Jeffersons original draft of the Declaration of Independence is clear and logical, but his committees modifications made it even simpler. The Federalist Papers, written in support of the Constitution, are also lucid, logical arguments, suitable for debate in a democratic nation. NEOCLASSISM: EPIC, MOCK EPIC, AND SATIRE Unfortunately, literary writing was not as simple and direct as political writing. When trying to write poetry, most educated authors stumbled into the pitfall of elegant neoclassicism. The epic, in particular, exercised a fatal attraction. American literary patriots felt sure that the great American Revolution naturally would find expression in the epic a long, dramatic narrative poem in elevated language, celebrating the feats of a legendary hero. Many writers tried but none succeeded. Timothy Dwight (1752-1817), one of the group of writers known as the Hartford Wits, is an example. Dwight, who eventually became the president of Yale University, based his epic, The Conquest of Canaan (1785), on the Biblical story of Joshuas struggle to enter the Promised Land. Dwight cast General Washington, commander of the American army and later the first president of the United States, as Joshua in his allegory and borrowed the couplet form that Alexander Pope used to translate Homer. Dwights epic was as boring as it was ambitious. English critics demolished it; even Dwights friends, such as John Trumbull (1750-1831), remained unenthusiastic. So much thunder and lightning raged in the melodramatic battle scenes that Trumbull proposed that the epic be provided with lightning rods. Not surprisingly, satirical poetry fared much better than serious verse. The mock epic genre encouraged American poets to use their natural voices and did not lure them into a bog of pretentious and predictable patriotic sentiments and faceless conventional poetic epithets out of the Greek poet Homer and the Roman poet Virgil by way of the English poets. In mock epics like John Trumbulls good-humored MFingal (1776-82), stylized emotions and conventional turns of phrase are ammunition for good satire, and the bombastic oratory of the revolution is itself ridiculed. Modeled on the British poet Samuel Butlers Hudibras, the mock epic derides a Tory, MFingal. It is often pithy, as when noting of condemned criminals facing hanging: No man eer felt the halter draw With good opinion of the law. MFingal went into over 30 editions, was reprinted for a half-century, and was appreciated in England as well as America. Satire appealed to Revolutionary audiences partly because it contained social comment and criticism, and political topics and social problems were the main subjects of the day. The first American comedy to be performed, The Contrast (produced 1787) by Royall Tyler (1757-1826), humorously contrasts Colonel Manly, an American officer, with Dimple, who imitates English fashions. Naturally, Dimple is made to look ridiculous. The play introduces the first Yankee character, Jonathan. Another satirical work, the novel Modern Chivalry, published by Hugh Henry Brackenridge in installments from 1792 to 1815, memorably lampoons the excesses of the age. Brackenridge (1748- 1816), a Scottish immigrant raised on the American frontier, based his huge, picaresque novel on Don Quixote; it describes the misadventures of Captain Farrago and his stupid, brutal, yet appealingly human, servant Teague ORegan. POET OF THE AMERICAN REVOLUTION: Philip Freneau (1752-1832). One poet, Philip Freneau, incorporated the new stirrings of European Romanticism and escaped the imitativeness and vague universality of the Hartford Wits. The key to both his success and his failure was his passionately democratic spirit combined with an inflexible temper. The Hartford Wits, all of them undoubted patriots, reflected the general cultural conservatism of the educated classes. Freneau set himself against this holdover of old Tory attitudes, complaining of the writings of an aristocratic, speculating faction at Hartford, in favor of monarchy and titular distinctions. Although Freneau received a fine education and was as well acquainted with the classics as any Hartford Wit, he embraced liberal and democratic causes. From a Huguenot (radical French Protestant) background, Freneau fought as a militiaman during the Revolutionary War. In 1780, he was captured and imprisoned in two British ships, where he almost died before his family managed to get him released. His poem The British Prison Ship is a bitter condemnation of the cruelties of the British, who wished to stain the world with gore. This piece and other revolutionary works, including Eutaw Springs, American Liberty, A Political Litany, A Midnight Consultation, and George the Thirds Soliloquy, brought him fame as the Poet of the American Revolution. Freneau edited a number of journals during his life, always mindful of the great cause of democracy. When Thomas Jefferson helped him establish the militant, anti-Federalist National Gazette in 1791, Freneau became the first powerful, crusading newspaper editor in America, and the literary predecessor of William Cullen Bryant, William Lloyd Garrison, and H.L. Mencken. As a poet and editor, Freneau adhered to his democratic ideals. His popular poems, published in newspapers for the average reader, regularly celebrated American subjects. The Virtue of Tobacco concerns the indigenous plant, a mainstay of the southern economy, while The Jug of Rum celebrates the alcoholic drink of the West Indies, a crucial commodity of early American trade and a major New World export. Common American characters lived in The Pilot of Hatteras, as well as in poems about quack doctors and bombastic evangelists. Freneau commanded a natural and colloquial style appropriate to a genuine democracy, but he could also rise to refined neoclassic lyricism in often-anthologized works such as The Wild Honeysuckle (1786), which evokes a sweet-smelling native shrub. Not until the American Renaissance that began in the 1820s would American poetry surpass the heights that Freneau had scaled 40 years earlier. Additional groundwork for later literary achievement was laid during the early years. Nationalism inspired publications in many fields, leading to a new appreciation of things American. Noah Webster (1758-1843) devised an American Dictionary, as well as an important reader and speller for the schools. His Spelling Book sold more than 100 million copies over the years. Updated Websters dictionaries are still standard today. The American Geography, by Jedidiah Morse, another landmark reference work, promoted knowledge of the vast and expanding American land itself. Some of the most interesting if nonliterary writings of the period are the journals of frontiersmen and explorers such as Meriwether Lewis (1774-1809) and  Zebulon Pike (1779-1813), who wrote accounts of expeditions across the Louisiana Territory, the vast portion of the North American continent that Thomas Jefferson purchased from Napoleon in 1803. WRITERS OF FICTION. The first important fiction writers widely recognized today, Charles Brockden Brown, Washington Irving, and James Fenimore Cooper, used American subjects, historical perspectives, themes of change, and nostalgic tones. They wrote in many prose genres, initiated new forms, and found new ways to make a living through literature. With them, American literature began to be read and appreciated in the United States and abroad. Charles Brockden Brown (1771-1810) Already mentioned as the first professional American writer, Charles Brockden Brown was inspired by the English writers Mrs. Radcliffe and English William Godwin. (Radcliffe was known for her terrifying Gothic novels; a novelist and social reformer, Godwin was the father of Mary Shelley, who wrote Frankenstein and married English poet Percy Bysshe Shelley. ) Driven by poverty, Brown hastily penned four haunting novels in two years: Wieland (1798), Arthur Mervyn (1799), Ormond (1799), and Edgar Huntley (1799). In them, he developed the genre of American Gothic. The Gothic novel was a popular genre of the day featuring exotic and wild settings, disturbing psychological depth, and much suspense. Trappings included ruined castles or abbeys, ghosts, mysterious secrets, threatening figures, and solitary maidens who survive by their wits and spiritual strength. At their best, such novels offer tremendous suspense and hints of magic, along with profound explorations of the human soul in extremity. Critics suggest that Browns Gothic sensibility expresses deep anxieties about the inadequate social institutions of the new nation. Brown used distinctively American settings. A man of ideas, he dramatized scientific theories, developed a personal theory of fiction, and championed high literary standards despite personal poverty. Though flawed, his works are darkly powerful. Increasingly, he is seen as the precursor of romantic writers like Edgar Allan Poe, Herman Melville, and Nathaniel Hawthorne. He expresses subconscious fears that the outwardly optimistic Enlightenment period drove underground. Washington Irving (1789-1859). The youngest of 11 children born to a well-to-do New York merchant family, Washington Irving became a cultural and diplomatic ambassador to Europe, like Benjamin Franklin and Nathaniel Hawthorne. Despite his talent, he probably would not have become a full-time professional writer, given the lack of financial rewards, if a series of fortuitous incidents had not thrust writing as a profession upon him. Through friends, he was able to publish his Sketch Book (1819-1820) simultaneously in England and America, obtaining copyrights and payment in both countries. The Sketch Book of Geoffrye Crayon (Irvings pseudonym) contains his two best remembered stories, Rip Van Winkle and The Legend of Sleepy Hollow. Sketch aptly describes Irvings delicate, elegant, yet seemingly casual style, and crayon suggests his ability as a colorist or creator of rich, nuanced tones and emotional effects. In the Sketch Book, Irving transforms the Catskill Mountains along the Hudson River north of New York City into a fabulous, magical region. American readers gratefully accepted Irvings imagined history of the Catskills, despite the fact (unknown to them) that he had adapted his stories from a German source. Irving gave America something it badly needed in the brash, materialistic early years: an imaginative way of relating to the new land. No writer was as successful as Irving at humanizing the land, endowing it with a name and a face and a set of legends. The story of Rip Van Winkle, who slept for 20 years, waking to find the colonies had become independent, eventually became folklore. It was adapted for the stage, went into the oral tradition, and was gradually accepted as authentic American legend by generations of Americans. Irving discovered and helped satisfy the raw new nations sense of history. His numerous works may be seen as his devoted attempts to build the new nations soul by recreating history and giving it living, breathing, imaginative life. For subjects, he chose the most dramatic aspects of American history: the discovery of the New World, the first president and national hero, and the westward exploration. His earliest work was a sparkling, satirical History of New York (1809) under the Dutch, ostensibly written by Diedrich Knickerbocker (hence the name of Irvings friends and New York writers of the day, the Knickerbocker School). James Fenimore Cooper (1789-1851) James Fenimore Cooper, like Irving, evoked a sense of the past and gave it a local habitation and a name. In Cooper, though, one finds the powerful myth of a golden age and the poignance of its loss. While Irving and other American writers before and after him scoured Europe in search of its legends, castles, and great themes, Cooper grasped the essential myth of America: that it was timeless, like the wilderness. American history was a trespass on the eternal; European history in America was a reenactment of the fall in the Garden of Eden. The cyclical realm of nature was glimpsed only in the act of destroying it: The wilderness disappeared in front of American eyes, vanishing before the oncoming pioneers like a mirage. This is Coopers basic tragic vision of the ironic destruction of the wilderness, the new Eden that had attracted the colonists in the first place. Personal experience enabled Cooper to write vividly of the transformation of the wilderness and of other subjects such as the sea and the clash of peoples from different cultures. The son of a Quaker family, he grew up on his fathers remote estate at Otsego Lake (now Cooperstown) in central New York State. Although this area was relatively peaceful during Coopers boyhood, it had once been the scene of an Indian massacre. Young Fenimore Cooper grew up in an almost feudal environment. His father, Judge Cooper, was a landowner and leader. Cooper saw frontiersmen and Indians at Otsego Lake as a boy; in later life, bold white settlers intruded on his land. Natty Bumppo, Coopers renowned literary character, embodies his vision of the frontiersman as a gentleman, a Jeffersonian natural aristocrat. Early in 1823, in The Pioneers, Cooper had begun to discover Bumppo. Natty is the first famous frontiersman in American literature and the literary forerunner of countless cowboy and backwoods heroes. He is the idealized, upright individualist who is better than the society he protects. Poor and isolated, yet pure, he is a touchstone for ethical values and prefigures Herman Melvilles Billy Budd and Mark Twains Huck Finn. Based in part on the real life of American pioneer Daniel Boone who was a Quaker like Cooper Natty Bumppo, an outstanding woodsman like Boone, was a peaceful man adopted by an Indian tribe. Both Boone and the fictional Bumppo loved nature and freedom. They constantly kept moving west to escape the oncoming settlers they had guided into the wilderness, and they became legends in their own lifetimes. Natty is also chaste, high-minded, and deeply spiritual: He is the Christian knight of medieval romances transposed to the virgin forest and rocky soil of America. The unifying thread of the five novels collectively known as the Leather-Stocking Tales is the life of Natty Bumppo. Coopers finest achievement, they constitute a vast prose epic with the North American continent as setting, Indian tribes as characters, and great wars and westward migration as social background. The novels bring to life frontier America from 1740 to 1804. Coopers novels portray the successive waves of the frontier settlement: the original wilderness inhabited by Indians; the arrival of the first whites as scouts, soldiers, traders, and frontiersmen; the coming of the poor, rough settler families; and the final arrival of the middle class, bringing the first professionals the judge, the physician, and the banker. Each incoming wave displaced the earlier: Whites displaced the Indians, who retreated westward; the civilized middle classes who erected schools, churches, and jails displaced the lower-class individualistic frontier folk, who moved further west, in turn displacing the Indians who had preceded them. Cooper evokes the endless, inevitable wave of settlers, seeing not only the gains but the losses. Coopers novels reveal a deep tension between the lone individual and society, nature and culture, spirituality and organized religion. In Cooper, the natural world and the Indian are fundamentally good as is the highly civilized realm associated with his most cultured characters. Intermediate characters are often suspect, especially greedy, poor white settlers who are too uneducated or unrefined to appreciate nature or culture. Like Rudyard Kipling, E. M. Forster, Herman Melville, and other sensitive observers of widely varied cultures interacting with each other, Cooper was a cultural relativist. He understood that no culture had a monopoly on virtue or refinement. Cooper accepted the American condition while Irving did not. Irving addressed the American setting as a European might have by importing and adapting European legends, culture, and history. Cooper took the process a step farther. He created American settings and new, distinctively American characters and themes. He was the first to sound the recurring tragic note in American fiction. WOMEN AND MINORITIES Although the colonial period produced several women writers of note, the revolutionary era did not further the work of women and minorities, despite the many schools, magazines, newspapers, and literary clubs that were springing up. Colonial women such as Anne Bradstreet, Anne Hutchinson, Ann Cotton, and Sarah Kemble Knight exerted considerable social and literary influence in spite of primitive conditions and dangers; of the 18 women who came to America on the ship Mayflower in 1620, only four survived the first year. When every able-bodied person counted and conditions were fluid, innate talent could find expression. But as cultural institutions became formalized in the new republic, women and minorities gradually were excluded from them. Phillis Wheatley (c. 1753-1784) Given the hardships of life in early America, it is ironic that some of the best poetry of the period was written by an exceptional slave woman. The first African-American author of importance in the United States, Phillis Wheatley was born in Africa and brought to Boston, Massachusetts, when she was about seven, where she was purchased by the pious and wealthy tailor John Wheatley to be a companion for his wife. The Wheatleys recognized Philliss remarkable inte.