P/E conti..
The price earnings ratio (P/E) anomaly refers to the observation that stocks
with extremely low P/E ratios (i.e., lowest decile) earn larger risk-adjusted returns
than high P/E stocks..An alternative behavioral explanation for the anomaly based on investor
overreaction is called the "price-ratio"hypothesis.Companies with very low P/E's are thought to be temporarily "undervalued" because investors become excessively pessimistic after a series of bad earnings reports or other bad news. Once future earnings turn out to be better than the unreasonably gloomy forecasts, the price adjusts Similarly, the equity of companies with very high P/E's is thought to be "overvalued,"before (predictably)
falling in price.

Been at the NSE for arnd 4 years now...bt i must say i have learnd a thing or two here..

Asante @the deal

@ the deal
I do read your blog, unfortunately, you don't allow comments from anonymous users.

This is not a fish market, i love remaining anonymous to an extent.

Ok Mr Anonymous go ahead and comment i changed the settings

well it depends on who is in charge...buyers or sellers...rise in share price coupled with increased in share volume is a bullish signal i.e KCB whereas an increase in volume accompanied by decrease in share price is Bearish i.e KQ on most occassions.

Think of it like this... (forgive me for being too simple).

1. The market is a group of people who have come to buy (Bids) & another group that has come to sell (Asks).

2. For any trade, a bid & an ask must be matched in price.

Here is a basic example. Lets assume we have bids & asks as below:

Asks
200 at 15
200 at 16
200 at 17
200 at 18


Bids
200 at 15
200 at 14
200 at 13
200 at 12

Generally, sellers will ask a higher price than buyers are bidding for. If there is a price intersection (as above) the orders at 15bob are executed and the board now looks like this.

Asks
200 at 16
200 at 17
200 at 18

Bids
200 at 14
200 at 13
200 at 12

Of course more bids and asks are being constantly put on the board and withdrawn.

If Genghis comes and he desparately needs to buy at any price for whatever reason, he may look at the board and buy 400 at 16 & 17.

Several scenarios may play out.eg.

The asker at 18 may get excited since a lot of people want to buy and he is the only one selling. He may raise ask to 19.

Asks
200 at 19

Bids
200 at 14
200 at 13
200 at 12

The bidders at 14 and 12 may see that time is running out and may opt to raise their bids to 18.5 and 18 respectively so that they can get some before close of business.

Asks
200 at 19

Bids
200 at 18.5
200 at 18
200 at 13

Towards the end the bidder at 18 may opt to just buy at 19 and call it a day. When the trade at 19 happens, some sellors may rise from the woodwork and ask for 19.5, 20, 21. The bidder at 18.5 may opt to pay the xtra 1bob and buy at 19.5, the one still at 13 will say he missed the boat and may cancel the order and look for something else.

End of day
Asks
200 at 20
200 at 21


Bids
NIL

Price has moved from 15 to 19.50 during the day.

Only one reason, traders were more willing to raise bids than to lower asks.

You ask how early one can tell... You can't read peoples minds but if you look keenly at what they do (and how many they are) you have a fighting chance.

Not necessarily who and not necessarily that much time. Just watch the bid/ask volumes and you can tell what is / will happen. I hope I'm helpful

. Thanks...you have some rich material with you there...i have the old version...you send to me last year...when is the 2011 edition coming out.? Kakuzi i fundamentally disagree....hehehe the Fundamentals caught up with them...LOL.