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.
Thursday, September 18, 2008
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.
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.
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.
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.
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