Market Outlook

Folks, I am on vacation this week...In Los Angeles some theme parks and after that Las Vegas...So posts might not be that much...My initial idea was to close everything before I left but still held some and well that was probably not a good thing...Oh well...Anyways heres my thoughts for this coming week.

One thing to note here is that Monday is a hol over here in the US...This could be important.

Now see the chart..the decline came on low volumes...I find this quite interesting. Why did this happen?...Is it setting up for a short covering rally after the public is sufficiently beared up?

One very interesting thing I see now is that the 'experts' are all beared up and are expecting retest of Jan lows.

Now I am not an expert and I am not going to try and predict Mondays moves. If you are not in a trade, it might be a good idea to stay out on Monday. I have some small longs..And the plan is to hold this if 4900 holds...Break this and I will be out. See if it consistently trades below 4900 for 10 mins...

4920 and 4900 and important levels. I do not know more than this now...I will try to post updates when I can...If I were to guess, I'd said we do a small bounceback from here or a bit lower...And then maybe setup a long and painful decline. Overall situation is not good.

Best.

Stopped Out

Got stopped out 1/3 at 5020 and rest 1/3 at 5000. Trying a small long here also....4943.

Best.

Update

Closing 1/3 of my position in profits...small profits...Just practicing good risk management.
Get out of longs if 5020 and 5000 breaks.

Best.

Market Outlook - 23rd May 2008

Pretty decent day for me yesterday...If only I had got a better entry the day before, tomorrow would have been a great day for me...but well, you cant win em all....

Coming to today...See chart and comments on chart.

Looking only at daily today. See how we stopped exactly at the t-line. Shows how important this is...What this means is that when this eventually breaks, it will be a sight to behold.

The reason I covered shorts and went long was only because of this t-line.

Today, well I am expecting a decent bounce...Maybe we get to 5100...max 5150...Before that we have to handle 5050 and 5080...Lets see how high we go...

Its always good to have a trading plan...My plan is to -

- Cover at either 5050 or 5080...Best case 5100. If I cover I will try some shorts..Will update.

- Hold till Monday and cover and go short then.

Let us see...Have a good trading day all.

Best.

Covering Shorts N Flipping Long in Small Amounts

Covering shorts and trying long here...Might be early but lookin for a bounce...Let us see..

Best.

Update - May 22nd 2008

No charts today..Just a quick update...looks like we go down to 5050 and if that fails 5000. I will look to cover shorts at one of these levels and go long..call me crazy but I will give it a try...I am expecting a bounce before more decline. The crazy public is buying all the dips so no problem...
:-D These guys are nuts.

A very sincere note here - dont fall with the fray..fundamentals are not bullish. I have said this before and will say this again - there is a time to bullish and there is a time to be bearish. I see that general complacency among the public is rising. This is a warning factor in itself.

Best.

Bad Timing

Well what can I say..Covered shorts at the best possible point...Support lvl of 5050 held like I thought it would and I waited for a rise to short into again...Waited for some time...lost patience...and shorted again...Bad level to short....I wish I was able to stay for whole trading days...because I have to go to sleep, this is killing me...Oh well...It is what it is...
Luckily I have the hedge.

What next? It is possible we saw a 'sucker' rally yesterday...The market makers are playing this game well...One thing to note here is FIIs sold 700 crore yesterday which is a big amount compared to their recent activity. I find it interesting that the market rose even when they sold this much...Be cautious if you are long....Atleast for some more time..

As I said before, it looks to me like the public is being trained to buy the dips.

5120 looks key here. Price action bullish above and bearish below. Above this 5150 is strong resistance.

5050 and 5000 are very strong supports. If we break this, we will get a waterfall decline.
Let us see.

Best.

Trying short again

Admit I didnt gain much from covering and reentering but better to be safe than sorry. Market is quite weak...Trying a short right here.

EDIT: Can cover if it goes above 5100. I am holding overnight. Good night!
Please note I am hedged with calls.

Best.

Covered Shorts

Quick update that I covered shorts at 5060...I am looking for opportunities either long or short here..

Best.

Market Outlook - May 21st 2008

Nifty intraday chart attached. I have added comments on the chart. Open in new window to read this. My view is that the public is trained to buy the dips. Beware against this tendency. There is a time to buy and there is a time to sell...Be careful if you are a shorter term player.

Position Update - As you know from earlier updates, I am short and will look to cover today and maybe short later at higher levels wherever we bounce back to.

Today important lvls to watch on downside is 5100 and 5070/5050. On upside again 5100, 5120 and 5140/5150 is important. I am looking to cover shorts at 5050 area or max 5000. 5000 is very strong support.

Best.

2000 Hits in 10 Days!

Well thats right..2000 Hits in just 10days...Nice for a start...Keep em coming...
And if you like this blog -

- Tell your friends about it
- Click on the ads on the right side
- And please vote in all the polls

Help me with the above, and I will keep the good stuff rollin in.

Best.

Shorted Nifty near Highs

Shorted some more near high of day with hedge. Lets see how it goes.

Best.

Poll Final Results and Interpretation - Week of May19th

I am closing the first weekly poll. Got a total of 59 votes which is not bad even though not as much as I expected...Hope ppl continue to vote...Seriously 1 sec out of your time guys?...Comeon!

So the results...(please note for those who do not know sentiment polls act as a contrarian indicator most of the time)

47% was bullish
39% was bearish
14% was neutral

There is a significant decline in bearishness which I think is important. I am not going to try
and make too much out of this data because as I said...we really more weeks of data to get at a trend. However the decline in bearishness is interesting but still the difference between bullishness and bearishness is not big enough to cause a major decline unless something unforeseen happens.

To me it seems like this week my end flattish to a bit down at the end...
Maybe some initial weakness to week and then recovery? let us see.

Have a good trading day.

Best.

US Market Update - Another Crappola Day

Looked very strong in morning but reversed from the 200dma. Not very bullish. However lets watch tomorrow for confirmation/continuation. We are setting up a wedge on the charts...Will it breakdown soon? Lets see. Today was also a doji...Showing indecision among market participants.

Our market could behave similarly...I will be looking to short into strength today if we get it.

5180/5190 and 5220 to watch on upside and 5150 and 5100 to be watched on downside. 5100 if breaks will be strong confirmation of bearishness.

Best.

A Modern Day Parable

A Japanese company (TOYOTA) and an American company (FORD Motor) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race. On the big day, the Japanese won by a mile.The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat.

A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.

Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing. Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents and 1 assistant superintendent steering manager. They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners and free pens for the rower. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices and bonuses. The next year the Japanese won by two miles.

Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India.

Sadly, The End.

Here's something else to think about: FORD has spent the last thirty years moving all its factories out of the US, claiming they can't make money paying American wages.TOYOTA has spent the last thirty years building more than a dozen plants inside the US. The last quarter's results: TOYOTA made 4 billion in profits while Ford racked up 9 billion in losses. FORD folks are still scratching their heads.

:-D

Best.

Market Outlook for the Week of May19th

Last week was a fun week. I made money during the first half but second half was a poor performance for me I have to admit. The main problem I see I did was that I tried to fight the market because of my own bias and I paid because of that.

Right now I am still holding some shorts but its very minimal and hedged. I booked the rest of them as I was not comfortable with them and also I admit there is a good possibility of an upward run.

One thing I have to say. The uptrend from the very recent lows was quite weak till now. It remains to be seen whether it gets stronger over the next couple of days. This is my plan. I will wait to see how the next couple of days pan out. If it remains strong, I will close my shorts and flip bullish. The points I am watching on the upside is 5180/5190 first and then 5220.
Go above this and possibility of going above 5300 to 5500 becomes are very strong possibility.
But we will get to that later. Lets first examine the charts. I will start from the weekly, drill down to daily and finally hourly. I am trying here to be as neutral as possible even though my obvious bias is still bearish - probably due to the fact I am holding shorts.

Ok weekly chart attached above. I have added some comments on it. MACD crossover on a weekly is one of the most bullish signals we can get. But this is a very very lagging signal and to be used for longer term. We are not yet there and there is a good possibility for some pullback in price before the crossover. And more often than not, crossover will not be followed by immediate rallies. For now what this indicates is a die down of selling activity.

For me next 2 weeks are important for this weekly chart.

Next the daily. Again comments are added in the chart.

Stochastics have given a bullish crossover. This obviously supports the bullish case and kinda says holding shorts are dangerous. But gut feel tells me we might get some weakness next week. I will watch the next couple of days very closely before deciding to close or hold onto my shorts.

Next heres the hourly.

Most of my comments are on the chart. This whole channel over here is what defines the market today. Watch it closely. There were some indications that it could be broken last week but it pulled back in to continue the bullish momentum. My thought was that a lot of the rally last week had to do with short covering than fresh buying. This should be a red flag for us. Short positions in the system if fairly large, help keep the market from going down too much. If they decrease AND speculators start moving toward the long side, it can be dangerous. But short term this chart is bullish as long as we are in this channel. As I said before next couple of days will be very important for me. Strength will mean I am wrong and I will close the shorts and probably flip long.

Have a good trading week all. Please vote also in the poll on the right side.

Best.

Request to please vote in poll

Please do vote in the poll on the right hand side. All it will take you is a second. Humble request to take a second to do this. If you take a few minutes to read the content on this site, you can spare a second to vote. Please do. As I said before, unless we have a sufficiently large sample size, this data is meaningless and I want to collect and tabulate this data for a long period of time. I will also post weekly interpretations of this. Believe me, sentiment if we know how to use it is a wonderful and powerful tool - I am learning on this from one of the best here in the US.
Kindly vote.

Best.

PS: Hope you like the changes I made to format and color on my site - If you have any more suggestions like this, please leave them as comments or in the chatbox. Thanks!