Jokes aside...It was quite serious - this decline...And there was really no sign of relief...Yesterday market bounced back however I do not think we are out of the woods...I think a lot of traders seeing yesterdays action, might have gone long thinking its over...But I am not so sure...To tell the truth I am confused however I will give the benefit of the doubt to the bearish case until I see more convincing evidence.
Okay coming to the weekly chart first...I have added my comments in the chart. You can see how the stochastics is acting now...I would wait for it to first turn up before jumping in again
with my longer term investments.
Next the daily...Now the bounceback should continue for a few days I think...The lows of March and Jan are quite important...The 4440-4460 area. If this breaks, we should quickly crash to 4000 area. And maybe even more. But before jumping to any conclusions, I remain flat for next 1-2 weeks before making a decision on next steps.
Next the hourly chart. Again its clear...Supports are marked...Break this and we crash. Its simple. I am sure that a lot of traders have gone long or covered shorts in anticipation of this holding? But will it hold?...The Million dollar question!
If I were to guess, I would say bounceback and then come back to break the lows...We can surely expect a retest and how it reacts there will determine the market's trend for this year itself!
For a refresh, read this post again...I posted this some time back...Ultimate bottom can be much lower: http://theindianmarketblog.blogspot.com/2008/05/elliot-wave-counts-and-ideas.html
Okay now that the charts are covered. I just wanted to say some stuff...For some time I have been trying different strategies in FNO and eventually come to the conclusion that it is not worth for me to continue in the same. Believe me, I have made money...good money in normal cash trading in stocks...Or stock picking...But FNO is a different story...Simply not worth for me..Time or effort...So I am returning back to stock picking for a slightly longer timeframe...Means 2-6 months timeframe...Maybe more depending on the market conditions.
I think the main problem that I have with FNO is more phsychological that anything else. Leverage just does not work for me...The main reason ppl get into FNO is to make a quick buck and often end up loosing their shirt in the process...For me since I was hedged most of the time, I did not get off too bad...But still overall I can safely say its not worth the time for me anyone...So moving back to stock picking...And I think we are getting close to a very good buy point....I would wait for 2 more weeks before making a decision...
Fundamentally things are not good...If inflation is 8%(actual much more) and GDP is 8%, this means, real growth is negative...BUT still I think picking out some good stocks will really work out in the longer run.
As a start, I will post 2 interesting stocks in the next post.
Best.
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