Hurst Cycles Trading Software - Accurately Forecast Nifty and Stock Cycles

Saturday, December 27, 2008

2008 - What A Year!

Its the end of the year and looking back on this year, I am sure that no one would have expected what played out. Not to this extent. I expected some kind of top at 5800 and sold out on all my long positions and went flat....Market continued upward without me but I was content since we can never expect to catch the last 10% of any big move...Not unless you are very nimble. 

The end of the bull run was marked by the famous Reliance Power IPO...Retail went crazy at the time this one came out and even though I warned all my friends not to put any money in this they still went ahead...loosing most of their money in the process. The day the IPO came out marked the bull market top and never looked back. Has retail learned their lesson? I think not. They still listen to the CNBC clowns - even now. Folks its not a bottom. Their is no such thing as a V bottom. It will take time.

So what do I expect 2009 to bring? It will be bittersweet for sure. The first half is bound to be bad..I expect we shall see new lows...Then after this one super bear market rally. Again pundits will come out calling a new bull market....Will it be? Maybe...But lets take it one step at a time...We will surely go through a basing process over the next 12-18 months...Ups and downs...But there will be super rallies to play...Lets be a trader for some more time and try to catch these big moves before turning on our investment mentality again. 2010-2011 may be the time another bull market starts. Now this is all speculation...But this is my expectation.

Okay enough of raving...Lets go the charts and more closer stuff...Chart with comments attached below. In the post below this one, I mentioned it was good to short at those levels since we were close to the upper area of the channel. Its in good profits right now...What next? My expectations and comments are on the chart. Enjoy.



Once we set this important low in Feb-Mar 2009 timeframe, I expect we shall get a huge rally from the lows...which may be around 1800-2000 on Nifty...this rally should happen into late 2009...maybe a 100% rally also...But let us see that when we get there.

Best and Wish you all a very Happy and Prosperous New Year!

Monday, December 22, 2008

Range and some very interesting charts

Well folks...I got some free time now...so did some analysis and am putting up some charts here with comments...This is very interesting stuff...Dont miss to go through the comments and the studies...If this call plays out, it will be quite an amazing move...!

First the sensex chart I posted in earlier post updated now.


Nifty log...Is this a wedge? Not clear enough to call.


Now the main chart...All comments here...Study closely and leave comments if you like it! :)



Cheers and All the Best!

Thursday, December 18, 2008

Merry Christmas!

Well guys this bear market rally has continued much more than I expected and I feel quite drained..I am however still medium term bearish...Even though tired and exhausted with this market...Being year end and Christmas, I am taking a few days break from the markets..I am leaving some short positions still on but not trading around them anymore...I leave you with some good long term charts for your study...I have not added much comments but you can check them out...see the important t-lines and price areas of importance I have marked on the charts..Anyone with basic TA knowledge can make out what I am trying to say here :-) 
Enjoy...

First Chart - Monthly Sensex Very Long Term....Still in a nice bullish channel. Will we test the bottom area of the channel in 2009?

A closer look of same chart but on a weekly scale. 

An even more closer look. Notice the area of importance price is now approaching. Good short point with appropriate stops.

Stay safe out there and Wish you all a Merry Christmas and A Happy New Year!

Best.

Monday, December 15, 2008

When sudden realization sets in....

When the music stops, who will be left holding the bag? 

To me the past few days look like distribution than anything else. Optimism is back. The public is being trained to buy the dips. 

FIIs are buying again...So it seems. Hasnt anything changed fundamentally? Has it become better?

I think IT is showing whats in store for the broader market....very soon...

Chart of Infy first -


Same charts of nifty as I posted before...but updated..and latest comments...Has anything changed?

Log chart...Same story here also.




Best,
A very bearish Lee.

Thursday, December 11, 2008

Resolution Time?

Sorry guys..I know long time since a post...Well to tell the truth I have been busy..very busy past few days...Its that time of the year when all projects start rolling out...And well the markets to tell the truth, I have been frustrated by the moves..I did not get any good entries for my shorts...Some of them I have are under water...I did short a ton of 2900 Nifty calls and so some sort of pay back in them...

But I hope some of you stayed sane and out of trouble coz of my last post where I clearly mentioned thats its not wise to be long in this market..We are not at a bottom..Yet.
And still I was apalled again at some bloggers and gurus still calling for bullishness...The market obliged and created a bull trap by breaking above 2860...And then gapping below it today...

So what next...2860 remains the pivot...Longs should not exist below this level. Above this also, try shorting with stops...I remain bearish until I see signs of real capitulation.

Charts for your review - (As SS(Mr Timamo) adviced, I am adding charts with a closer look)





More to follow later. Stay safe out there. 

Best.

Tuesday, December 2, 2008

Whipsaw City

Covered all shorts today and went flat...Pretty decent profits and I do not want to let it go..I might be early but the market is displaying some strength by holding onto support levels. Will reshort at higher levels if a good bounce comes in else remaining flat...Not going long at all for now. As I said before, I dont like this market. Its whipsaw city and I'm not so sure anymore on direction!  :(

Charts to follow later.

Stay Nimble!

Best.

Monday, December 1, 2008

More to come

As I said last week, market was looking very dangerous. I was apalled at some bullish views coming in from various forums and blogs I frequent. To me it was clear that something dangerous was brewing and lot of small players will get caught on the wrong foot again. I sincerely hope that some of my readers took precautions with what they read here and did not go long yet.

Well as mentioned in my earlier update, I was looking for possible reversal points. I kept adding shorts as we went higher because it was clear that there was a buyers strike and bad things would come soon. Yesterday the market confirmed that with a strong rejection at the 2830 resistance/pivot area. Now back at support...2630 should break today giving way to the 2520 support area. I think this also will break sooner than later and we should go on to test earlier lows and new lows. Dec mid timeframe is where I will be looking for some sort of turn - This is also a bradley turn date. We will see when we get there. Till then enjoy the fall and these charts with comments on them.





Also my sincere wishes and prayers are with all involved in the nasty incident in Mumbai. I dont want to say anything more here but that I am really saddened by several things...The violence, the ineptness of our security forces and above all our politicians and media. Sickening to say the least. I will continue to hope for better times for India as a whole...Will it ever come?

Best.

Monday, November 24, 2008

Possible Reversal Points

Well 2520 turned out to be strong support and market bounced back from that area. I am totally flat now and looking to see if I can short at higher areas. Its risky business as market has some momentum now as is clearly evident from US markets today...BUT I still dont trust this upmove. Not yet. I want to see one more bottom...If its a higher bottom, it kinda seals the deal.

Chart below showing some possible paths and where I am going to be looking to short at. 

Its self explanatory...Short at your own risk however...!..Market has momentum now!  :)


Best.

Wednesday, November 19, 2008

Some Charts and EWT counts

Been a while since I posted some charts...But I have been mentioning here that I am more bearish than bullish and what I think would happen. Posting some charts here to substantiate this view and also show what I was seeing and why I became bearish. 

Below are 2 charts which show 2 different ewt counts and what is happening now. Either way we go down to test the lows and maybe more. But lets see how market negotiates 2520 and then 2250. 

EWT Count1


EWT Count2

Next here is the weekly chart. Comments on it. Overall things dont look good. I hope some people benefitted from my caution messages over the past few days. A reversal will happen but from which level? Its anyones guess. For me the market looks sick...And there is a buyers strike out there. Sentiment needs to turn before we can start some sort of rally.


Best.

Tuesday, November 18, 2008

Exit Longs and Going Short for next few days

Yesterday I exited all longs and went short around 2760 Nifty....I am hedged so will continue to hold even if we go higher.

Best.

Monday, November 17, 2008

Quick Update

Buying weakness yesterday worked but I am not so sure anymore. Today I will get rid of my longs and my hedge positions and go into cash for a few weeks..I think its a good idea to be out of the market next few weeks since moves either side are dangerous and can kill a positional trader. Day traders...well enjoy the volatility while it lasts.

Best.

Sunday, November 16, 2008

Buying Opportunity

This week could be a good time to start slowly buying into the market...I will start buying back in small amounts daily...Essentially buying back what I sold at around 3200. These are tough markets to time and trade but I think we are close to some kind of value levels...Market even though going down, is not really crashing now. I say lets evaluate the moves today and buy for a good swing up. We are now holding inbetween the 61.8%-50% retracement levels. If market breaks the 2730 area, we can go down to 2640. This area should offer some excellent support going forward.

Will post again after a few days.

Cheers.

Tuesday, November 11, 2008

BOOM!

Well got the big selloff...Morning started with a 1-1.5% down and I used this area to get rid of almost all my longs and also shorted 3100 Nifty. 

6.66% down...When I got up today and saw this on the screen, I thought to myself...Man thats not a good omen!...Hmmnn...let us see...

So what next? Some bouncing about in a range is possible before we head a bit lower. But remember this is all part of the bottoming process and I also think we are finishing the last 5th wave of C. Today 2860-2850 needs to hold for some kind of rally to develop. If not, well God help the bulls. I will probably cover shorts today and just wait it out....Not going long here because of the uncertainty...Will again try to go short higher...But lets see that as we go along.

See this post I made some time back -


We are still playing out this scenario...I am looking for one more major low in the next few weeks. Maybe December.

Updated Daily Chart for your study.



Best.

Monday, November 10, 2008

Are we done?

Is the rally over? Or close to over? For some time I am having this nagging thought in the back of my mind. The earlier decline held to the 38.2% retrace at 2860 and bounced back nicely. But now it could face very strong resistance to the upmove at around this 3180-3250 area. If it breaks out of this, there could be another quick 200 point upmove. But somehow I dont think we will break out above 3250 also very easily. 

Now, even though I said what I have said above, we still can have more rallies and I am open to that possibility. But let it be. We can afford miss out on the last 10% of the rally as long we get out safely...Retest of the lows is quite possible from here...There are some other important things here but I will talk more about that in next post. 

So, I am going to sell my cash longs today on any rally pops and maybe build some small shorts. Its not a good day to do this because there might not be a big rally today but I will see what rallies I can get so I can sell into it...

Charts to follow later.

Best.

Wednesday, November 5, 2008

Bingo!

Well I got the selloff I was looking for...Should continue for ATLEAST some part today too. I hope you also noted that Reliance cratered and took the market along with it...Dont I deserve a star? LOL!!
Give SS one too...That was an amazing chart and call idea from him - check timamo.blogspot.com

Well anyways joke apart, I am not sure now if this is a sharp corrective selloff with more recovery highs to follow or if it is part of an initiation move that should go on to test the market lows at 2250 and probably lower at 2000 odd. Any thoughts? I am not sure.
I will most probably cover some of my shorts today...Hedge puts against cash longs will remain.

Comments, ideas, thoughts etc welcome. The forum I used to post for ideas VFM has become a noisy and useless place due to some new elements posting and spamming there now. Comments can be posted here also...Will be welcome..And hopefully some kind of healthy debate can emerge.

Best.

Tuesday, November 4, 2008

And the Beat goes on!

Well today was quite bullish...More than my expectations...Looks to me like some short covering and some panic buying by those who missed the bottom. Well, I am still seeing a decent pullback over next few days.

Some things I saw today and yesterday....Reliance was weak...Visit SS's site - timamo - for more on this...While Nifty continued to rally...If we take this as a sign of things to come, Nifty can get weaker over the next few days after the late to the party retail crowd gets bullish. One other thing I noted today is that all the so called financial advisors on TV have turned bullish. Where the hell were they when we were at 2250?

Well pullback is coming for sure...From where I do not know..But lets watch 3160 and 3250 areas closely for more clues. It might not be a big selloff and I think this one should be bought. I started some small shorts yesterday...Its underwater...And I am hedged. Will look to add some more today. I am not looking for a big selloff and I will also look to buy the dips ofcourse after seeing the character of the same.

Best.

Monday, November 3, 2008

Rapidly Approaching Strong Confluence of Resistance

From the title of this post, you might have guessed, I am looking for some weakness going forward..Some kind of pullback only because we have run up too much too fast and we have also kind of reverted to the mean after all the recent market mayhem. Some pullback is possible..And will also be good for the market.

After this pullback, can we rally again? Definitely. We need to see the nature of the pullback first ofcourse. I believe the market will build an important low and base in the market over the next few months. Dont be surprised if we do not go anywhere in next few months. We can go down some, then go up some and then one final low around 2100-2000 area which should give up a multimonth rally...I am still long but I have some hedges in place and will also look at building some very short term shorts in Futures today. Longs are in cash stocks.

Some charts for your study below.





Comments welcome and urged...Confusing times. Trade Safe.


Best.

Friday, October 31, 2008

Thoughts for the Weekend

Well guys first I must say thanks to all who came forward to offer me support as I was having second thoughts about continuing with the blog...I have added more on this in the comments in the post below this. Reading all the comments in the post and on the shoutbox, I cannot bring myself to close the blog...So I will not. I will however outline some concerns I have and why I thought about closing the blog...

THE WHY?

- Trading is tough...Mentally exhausting...Emotionally draining....Reasearch and Analysis also takes a lot of time....In addition to that blogging takes even more out of you...Putting your own ideas out in public for everyone to see them and act on them...And probably even go wrong more than often puts a lot of pressure on you in case the readers of this blog did not know...

- Ideas are out here. Trades are not. Does anyone know how I trade? Do I go long without any cover? Do I hedge? Where do I hedge? What do I use to hedge? If its puts, what is the ratio to longs that should be maintained, whats the strike so that the portfolio is delta neutral? Am I making sense? What I am trying to say is I am NOT a financial advisor...This blog presents ideas..Unless someone understands the risk vs. reward, do not enter a trade. I get sad seeing suckers everywhere looking for 'calls'. I have said this before and will say it again - Do your due diligence...I read 100s of blogs and ideas from other...Why do I do it? To get ideas..Not trades..I will collate this information and try to see how I can use it in my analysis. Sometimes I find useful stuff...Sometimes not...But in the end my own ideas and chart reads will come through...So my sincere advice to all...Use this blog for ideas NOT for calls or trades...I dont want that on my concience. And also understand basic ideas of risk and money management. This is what will make you successful in the long run.

- Few days back a sucker commented in one of the posts below that I am consistently wrong and that Nifty is going to 1800...Remember he posted when it was at 2250...I knew we had a bottom in place there...That comment is still there for those interested to check it out...It was an anonymous comment but I wonder if that loser is still short 700 nifty points above. While I was not much bothered about his comment because I knew he was wrong about short term..Medium term still can go lower but then its all about playing odds...Right now its buy the dips vs. sell the rallies...And so keep buying the dips.

We also had another sucker on VFM saying that India and China is going to war he had RAW intelligence...And so on...Another sure indication of the bottom... :) Read that in case you missed it...It was one of the most hilarious posts on VFM. When nifty goes back down to test the lows, I am sure he will post again...Buy blindly then...lol.

Coming to markets...Charts and more detailed analysis will follow later but in short what I think is the current configuration is still buy the dips but something is still nagging in the back on my mind that we need 1 more low....Till then we might just chop chop. This low can be a higher low also but we need to see that when we get there...I cannot count the waves properly..It looks like one more 5th wave low is needed and we might remain in a complex 4th wave for some time. At the moment I am confused at how long this uptrend will last and if we will even get much of a selloff later. I will analyse some more in the next post.

Cheers.

Lee


Wednesday, October 29, 2008

Important Update and Analysis

I just realized we've completed a very powerful chart formation here, i think its called the "funny blue lizard guy loses his lunch" pattern. I just forget how you're supposed to play this one.




Sorry guys...In case you did not realize till now...this was a weekend FUN post..lol...hope I gave you some laughs...

On a more serious note...I am seriously considering shutting down this blog...Why? You might ask..Well several reasons...Dont want to elucidate them here...But I will consider any comments any one has before making a decision.

Best.

Monday, October 27, 2008

Market Thoughts and Ideas

Well folks, the decline/crash run much more in price levels than what I had been expecting. I will be honest - 2600 in Nifty was the worst possible level I was looking for...Market is a great humbler is it not? Broke 2600 with ease and went down to test 2250 area. Could be testing the multiyear flag breakout here - Chart below.

Let me be clear here...I am down on my cash holdings but I will keep adding on dips...I expect I will be much better off a few months from now...I booked a good deal of my puts yesterday...Thank God for Puts...Was able to recover much of my losses from the cash holdings...

My view going forward - Keep buying em big drops in the market..

See below charts also. First the long term chart I posted some time back. I admit we went much more than I thought we would but we are at an important area. Looks like we are testing the multiyear flag breakout area. If we fail this area, we can go to around 1950 on Nifty...Maybe around 6000 area on Sensex...BUT pls note this is the worst case..We need to be brave here and keep buying all the dips...No one can catch the exact bottom...But we can get close as possible.



Now the Nifty weekly chart...Comments on the chart.




Regd EW counts not going to make any statements out there...But sentiment is supportive of a major major bottom forming right here. But I am not going to worry about that. There is huge huge value out there...Dig for em and buy em...Dont be too nervous. A good example of a good stock is INFOSYS...Market down 25% from where I bought but INFY is UP 3% from my buy point...Thats just amazing and also a screaming BUY. Others I like right here are Educomp, KSOIL and NTPC..As always usual disclaimers apply and please do due diligence before following advice here...

Please note I had to say that since I hate to be the cause for ppl losing money if any....But having said that, I am confident on whats stated above. :) BUT expect retests of the bottom and maybe slightly lower going forward....Will be good areas to add aggressively to longs.

I remember at 6000 Nifty, ppl were calling and asking me about shares, demat accounts, IPOs and what not...I told them now is not the time...Now if I ask them to buy, they will look at me as if I am totally nuts...Thats sentiment guys...Be brave and buy now...As my friend Rajan sir says, Fortune does favour the brave! ;)

Comments welcome.

Best.

Wednesday, October 22, 2008

VLT charts- Sensex

Very long term sensex charts with comments..Looks to be an important area. Tested today morning for one...

Bottoming is a process...Expecting retests of this area again...Maybe today itself before 
a lasting rally..

Best.



Sunday, October 19, 2008

The Search for the Elusive Bottom

Well folks we are in search for a bottom...This week initially should be bearish and a recovery later which should also coincide with a longer term bottom. This is what I am thinking now however we are in unprecendented times so be cautious. I am adding stocks in cash in all dips...Lets rock...! 2600 is the final bottom I see...Before that we have 2900 area and then 2750 area as possible supports. I dont see us going below 2600. 

I will look at covering my futures short positions today and take some crash puts to hedge my cash portfolio. Also adding to cash postions in a few days...

Below are some charts with comments. Dont miss them.

Best. 





Thursday, October 16, 2008

Updates...

A quick update here...

As I said before, I am bit confused on what next but some ideas here on what can happen...

Today should be up huge...Monday also might be up...good probability for it....we can get to somewhere like 3500...even 3600...more than that for this round might not be possible...after that again, i expect a downmove to an important low sometime mid to end next week....this will be the final low....and should be bought very aggressively...

Now the problem here is I do not know how low that low will be?....Can be a lower low....Can be something very close to 3000 also...

BUT there is also a possibility it goes lower to somewhere in the 2700-2900 range...
So best keep above in mind...

What can be done is keep buying in cash but also hedge positions with equal number of PUTs...Atleast our risk is managed for this month..The idea being that we build a long term portfolio for the next big rally...

What we are seeing now in the markets and economy is truly unprecendented....Something I have never seen...Bottom picking is never easy and can never never be 100% accurate...But the aim is to get as close as possible...And maximize reward with respect to risk...

All the best folks.

Wednesday, October 15, 2008

What Next?

It turned out to be a very good idea to get out of leveraged positions on the big upmove we had before...As I had adviced here...What next?

I am confused but I think we shall try to go a bit more higher and then come back down again to retest the lows and slightly lower...So what to do? Sitting out a bit until some sanity returns is a good idea...In cash, its a good idea to keep buying the dips...I am still longer term quite bullish...Only thing I am not very sure about is how the lows retest will happen...

From 3300 up to 3600/3700 again...And then back down to 3150/2900 range? Something like this I am thinking about now...And that low should be the major low...5th wave low that is.

Its all speculation...So better to avoid leveraged positions...In cash as I said...Keep buying the dips...I think anything around 3200-2900 is an excellent buy.

Best.

Monday, October 13, 2008

Yeaaahaa!! :)

See the US markets today...This is one for the record books. The fractal and yours truly nailed the bottom here in real time and fully boarded the bull bus...Hope some of the readers of this blog are aboard with me :)

Ready for a 10% up day or close?  :-)

I will probably exit a good chunk of my leveraged positions today..Cash I am planning to hold for some time...

I believe you aint seen nuthin yet! Still lot of gloom and doom and bears around...This ofcourse will continue to provide fuel for the ongoing rally.

A couple of charts for your review below. Comments on the charts. 

The other important chart I am looking at is the weekly nifty with stochastics...Still not turned up but close...

As I said before...You aint seen nuthin yet!...Enjoy the charts.

Best.



Sunday, October 12, 2008

Market Thoughts for the Week

Well I posted to buy on Friday...I dont know how many bought in that panic with me...I see a very good possibility of an intense rally. I do not know if this is THE bottom - In answer to some of the comments and emails I got - BUT odds are we get a very strong rally maybe to 4140 area....Above 4140 and the bears will die big time...But one step at a time...The roadmap should be 3600 first...Evaluate there...Then 3800...Again evaluate...Then 4000-4100...Again reevaluate...Above 4140, and then we have something big on our hands...But as I said, one step at a time...I think we have had a washout...Capitulation...Still I see people calling for 2600, 2000, 1800, ZERO...lol...Well maybe we will get 2960 on this round but it looks unlikely to me...If we do get it, I will still be buying in cash...These opportunities do not come often...I will compare this crash we have just had to what happened when the commies came to power with the  Manmohan Singh government...God I wish I had the guts to buy at that time....Instead I sold...Everything I had...Now with the experience I have..And all the bearishness I see around, I think this is the time to buy. Maybe its just 3-4 months of rally...But still its a rally...Buy the dips is my advice...If you are risk averse throw in some PUTs to hedge your risk.

On the charts, I see that weekly stochastics is way down...An up week will probably turn it up and if so we will be on a longer term buy...

On EWI scale, we may have completed a BIG wave A down with a monster B wave rally to follow into the mid of next year before we have another major decline...

But now is the time to buy...I expect we will have a retest of the lows - But its not a big probability...I am lessening my futures trades and accumulating in cash...I bought heavily on Friday and today we will have a big gap up and then an attempt to fill the gap...I will watch this and probably buy the dip today afternoon...

All the best. These opportunities come once in a lifetime. I dont profess to be a trading god or anything..Others are there here like that...But I can recognize good odds when I see it.

Some good stocks - Infosys, Bhel, NTPC, SBI, Mosar Baer, KSOIL, LnT. Other welcome to add to the list..I am still digging for gems amongst the carnage.

Charts will follow later.

Trade Safe.

Best.

Friday, October 10, 2008

Fractal Complete - Or close enough for goverment work! :)



Hello Friends and Faithful followers of this Blog,
Almost a month back I posted this message here -


and here - http://www.vfmdirect.com/forums/show.cgi?topicid=1221160847

Please review above messages/posts before you read this below.

The message said that based on fractals that we were going to have the next leg hard down. Nifty was at around 4300 at the time...Now at 3200...

Booked all shorts b/w 3500 and 3200...Some early...Some late...Overall a fantastic trade - The best I have ever done...Even I was amazed at how the whole thing played to the dot.

Now see the latest chart posted above. Nifty log. 
I have also added some comments on the chart.

To me it looks like the risk-reward has shifted to the long side and we should buy the dips going forward...We might get a retest of the lows in order to complete the wave structure but its not necessary. 

I bought heavily yesterday at around 3200...If you did not buy, dont worry, good chance we will retest the lows again...Else just buy the dips...The move up could be fast and furious..but should be profitable nevertheless...

One thing to note here - something I have always said...Dont use insane leverage...You will be wiped out...Trade safe..

Now wave structure I am not sure...If we have completed the BIG wave A down and the corrective multimonth B wave rally is going to start? OR if we have one more downleg in a month or so to complete the big A wave...

Maybe in a later post, if all are interested, I will post a couple of EW possibilities with charts. This fractal call turned out to be pure GOLD for me...And hope some others also benefitted...The whole time this was running, you just had to look at the charts I had posted earlier and note the pure symmetry of the both the waves...Its really a thing of great beauty :)

Trade Safe.

Best.

Thursday, October 9, 2008

Buy!

Today may bring a 10% circuit down or maybe even more....I will be buying agressively today...Just a quick update...Not going to advice everyone to buy as more pain can come but odds are that decline completes today and we embark on a multimonth rally...As I have been saying in past posts...Buying without leverage...Or very small leverage will be safe..And add as we go up only...Today 3350, 3200 and 3150 is important...Below this 2960-3000 range. I dont expect below this...

Trade Safe..

Best.

Monday, October 6, 2008

Market Update

A quick one chart update from my side on where I think we are and where we are going...

First refer my fractal post made almost a month back -


And here my latest updates and thoughts on this chart...A follow up to above post...



Interesting times we are living in...

I will post a more detailed analysis tomorrow after watching todays action.

EDIT: Just to be clear here - I expect 4-5 days of upmove starting today maybe to the 4000 area and from there we should come back down to test the 3500-3600 area again...Possibly up to the 3300-3200 area BUT this will be a fantastic opportunity to buy some longer term positions...I will post follow ups tomorrow and also in a few days...
For now covered all shorts and flipped long...Very short term trade ONLY.

Best.

Monday, September 29, 2008

OH WOW!

US markets today...Man thats a crash...Biggest decline in a day that I have ever seen....Biggest since 1987....

Everyone ready for a 20% down day today? :-)

Its very likely unless some massive governtment intervention comes in. I think my longer term targets will get achieved very soon.

Dont miss the charts and TA below. When I did below analysis today early morning, I had no idea US markets would crash today...Man what a move! Almost like our own markets :)

PLS do not be in a hurry to bottom pick/knife catch. There will be lots of time. We are in panic mode now...Let the market find its bottom.

Best.

Charts and Updates

After a long time I am finally getting an opportunity to put up some charts and detailed analysis. Its some busy and crazy times for me what with the hurricane and internet being down...Well things are kinda back to normal now and I am back in business. 

I got a lot of emails from readers of this blog asking why no charts..Well reason is above as I did post several times over here...Thank you all for your wishes and concerns at this time...!

Now to the markets. 

If you remember my fractal post, I had clearly said we will get something like this coming...I did turn short term bullish in between which turned out to be a dud as it did not bounce as much as I expected and I would have been better off just holding shorts...Unfortunately market has been very volatile and whipsaw-y nowadays that its been tough to time short term trades...My thought is avoid trying to catch the knife either way...Wait for bounces to short seems to be the wiser thing to do...Unless you want to take a sizable drawdown.

Okay lets look at the hourly chart here. Some things I have pointed out on the chart. You can also compare with the earlier move we had similar to this(see fractal post) and it should give some ideas on how this can go now...



Next the daily. I have market the possible move happening here over the next couple of weeks. I expect a very very important bottom to be set here in October itself maybe...Maybe around 3200-2900 range. We should then embark on a major multimonth rally...But these are based on waves so we will revisit this in another post in a few days. Also note in this chart, note the macd and stochastics clearly showing the downtrending nature of this move. 

If I were to guess, I would say the market continues the decline, makes a low around 3600 and then moves upward to test the 3800 line again setting up a perfect short before we go down to much lower targets as shown in chart below.



Next the daily log chart...
Note how clearly we are within the doomsday channel as I had dubbed this before...We should move toward the bottom of the channel soon...




Finally the weekly. Nothing much to say except both macd and stoch on weekly also on sell...Watch for the stochastics turn back up on weekly to signify a longer term bottom. This is what I will be watching for.




I am really amazed at how well my fractal post worked from a couple of weeks back! Enjoy :)

Comments welcome.

Best.


Sunday, September 28, 2008

Not looking good

Charts will follow in the post after this.

For a few days I was entertaining a bullish notion...I was wrong about short term..Looks like longer term bearishness has taken stronger hold and we are going to make a very important low. Where I do not know...But I think odds of breaking 3800 are very high this time. I know of very few situations where a support is being tested for a 3rd time and surviving...So it should break and we should test 3600 and lower. We will visit that when we get there. After making this low, we should embark on a strong multi-month rally...(the bigger B wave - will explain more with charts)

I got stopped out of all longs and am now looking for an area to short. But it situations like this, its dangerous to chase an entry...Maybe just sit out for now.

Best.

Tuesday, September 23, 2008

Low Volume Declines

The past 2 days moves lower...both here and in US..have been on low volumes which makes me very cautiously bullish...Now again only for a bounce upward where I plan to get short again...Now dont trade for few days if you are risk averse because nowadays markets are moving on news alone and things are quite volatile and dangerous. If you dont manage risk properly, a trader can have his head handed over to him. Be careful out there...Its a jungle!

Some UPSIDE and then MAJOR DOWNSIDE...My Outlook for Now...!

Lets see :)  

Best.

PS: Long time since I put up charts I know...But will do so before or on this weekend.

Monday, September 22, 2008

Update for the Week

Hello All, Well after the outrage over last weeks events and everything else, I settled  back and looked over things and reflected, analysed, and reached more saner areas in my thought process....Most of the time, a position can cloud your judgement and ofcourse this will impact your ability to make money...always..We need to be of clear mind to keep making money..consistently.

Trading is not about trading systems...its more about the mind..and good money/risk management techniques..Now dont get me wrong...TA and systems are important...though not as much as we think them to be or how much people make them out to be...

Okay..Now coming to the markets....We are gonna have some decline today for sure..I will look to cover them shorts I already have which I took from 4250 area as I had updated in previous posts and go flat...And from there I might try some very small nifty longs...Very small coz I am not confident on them and since recently bearish positions have worked better for me than bullish ones..but still might try some small longs for a bounceback....Dont get me wrong...I am still bearish but near term some bounces can come..Maybe to the 4400 or 4450 area.........

Charts and EWT structures..I am still reviewing this...Watch for them in following posts.

Comments welcome...Are you bullish or bearish on our markets? Please comment!

Best.

Thursday, September 18, 2008

Sheer Stupidity

Surprised by my post title? I will explain. You all might have noticed the sheer volatility today in the markets. Intervention after intervention by the authorities and the governtment - Insane volatility in the markets. The DOW acted like our own markets...LOL..First time I have seen anything like it..

The latest from the authorities, they are gonna ban all short selling..Ofcourse this is not yet confirmed BUT its amazing...Any fool in the market knows that we NEED shorts for the market to run...Thats how efficiency is built in and that is how short covering rallies come up - It lends a bottom to the market!...Remove that and what do you have? You kill half of the market turnover and also open up a HUGE HUGE crash possibility. Why? Because the FLOOR in the market is removed!...No shorts mean NO floor..!..I hope I am making sense. I said in past couple of posts we are entering into unprecendented times...This is the demise of capitalism..Pure and Simple.

Okay now that I have vented....The markets, I am glad I went flat yesterday night..I see this as another good opportunity to build some shorts...I am looking to short today at 4250 levels with hedges in option calls so I can cash out if this volatility continues. I will continue to add shorts next few days as I think we will top out in 1-2 days. Now this is just my gut feel and also based on the wave structure as I see it...I still do not have my charting service back together so no charts...But you got the idea. Dont get carried away today by all the bullishness.

Best.

Wednesday, September 17, 2008

SQUEEZE

Well the short squeeze from hell came in giving bears a nightmare - me included. I got out of all shorts yesterday when it became apparent we are not going to break down..I gave back around 70 points of my profit in the process but well still a very very good profit in my positions.

Yesterday was a concerted effort by all central banks to pump up the markets. See how Hangseng and China which were in blood recovered toward the close. See the news below -

Sept. 18 (Bloomberg) -- The cost of protecting corporate bonds from default fell after the Federal Reserve, Europe's biggest central banks and the Bank of Japan said they are taking coordinated action to ease tensions in financial markets.

Credit-default swaps on the Markit iTraxx Financial index of 25 European banks and insurers fell 15 basis points to 135 and the subordinated index dropped 30 to 265, according to JPMorgan Chase & Co. prices at 8:15 a.m. in London. The Markit iTraxx Europe index of 125 companies with investment-grade ratings declined 10 basis points to 135.

Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline signals the opposite.

AND NOW - WHAT NEXT
The bounce should continue for few more days. Maybe into beginning of next week. I will look to build shorts again at around 4100-4160 levels all the way up to 4220. Above this means we will try to grind up higher but I doubt it will....Let us see. Market is all about taking risks to make the big bucks. Yesterday if I was conservative, I would have made much more but I took a risk expecting more - When the market told me to get out, I did. Still did not go long because in this environment, we just do not know what will happen overnight. As I said before, we are in unprecendented times - No one knows what next. We can just take calculated guesses based on TA and trade that. The market tells us if wrong. I am looking forward to building the next short position.

Btw - Did anyone see GOLD yesterday?...I am sitting on good profits on my investment long position. Enjoy!

Best.

Selling Climax

To me it looks like we are finally entering into the selling climax of this leg down. This might be later today or early tomorrow. My heart goes out to those who tried to bottom pick and go long in this market but my warnings and messages were very clear.

Anyone who shorted with me at 4350 with me reading this? If so, leave a comment - I enjoy reading accounts of ppl who benefitted from my analysis and calls.

What next? Its very difficult to say - The events happening today are truly unprecedented - I am amazed at the way our markets are holding so far. I want to see a limit down day or two to feel more comfortable on the long side. Having said that, I also think that we are close to a selling climax. Will it happen today? I am not sure but there are good odds that it might. If so, I will look to close shorts in futures and buy some crash puts just in case we crash tomorrow. Overall I feel this is not a time to bottom pick. I amazed at the calls going around past 2 days advising ppl to bottom pick - Today they have their heads handed over to them. The credit market crisis or a bear market of this intensity is not something any one of us has seen. Why try to guess where the bottom is? To go long, the market will tell us when its time. And I will surely post here. A bounce is coming soon. I am not sure yet from which level but let us see.

Best.

Monday, September 15, 2008

One more Update

Well folks...Whoever shorted on my call and charts have made a fortune now as have I...Today might be a good day to take profits...atleast some profits...but be ready to short at higher levels again because we are still far from the bottom...Today lets see if 3950 holds..If not, we go down to 3800 area which should hold...Below this next strong support area is 3600-3550 area. But we will not go down in a straight line...

Now pls note above is for nimble players...If you dont want to trade in and out...Then just hold shorts with trailing stops...Based on your risk appetites...This is what I will be doing...Holding shorts until I see more reasons for a bottom...

Best.

PS: There was a query in earlier comments on how to learn EWT - Well its a tough question as there is no easy way. EWT is a very tough form of analysis because it all depends on a persons perspective...Again we need to use indicators to confirm wave analysis. EWT is best learnt thru sites like this and the rest is ONLY thru experience. Try other forms on analysis first and observe how waves unfold before using them solely...And ofcourse follow this site and Vivek Patils EWT analysis on ICICIDirect.

Some books on EWT can be found here - http://www.esnips.com/_t_/elliot+wave?q=elliot+wave

I honestly dont have an opinion on which one is good since I have never fully read an EWT book that is easy to understand.

Sunday, September 14, 2008

Quick Update

Well I was not able to follow up on my latest post...Since of Hurricane IKE in Texas..Donno if anyone saw the news on this but things were quite bad over here...No Net..No Water...No Power..No nothing at home..hehe....out at a friends house to check things... Well I am still of same view...Msg posted few days back when nifty was around 4350....still of same view..I think first bottom will come at around 2 months or so from now....Not sure on time yet but with respect to levels, expecting 3600 first, 3200 second and finally 2960...not more than that at present because of some VERY VERY important support lines...But we can reevaluate when we get there....I am not going to post an updated chart here coz of the reasons I updated above...Its tough times...And I dont have much time...So thats it... All the best to all... Best.

Thursday, September 11, 2008

Fractal Theory - Building the case for the next leg down

In my last post over here, I mentioned that I am exiting all long positions and sitting on the sidelines with small shorts until I see more evidence for some more rally OR 4522 being taken out on the upside. From then the market has clearly deteriorated. I hope some people reading over here would have been saved from all long positions even if you did not take any shorts. 

Yesterday I was looking at my EOD chart for hours and some things jumped out at me...I mean it was visible before too but after yesterdays study, I am really confident on what I see...Its clear that we have started the next leg down. I will present my ideas in the chart and writeup below this but before that, let me present something known as 'Fractals' and what it means. 

"A fractal is generally "a rough or fragmented geometric shape that can be split into parts, each of which is (at least approximately) a reduced-size copy of the whole,"[1] a property called self-similarity. The term was coined by BenoƮt Mandelbrot in 1975 and was derived from the Latin fractus meaning "broken" or "fractured."

More on fractals can be read here - http://en.wikipedia.org/wiki/Fractal

Elliot wave theory is built on the fractal wave theory - essentially what it means is that similar structure keep occuring in the market, in nature and well everywhere...Its a great mystery of nature as to why this happens. I believe other theories such as Kondrateiff also have their base in fractals. Fractals are recursive. Means the same structure repeats over and over again...They can be different on a whole but there will be so many similarities and when we can spot these, it builds up a high probability trade AND you also know when it gets invalidated. Fractals are why you have similar bull and bear wave structures in the market. Google more on fractals and you will be amazed at what you find...Fibo ratios also play a very important role in fractals and in effect EWT. 

Okay now coming to the chart. See below chart...I have added a good deal of comments on it. 



Now same fractal iterations as in above chart, can also be explained in EWT terms but you already know my count ABC-X-ABC where the final C might have just started. We have a very high probability of a big sell off coming. I knew it was coming. Only question was of WHEN? 
The other interesting thing is, back in May when the last fall happened also, a lot of market participants were bullish and confused expecting one last wave up. I was also one of them. It never happened. Almost similar today. Several folks including me expected one last burst up to 4650 and 4750...Might never happen. Areas to watch now are clear - 4200 and 4160 on downside and 4450 area on upside. 

Today inflation is 'GOOD' lol...If IIP is also 'good', pray for a rally to get out of any remaining longs and start piling on shorts....If we get a rally to 4400 area again, its a God given gift to get short.

Comments welcome please. Sometimes I feel like I am the only visitor to this site. Please post and offer your views also.

Best.

Monday, September 8, 2008

Confusion!

Confused on market direction in near term so I booked all longs today..Yesterday would have been ideal but greed and stupid ICICIDirect got the better of me...Well booked all today and started some small shorts right now with hedges also in place...A move above 4522 will get me out of shorts...Till then leaning slightly bearish...Yest moves made me bearish since we could not sustain above 4522-4540..I can explain the importance of this area later....But still overall damn confused on market...And when confused, better sit out or trade very small with tight stops...

Best.

US Markets EWT Counts

Chart is self explanatory. Expect our market also to follow something similar.


Best.

Sunday, September 7, 2008

Market Psychology

A nice writeup from a fellow blogger...Read it even though its long...A good insightful post

PS: dont miss weekly analysis post below this!

As a trader I have always been fascinated by market psychology. By its definition the process of ‘price discovery’ is intrinsically a large experiment in human emotion which is driven by greed and fear. Although the former is what brings people to the market in the first place, in 9 of 10 cases it is the latter that proves to be the basis of their financial demise. As Peter Lynch put it: “The real key to making money in stocks is not to get scared out of them.”

Of course things change profoundly when you find yourself in an ensuing bear market - but in a way things remain exactly the same. Only that the dynamics now switch into reverse, in that the ‘upside’ is the continuous slide down and that the ‘downside’ are the various episodes of corrective bull rallies. Nevertheless, many investors seem to have a psychological barrier towards ’shorting’ stock and it is probably fair to say that an overwhelming majority have never shortened a single stock in their life. After all, it is a bit ‘unnatural’ for Joe/Jane Sixpack to grasp the concept of selling something now just to buy it back later, hopefully at a lower price. I have tried to explain this idea to some of my friends and most of the time they just give me a polite smile and hastily proceed to change the topic of conversation. As I enjoy getting invited back (especially since the food is free and the women are hot) I don’t press the issue. And finally, as I am an evil speculator I am aware of the fact that for every penny I wrest out of the market someone else out there has to lose it. It’s a zero sum game, no matter what anyone tells you.

The other aspect of investors losing money in a bear (and also bull) market is that they fall prey to their own cognitive biases. Let me suggest a few of my favorites - you can find the full list in Curtis Faith’s ‘Way Of The Turtle’ - a most excellent read:

  • Loss Aversion - The tendency for people to have a strong preference for avoiding losses over acquiring gains.
  • Sunk Cost Effect - The tendency to treat money that has already been committed or spent as more valuable than money that may be spent in the future.
  • Recency Bias - The tendency to weigh recent data or experience more than earlier data or experience.
  • Bandwagon Effect - The tendency to believe things because many other people believe them.
  • Low of Small Numbers - The tendency to draw unjustified conclusions from too little information.

I guess you get the picture - people often (if not most of the time) make decisions which are driven by human emotion, not by rational analysis. The natural instincts of our deeply ingrained reptilian brain might be well equipped to staving off natural enemies and surviving a cold winter, but are completely orthogonal to the skills needed in making money in the market. Yes, we all like to believe that we are stone cold traders who can press the buy button when our instincts scream at us to start selling everything now! But evidence points quite to the contrary - most traders fail because they sooner or later fall prey to their own fears. Of course there is a good portion of people who have a trading system without a statistically reliable edge or have no trading system at all, but this is not today’s topic.

Reducing the ‘Noise’

The Internet and modern information technology as a whole has given small time investors/traders access to a wealth of data and tools that was reserved to a wealthy elite just a decade ago. I should know - I was there and remember paying top Dollar for a trading platform that does not even come close to what I am now able to enjoy for free today. On top of that I am able to access a vast amount of information and news at the push of a button, right from the convenience of my home. I can also watch financial networks covering the market pretty much 24×7 (not that I personally ever do, but it’s there). For the fundamental trader I can only guess that this is pure heaven, however for the technical trend trader (yours truly) all that data in some ways may be more of a curse than a blessing. You see, the human brain is not very good at absorbing vast amounts of information. We are good at averaging - some call that ‘fuzzy logic’, and most of us are very visual. Which is why man traders eventually embrace technical analysis. As the thinking goes - all that vast amount of fundamental data which we could not possibly hope to digest is simply reflected by one main denominator, the actual market price of the underlying equity or commodity as depicted by a price chart (remember, I was talking about ‘price discovery’ at the beginning). Add to that some time tested chart patterns like ‘triangles’, ‘head and shoulder formation’, ‘double tops/bottoms’, etc. and you’d think that trading should actually be fairly easy, right?

Well, as you probably have learned from the tribulations of life as a trader - the answer is no. We just can help ourselves it seems and sometimes - and I actually dare to say most of the times - the majority of us are unable to see the forest for the trees.

Weekly Trends

Late on my posting for the week since I had some problems over the week...An accident...Luckily nothing happened to me but my car...well thats a different story...But well thats life and it happens...

Anyways, coming to the market, I should have updated on Thursday but due to problems above could not...I turned slowly bullish on the day as the market was holding onto support levels quite strongly and as I said before US markets were quite ugly at the time...We opened ugly too but still bears were not able to break support even with all the global support..Slowly I turned bullish and started buying with tight stops...Happy I did so..!

Lets look at the news front..We have 2 major market moving news that came out over the weekend...One is global and the other is local...Not so sure which one is more important but together it should give a big big boost to our markets in the short term...We still need to see and review what this will do in the longer term...

The Global News - Well if you didnt hear it by now, Friday after market hours, the US govt. made public the plan to nationalize/support the 'deep in trouble' Fannie and Freddie...This is a very bullish thing to the markets esp financials due to the amount of paper being held by all the different banks...Longer term..Well makes no difference..Infact its very bad as in essence capitalism is losing and something different is happening in the US of A. I would say we live in unprecendented times...The other most obvious bad thing is that USA goes more into debt worsening an already bad situation.

The Local News - Sure everyone knows this..The NUKE deal finally falling thru and it looks like we have a better deal now...Quite bullish.

SO. A gap up is almost guarranteed..If not long, look to buy pullbacks...Dont rush in and buy..Lets see how the markets react at supports and resistances...Since I am already long from Friday, I will sit tight...

Now to the charts...

First the daily...Comments on the chart and nothing more to say here.


Heres the log of the daily. Very interesting...Again nothing more to add here except for the comments on the chart..Open in new window to view.



The weekly....Note here how the MACD is now a clear buy...But note that this is quite lagging to be careful following this except for longer term cash investments. Stochastics is quite neutral right now...Need to see this week to understand more on what will happen next.


Overall the charts and news are quite bullish for this week. But longer term, we remain bearish...Short term and maybe medium term(1-2 months?)...We can turn bullish...Watch out for more bullishness coming from the new channels and public...This will be our signal to be more careful...For now, things start to look rosy again...But dont be fooled into longer term investments...This is still an upward correction to all the downmoves we had so far.

Best.

Wednesday, September 3, 2008

What Next?

No charts today...I am not sure yet of market direction...BUT I will look to exit longs today at some good profits...Only because I dont want to let these profits go..We will see what the market does near 4540 and 4620 if we do get there...

I was quite bullish after our market action on the last trading day but after watching the US market for past 2 days, I dont like it at all...Does not look good at all...Sure our market can still rally but to me it makes sense to take profits here and now if you're long with me...

I might also try some small shorts today but remember that its quite risky because of the strong momentum we saw before...We should know within the next 2 days whether it was the real thing....Till then the best thing might be to just sit out...Or if you are gutsy try some day trades...

Best.