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Wednesday, April 15, 2009

Amazing!

Well the bulls continue to amaze. Every little pullback is being bought..and yesterday it looked like some big money really came in..I only wonder why they are this late to the game but who am I to judge. Anyhow, on the log scale on the daily, Nifty looks to have broken out and next logical target is 3800 area. But keep in mind, market defies logic...Lets see how far this goes. I tried some shorts yesterday..monster moves stopped me out ofcourse..so nothing doing now...wait and watch...

Been thinking again about this blog for a while..And due to various reasons, personal and otherwise, I am taking a rather longish break from blogging..Not sure how long.
I have lots of personal changes coming up...will be moving to India in while and so on so I wouldnt have much time to continue this blog at the same level that I am doing now...Besides I am finding the whole thing stressful at the moment.

So I am going to step back a bit from blogging..And see how I can manage it..If I feel comfortable, I will be back with weekly or bi-weekly updates...For now, bye, take it easy in trading and always keep a watch out for the unexpected.

Best.

Tuesday, April 14, 2009

Da Wedge

Looks like we broke down from the wedge pattern and now backtesting it..Shorting with a tight stop has good risk-reward here.



Best.

Sunday, April 12, 2009

The Week Ahead

EDIT: Intraday at 12:15PM - Interesting action on intraday charts...Here 15min..Looks like a break. I shorted the break..small size only. I missed shorting the open even though my gut told me to..Nevertheless shorted at the break shown in the chart.



Lets see.

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Another shortened week ahead..I have found that these kind of weeks throw me off a bit..I mean timing wise it can make things a bit 'OFF' but well we got to live with it I guess.

Market this week - I am again expecting we see a pullback. It could be very fast and could also be a sidewise shallow correction. Buying the pullback could be profitable..I think for this time. But dont be in a hurry to buy - In my very humble opinion. Lets look at some levels on the charts.

NIFTY HOURLY



NIFTY DAILY



NIFTY WEEKLY



TWO POSSIBLE COUNTS IN RED AND BLUE



As you know I am totally flat right now..I am not sure what I will do next. In 2 minds..I.E to let the market settle down a bit before going long again..OR try a quick and small short for 2 days? Tough call. We will see as it goes. Will update if I see something interesting or do take a position today.

Best.

Wednesday, April 8, 2009

OUT

Out of longs...from 3166 to 3374 odd..

Not doing anything now..

200+ pts..I will take that.

I will post some charts and thoughts later if I can.

Best.

Some Mumbo Jumbo

Some more mumbo jumbo from my side..more of an extension to the post below this..

Often I've wondered why we go through good patches and then bad patches..Is it luck or is it all in our head? I think its the latter..Even a gambler has good streaks...but again is it chance? is it luck? Or is it something else?

I have had some stupendous periods of gains and good trades .. I have wondered what made me do that..What created that? And why does it not continue ad infinitum? I believe its all about being in the 'zone' .. Now what is being in the zone..simple..I am sure we all would have played some kind of sport in our life and during some point of time, we would have been playing at the top of our game in a particular game..and NOTHING you do...NO MATTER what you do, it always goes right..Thats the ZONE.

Now traders also have this zone...I have found myself somehow stumbling into this ZONE sometimes..Its mostly by accident but sometimes by design as well..And once we are there, usually something stops the streak and reality snaps back..I think a lot of it depends on having the right amount of confidence and also the right amount of common sense...Most expert traders remain in the ZONE permanently and trading for them is like a second nature..Traders like me..well not quite there even though we'd like to be there...Its a tough game this trading..No matter what you do in life..what all you do successfully, nothing can prepare you for trading successfully except for trading itself.

Its a tough road..Most give up..

But heres to sticking on the road..And getting into that permanent 'ZONE'!

Thoughts on the market later.

Best.

WOW

..I mean just wow...Been a long time since I've seen something like this...Market digested the big gap down and just powered ahead like its a new bull market..My decision to cover and go long in the morning paid off nicely..Position size was not as big as I would have liked but lol, I'll take it...Beer money :)

The markets are getting a bit ridiculous now..I still have a bad feeling this wont end well..but well thats just me..We shall go by what the market does...200pts in one day from low to high!!...well I wont complain as I caught all of this move...Still its amazing how this is going now...Looks like no one wants to miss the bull bus.

As you might have observed(lol, right), I havent been in good form lately and whenever this happens, it pays to step back a little and regroup before trading again...Bad streaks good streaks call it what you will but I believe its all in the mind...I guess I might be finding my groove again..Keeping fingers crossed.

Trading in the Zone is a good book by Mark Douglas on psychology in trading...I recommend this to everyone..More than often the enemy is within us..I want to also sincerely thank SS(Timamo) for encouraging and helping me during this time. Thanks!!! :)

Footnote: I would be very careful in the market now..Its close to euphoria now..You know what comes next..It can run some more but the last 5-10% of the rally is dangerous to catch - use extreme caution folks.

More later.

Best.

Tuesday, April 7, 2009

Getting Interesting...

Back into the grooove... :)

Getting interesting in here...down to first support..taking a stab at some small longs...Not sure of timeframe yet.



PS: Dont get into this trade unless you have balls of steel! :)

Best.

Pullback and then...

So we are going to get the pullback..And what next? Dont know..lets look at the charts.

HOURLY


DAILY


Looks like after this pullback, we might make one more attempt at the highs..Maybe a bit higher as well before a more serious pullback..As of now, the megabearish scenario is on hold...After a rally with this much momentum, we need to look to buy the dips..For NOW...Not to say this cannot change quickly as well...

For NOW, the hourly is on an uptrend and the 20hr swing is on a buy..until this changes, it pays to buy the dips...Overall(1month-2months), I believe we shall top out and have a downmove but its not possible now to say how far this goes, so lets not try to predict and instead play the hourlies.

I might look to go long today on the pullback..small amounts only..As you might know, Lee needs to get his GROOVE back :)

In other news - Cramer calls the bottom again :D




LAST TIME WHAT HAPPENED -


Best.

Sunday, April 5, 2009

Pullback due this week....

Lots of discussion regarding following the trend..I agree that we need to follow the trend..But tell me? - How do you define the trend? Hourly? Daily? Weekly? What I mean to say is where do you decide that the trend changed?

The market over the past several months have been rangebound...A large range but still rangebound...Anyone trying to trend trade on the daily would have been burnt...Maybe it is changing now..Do not know..Since the daily was burning me, I decided to move to the hourly. Since then the market has not given a meaningful pullback..just surging ahead on top of gap ups and new found optimism.

I am open to a new mini bull starting but this action is not healthy in my very humble opinion..Up on gaps..Same can happen in reverse.

We should see some sort of pullback atleast..this week and then maybe power up higher..The 3240-3260 area is of obvious importance as I have pointed out in previous charts. We are this close to taking it out...So lets watch that...If long and market goes above that, setting stop a little under that might be prudent.

For shorts, I am still waiting for the hourly to set up a sell so that I can go in short in bigger size. Unfortunately its not happening...Maybe that is the plan..Power ahead like this till 6300 without any pullbacks? :)

Best.

Thursday, April 2, 2009

NUTS

This thing is just too strong...

What a rally...feel disappointed to have missed out..The hourly buy alone would have netted 600 points so far..damn!

The worst part was..no substantial retrace and most of the gains came on gap ups..

Frustrating to say the least...

I really dont have substantial positions in the markets now...Some shorts only as I said before. I will likely get out next week sometime...

And then, will just wait and watch...And will post if I get a signal on the hourly.
Trading that and ignoring everything else seems best.

Lot of news, the G20 etc next few days..Our market is on long holiday..Will be interesting to see what comes out of all of this...

Have a good weekend all - and take your mind off of the markets :)

Best.

Monday, March 30, 2009

Bull Over or Just a Retrace?

@ 11:09AM - HEADS UP: Market is just chopping around..But 20hr swing is now at 2962.75. Below this and we have an hourly sell. I would respect this signal just looking at the earlier track record. Chart below -

Also see the red line I have drawn below. Below this, we can see a strong selloff.



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Bull Over or Just a Retrace?
===========================
Ah the billion dollar question..No I dont have an answer now but just some clues...

I was not able to post yesterday as I was moving house..Been damn busy over the weekend...Hopefully things can get back to normal soon :)

The market..All the baby bulls got their heads handed to them...Had some idea this might happen but did not expect it to be so dramatic. Well now the big question is are we starting a new bear move or it this just a retracement in this so called 'new bull market'? I dont know...

I mentioned a few days back that I had some interesting stuff to share. Chart with comments below. Now note this is just a scenario. I dont trade based off of this..Just looking at the bigger picture.



AGAIN just want to stress..Dont pay too much attention to above..Using EWT for trading can be fatal for those who take it at face value..Just use it as a guide.

Looking at the hourly...My main trading system for now.



All in all a bit of a confusing picture...But we should get more clarity in coming days.

Personally, I do think the bears are back though. If I do get another rally, I will use it to reposition myself better.

Will post intraday updates if something interesting comes up.

Best.

Thursday, March 26, 2009

Keeping things small..

Sorry folks for the late update...not much to say...the bull juggernaut continues...Just watching how long it goes..

I am short but in smaller size..and hedged..so not going to worry about all these silly upmoves...Its too late to go long so definitely not doing that..

If we do get some kind of pullback soon, we shall see then.

For now, short and watching...I will take off the hedge if I get an hourly sell..till then maintaining status quo.

Charts later..Bit busy today. I have some interesting thoughts to share but not now.

Best.

Wednesday, March 25, 2009

What am I doing?

PS: DONT IGNORE this one either...



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12:00 NOON UPDATE: Could this be a flag? If so, breakout above will make market run up quick. Not sure for now..But if it does, its good for an intraday trade.


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Okay guys...You saw I shorted a bit yesterday...I added some more today...And I hedged this with 3000 April calls. I am not sure at this juncture what we are going to do next...I see at minimum a pullback and then a move higher...It is actually too late to go long which is why I am not doing this...

For the bullish case, we need to have some sort of pullback here..else I am sorry to say, we are going into bubble mode and we will have a fast crash-like move...I am not raving bearish anymore..more like neutral..so remember my positions reflect that...

I mentioned earlier that I am looking more at swing signals(thanks to kpl) for trading signals going forward..So that I keep out of trouble going forward.

See the 20hr swing below.



Coming to sentiment...Its turned very bullish now..I would be cautious on longs..If we get a decent pullback I shall look to go long..Ofcourse will reevaluate at that point...Frankly this is a very confusing juncture..tough trading.

EW structures...I have some interesting ideas..One bullish(the obvious one) and the bearish one...Now since the obvious is more often incorrect, I would be cautious. I am thinking STILL along the bearish lines...For those familiar with the EW lingo, I think its a bearish wave4 flat or a wave4 triangle still..with w5 down still to come..However we need to respect momentum here and wait for some confirmation on downside...tough to say right now...But I will post these scenarios with charts later..maybe tomorrow....If anyone else has thoughts on this, please comment.

Intraday setups - I dont have anything at the moment but I shall post if I do see something interesting...note that these setups and patterns dont come often but when they do, we can bank some good coin and low risk.

Best.

Tuesday, March 24, 2009

Trying a small short...

...not going nuts on this short...very small compared to my normal short...And I have a hard stop at yesterdays highs...above that and I'm out...else I am playing for a pullback to 2860 odd...maybe a bit lower also...but let us see...

I will share some charts in a little while.

Best.

Just a small break

Read all the comments...Just wanted to say some stuff..which I also posted in the comments section of previous post -

Everyone..really...No defeat and all...I will come back with more analysis..And will come back stronger...

Why did I say I am taking a break?

Just regrouping..rethinking..evaluating what went wrong and so on..

When a big loser happens, we need to do that, else emotional trades will happen.

For the record -

My last short trade - From 2600 odd till 2800 I shorted...My AVG price was around 2720...I had several signals to cut and run in between which I ignored...This was my first mistake. Adding a lot to a losing position was the second...

However breakout above 2840 was my last point as I must have mentioned several times in previous posts..Market gapped up above and never looked back...

To be totally clear...From 2720 to 2860 around 140 pts loss...If you take all the earlier gains, this is not so BAD....BUT thats a traders folly and false justification..For me this was the biggest loser trade so far..So I needed to step back and see what went wrong..For me it was more of mindset that anything else...I need to clear that and come back fresh..

I will do so soon.

Best and Thanks to everyone for their comments..I know a lot of bears lost money...You can see how much I lost above...

Dont worry too much..Its all part and parcel of the game.

I WILL BE BACK LATER WITH MY CHARTS AND MORE ON OUTLOOK.

I am trying some new stuff..i.e using the 20period swing system on different timescales to see which one is better. I might post some trial entries later today with this..The only thing confusing me for now is which timeframe to use...1hour or 30 min swing...Trying to evaluate which is better.

Regd outlook - This rally has gone too far..We should get some kind of pullback and consolidation after which we will make an attempt to take out the highs...So it looks like we have to put bearishness on the back burner and try to trade on the longer side and buy dips...

But this will come later...I dont think the pullback is done yet..I will use the swing indicators to show where to go long or where to go short.

More later.

Best.

Sunday, March 22, 2009

Intraday Thoughts

EDIT: Just wanted to make things clear..I am totally flat now..Not trading for a little while..Generally after some losers, its better to regroup and come back..So thats what I will do..Frankly I am surprised all the bullishness..But generally market defies logic...So maybe a new bull is starting..Who knows...More thoughts later...trade safe out there...And dont trust anything..bye.

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EDIT: Dont know..Dont know..I am capitulating fully and going flat..Will decide on future positions later...Now just going to chill a bit...Better to let things sink in and not trade emotionally...Things look very bullish for now...Atleast for today.

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Okay guys...The US market futures has done bears in...I am capitulating a bit over here...Covering all option position shorts in loss...Also rolling the future shorts to April...Also hedging ALL of them with 2900 calls. Dont know how this turns out...But I cannot see any reason to be bullish now..Maybe I am wrong and will be bankrupt soon...Feel FREE to fade me.. :)

Below is what I wrote few hours back...I still feel the same...But US futs gapping up has obviously thrown a spanner in all bears works...Let us see how this works out..
Tough trading..

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Past several hours, I've been reviewing market data and charts..I've also been reading several blogs and forums...And overall, what I read is scaring me and making me question my earlier views in past few posts where I was toning down on my bearishness...

I see that everywhere, the bulls have started hoping against hope again...And on
what basis? That things cannot be TOO bad...HOW did they reach such a conclusion?
Price has done absolutely NOTHING on a medium term basis...So WHY bullish? I am pretty surprised...At best I expected some neutral sentiment..Price has not moved anywhere over past 3-4 months..So because of this one would expect more neutral sentiment...The bulls are back though...Last week pushed sentiment to the more bullish side...Maybe they will be right and we will push higher up...I continue to be skeptical But lets play point to point...

Best.

Saturday, March 21, 2009

Weekend Thoughts

A more objective look at things that transpired last week and also a look at possibilities for next week -

As I alluded to in the previous post, the last week in US was QUAD EXPO week - Basically everything expired..We had a lot of games played by the market makers...A lot of manipulation...Yeah I know lot of you dont believe it...But the markets are manipulated! So big rally in US = Big rally for our markets...Nothing else...Did something good come from our side of things? Nope...Okay instead of looking for reasons, lets see what can happen next -

CHARTS - See those posted in the posts below this and the next.

So what I see is - as I think I explained last week, a move to 2700 area is almost surely on the cards...After that, it gets fuzzy...We could make one more move back up to 2820 area at which we have to see what happens...OR we break 2700, 2660 and continue lower. At this point since there has been a lot of base building at 2500, we might not break it any time soon...Maybe never...

So taking it one step at a time...Maybe the bulls are right and we pullback a little and mount a huge rally..But I dont see it yet...I will see how we react after our pullback and expiry before making these decisions..

I am an intermediate term trader...Still I do try to identify very short term opportunities which I do post here..You'll remember the wedge, the flag pattern etc..All of these made for excellent intraday trades....I do trade them also when I see some good stuff like that...Doesnt come all the time but when they do, its worth trading them...

Which brings me to my next point...There has been some debate on anticipation vs. reactionary trading...And Sajal raised some good points to counter..

Really you think about the wedge I posted earlier or the flag breakdown..Both of them worked perfectly...It was anticipation...correct? The point is, when will you react to them? 20 points lower? :)

Okay another example, in the charts in below post, we have 2820 area as strong resistance to overcome right NOW because of the falling DT line...NOW, IF I short here with stops above...Tell me - Reaction or Anticipation? :) Hope you are getting my point...And this is not TA? Think about it.

There are different methods to make money in markets...Do your own thang..But dont be so quick to dismiss others...

Most traders lose money some time or other..The main problem I have is that whenever I do this, I do so in front of a large audience in real time :)

Think about this also a bit...

Best.

Friday, March 20, 2009

Do ya feel LUCKY PUNK?

WELL DO YA?




:D

Bulls get off this train with what you got so far...Thats ALL I have to say...Sure you might get some more upside...But dont fall in LOVE with the UPSIDE..

What you got already is way more that what you should have....

AND Thats all I have to say...

I read all the comments in the chatbox...I am happy with what I read here and elsewhere...People are ready for a new bullmarket..Already...That itself tells me you all are wrong...way wrong...

And when I look at my charts, its like the icing on the CAKE.. :)

For those that did not know this last week wast QUAD Witching week in US where pretty much all derivatives expire this week..Its a very rare occurance and so lots of manipulation comes up...DO you guys think Indian markets went up on their own accord? If so, GOD bless you guys...

Cheers to All...And have a GOOD weekend.

I will most my more sane thoughts later when I am NOT this inebriated... LOL :)

Ok you guys, understand this post is more of weekend fun that anything else..I dont mean offense to anyone...Its just not my style...Just thought its a funny post to do....I will do a very sane post tomorrow...with all my thoughts..I have to give this past week to the bulls...But I think next week belongs to da bears..

GO BEARS!! :D

Best.

Thursday, March 19, 2009

What's the Beef?

Okay guys..Whats going on...I have been really really busy the past several days...Still I am trying to come here and make some kind of update...I obviously missed to do this yesterday...Tried to say something in chatbox..And invited the IRE of some 'guy' there...

Also some folks on comments also are saying some stuff..See guy and those on comments, I dont disagree with you...I use TA too...What I use might be different from what you use...The only thing I see wrong in what I did - I missed the last 100-150 points on the upside...Now you leeches hold me to that..yeah..I know..You guys will do that...See there are different methods of TA and trading...Respect other methods too...I might be using a contrarian approach..But I do that coz thats what I am comfy with...

So okay...Have your laughs..I am wrong for now..And I am feeling the pain..BUT...

Overall I see very little reason for the market to continue up from here..If it does, I will abandon my bearishness...

Well what can I say..When I go right, lots of folks come out and praise...Some bugs wait for things to go wrong, then they come out...they however disappear when things go right again...I have been seeing this for the past several months...

You guys think I dont use money management or some kind of risk management? That was the aim of my post yesterday..Unfortunately it seems to have been too much to comprehend for most folks...Nothing I can do here...

Coming to the markets...I been wrong..No doubt...But looking at stuff today, I dont see any reason for bullishness to continue..In fact I see a good amount of downside..Very closeby...

2 scenarios I am looking at -

1. Bear Scenario - We decline fast from here, break 2770 first, 2700 second, 2660-2600 third and then touch 2500 strong support. Breaking 2500, while not impossible, seems unlikely for now...But if we do, we shall test 2200-2000 range very quick.

2. Bull Scenario - This one also portends a drop from here...We need to see where we can take supports...Will it be 2700 or 2660 I dont know...One of those areas, should support..And then we should mount another much stronger rally...

Seriously I do not know which one of above will play out...Its a toss up right now...Play level by level..Thats all we can do...There is some very bullish signals coming out...But the best thing for the bulls would have been to go down and set some really good divergences..But you know bulls..CHARGE..Yeah..This is going to be some tough trading...

I am however becoming more medium term and long term bullish..This I will give to the bulls...

Short term however...No cigar!

What I did over past few days..Reduced shorts considerably at around 2750 as I said in earlier posts...I added back some yesterday...Overall not so great of trades but lets see this to completion. See the charts below for what I am looking at.

Charts -





And as Tom Hanks said in Forrest Gump,

Thats ALL I have to SAY about THAT... :)

Best.

Wednesday, March 18, 2009

Words of Wisdom

"The market can remain irrational longer than you can stay solvent"

As always, it is vital that you size your positions appropriately and not focus on earning back losses, but rather only focus on the market now and going forward. Maybe you'll get lucky and the market will move your direction next time, but over time a lack of risk control will ruin everyone.

Best.

Tuesday, March 17, 2009

Wednesday

The wedge worked very well yesterday for a short term trade...Hope some of you banked some coin...

Today also the US market pushed up..I like the action because it made people more bullish...Sentiment is important..I think its very very close to topping out..

Our market..Tricky..Today we should retest the area of the highs again..Dont know if it will go above...Yesterday I reduced on my short exposure toward the end of day..I think I mentioned earlier that I would do this..Still short but not so much that I cannot add more..

So thats the plan..The top of the falling channel is at 2830-2840 range..So that should remain stoploss for shorts for now..Please note I never put in a hard stop..Instead will have a mental stop..

As for the market moves, there are few different possibilities...Infact the more bullish one was to drop to 2660 range over next couple of days and mount one more rally upward. Dont know if we get it but overall I would say we are in a topping mode right now...Lets see how it plays out.

If I see something worthwhile intraday, I will post.

Best.

Monday, March 16, 2009

Intraday Chart

Looks like a wedge but not very confident -




Breakdown of 2750 might get it to 2700 first, 2660 second and last 2600 strong support.Obviously will not happen in one line or in one day.

Best.

Bank Nifty, Reliance and the Broader Market

Some requests from viewers:

Heres Bank Nifty -



Heres Reliance -




Lastly here is a look at Nifty again.
Nifty -



I have to admit I have been wrong this time in shorting the rally too early..I have to give kudos to Ilango for calling this correctly i.e an ending diagonal...

Maybe a move down from 2780-2840 range to tag 2500-2450 range again. After which we shall see a much more sustainable and bigger rally.

For now, I am in damage control mode regarding short positions held. I still think 2500 will be seen again. But I am considerably less bearish than before..So will look to reduce risk and trade lighter. I would recommend same to everyone.

Best.

Sunday, March 15, 2009

What I see.....

12:30PM: I said we'd test 2730, and here we are testing it...May sell off from here..Infact I think good odds for it..Above it and we can run very fast to 2750 and maybe even 2780..Low probability for now..

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11:00AM: Okay so initial upmove over..And a pullback..It looks like its taking support around here..So it will try again 2730 range...Need to see how it reacts there before determining what can happen next..I added bit more to shorts in the am..As I said earlier, I was 50% short earlier...added bit more today...Not yet at 100%...I will reserve that for IF we trade at around 2820.

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Before I get into the charts and forecasting...Let me say some stuff...Most of you guys think that when I come out and make a statement like market is going to rally and test so and so a figure or market is going to fall and test so and so a figure, I look into my crystal ball and dole that out to you..OR that I am an operator moving the markets :D ..OR well that I am bullshitting you...But well that is NOT the case...Absolutely NOT...There is a lot of study that goes into this forecast..LOTS..That most of the normal folks wont be able to wrap their head around it!..LOL..I am delusional..A little bit crazy...A little bit paranoid...And very dedicated to the market that probably Mrs. Lee will soon drive me out of the house! LOL :D ..Thats probably why :) Not trying to be coy..But just trying to say - Dont take this stuff for granted..There is a lot of effort going into this..I am not God..I am wrong more often than right..But thats what we have exit plans or Stops in place for..But when I am right, I WILL rock and roll...And thats when most naysayers come out I notice...like last week and before :) So today, I will try and show some of the stuff I am looking at..

Its a very very interesting juncture...Infact I'd call it the most interesting and confusing juncture since the BIG BAD BEAR began in Jan of 08. So lets get into it...Guys you can comment, you can criticize, do whatever you want. I love reading comments..I love reading thoughts from others...Whether its FOR or AGAINST..so pls post..With reasons ofcourse.. :)

The only thing I cannot tolerate is -
1. Blatant criticism about positions without ANY reasons.
2. Questioning about positions AS IF I am your financial advisor..Which I am NOT!.

Anything other than above, please guys, I urge you to post..Post charts thru stuff like imageshack or jing..I will comment..I will help if you guys are looking for help...Anything...

Ok lets start then, we shall look at some charts first with my comments annotated on them...And then we shall go into my thoughts on what market shall do this coming week -












Okay...now what do I think...I feel..that we have 2 possibilities..Test 2760-80 odd and move down for the finale capitulation...I dont know what the reasons will be but in TA we dont search for reasons :)

The 2nd possibility is that we go down from around 2720-2740 odd to test 2660-2600 range before pushing higher up into the 2810-20 range...before again the finale capitulation move..

The last possibility - I give low probability to this but as traders we need to have this always in back of mind - Is that we go above 2820 and 2850 and sustain there..This will mean a move to around 3250 first and then above than 3600 and 4200..LOL...Look at the charts objectively and you will see what I mean...

For now, I do remain bearish but I will be ready to change on a dime as we might be near to a MORPH point....More than Ever!

Comments welcome as always.

Best.

Friday, March 13, 2009

Wrap Up

So I did absolutely nothing today..Which is also why I did not post in case anyone was wondering. If I dont post, assume I did nothing.. Its either that I am also confused and thinking what to do. Or that I do see anything tradeable in there.

For me yesterday was a day I could do nothing or very little...No pattern reliable enough to trade. I actually have some more leeway to add shorts as I am only 50% short now.

Its basically what we call a narrow range day even though it was a huge gap up..atleast what I would call an NR tradable day..Almost for 3 hrs or so, the market just stayed in a very narrow range...Absorbed all buying and selling and then moved up - short covering or buying I do not know..But I would guess a lot of shorts may have covered.

I wanted to hedge if possible, but market did not pullback enough to do that. I wanted to also add shorts if possible, but market did not rally enough for me to do that...

So next week, I will be looking at 2740 first and then 2780/90 next to add in some shorts...If market does look like it will close above 2780/90 any day, I will take my lumps and close this in a loss.

We could move straight up to the target and fall. OR we could pull back a bit to 2660 range and then try to rally up to 2780 again. Essentially the possibilities I have drawn down in below post. So its all different possibilities.

Its a moving target - Will watch next week for more clues. We all trade as per what we see. Please do not question others trades - this will not be entertained in this blog. After all I have to assume everyone reading this is intelligent enough to know when they are wrong - by themselves. I do know this and I make my own decisions - Just a cautionary request to all. I saw some challenging and questioning on cbox lately - Its not good. Trade your own stuff - If you are MAN enough, then post your trades. If you get it right, well and good..If wrong, well another trade will come - Take your lumps and move on.

Best.

Thursday, March 12, 2009

Another Squeeze on the Cards?

Looks like it based on the huge strength in all markets. And maybe this one will actually stick. As of now I dont have a clear trading plan even though I do want to hedge all my shorts with options - This rally may have some legs - I do not know at this point...Whenever the trend changes, its tough to get on board. At this moment I do not see anything to suggest a trend change - But I guess thats how something new starts always.

If market breaks back into the triangle, it will invalidate it and the bearish case will weaken considerably. So thats my line in the sand right now. Either case I will look to hedge today on a pullback.

Chart -


Best.

ITS WAR - Pure and Simple

Everyday I prepare for trading in the markets. During the US market hours, I watch the waves, try to understand where its going. During the time in between the US and our markets, I study different views, blogs, boards to get more ideas and thoughts..Not that I follow anyone but its to get different perspectives on things..Mostly I plan the trade and trade the plan. Before entering a trade, I have a plan - Meaning what will I do IF market does this? What is my exit point? What is my add-on point? At which point will market prove me wrong? How do I manage this trade? And a very important question - What is my RISK on this trade?

Most newbies ask me - what do you do to become successful in the markets. I dont have an easy answer to this. Markets are dynamic. There is no holy grail out there to making money in the markets. Its all a matter of experience. A matter of having a strong mind to weather out minor bad phases. A matter of understanding money management and risk management. Above all, you need real time experience trading - Its no easy feat - Hours and hours of effort is needed. One thing new traders always think about is WHAT is the profit potential of a trade? They never think or understand the concept of - WHAT is the risk potential of a trade? See trading is not about charts or TA alone. There are many factors which I have tried to explain above..

I always say - 3 things - Mental frame of mind, Money/Risk management and finally TA/Charting/Some kind of trading method or system. All 3 need to be there, all 3 need to gel together. Its a process...And each trader needs to evolve himself or herself into such a state. Its not easy but can be done.

When I trade, I feel like its a WAR. There is no concept of investment when you are trading in and out. In fact, I find it hilarious when some folks say they invested in calls and puts..LOL..Do you know what investment is? Where is the wealth creation? Trading short term or in FNO is a zero sum game. I take your money, someone else will take my money...You need to be ahead of the game to make a mark. The sharks are out there to take your money. Its WAR - pure and simple! :)

Maybe putting cash into stocks Buffet style so as to earn dividends - Yeah this is investment...Not what most people do or can do.

So when you go out to trade each day. Prepare for WAR...Bulls and Bears make money..Pigs get slaughtered :)

Charts and Views later.

Best.

Wednesday, March 11, 2009

THE GAPPER

12:30PM: Okay..Anyone shorted the pop to 2620? I added to shorts...Now hold and wait..Let us see..Good night all..Will try to post some charts tomorrow.
EDIT: Well on looking at intra charts some more, looks like we good have one more good push higher upto 2640 but not sure...More tomorrow!
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11:40AM: I dont see any intraday patterns worth trading today...So no charts. I am also not sure what will happen later today...If we do infact stretch up into the 2620-2640 area, I will look to add some more shorts.
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10:40AM: Hmmnn...Looks like shorting the open would have been a good trade..Nuts..Well I expected more strength today :) No trades yet today.

Something of interest and what I like for the BEAR case - Sentiment turned visibly more bullish over the 2 holidays we had...Based off a number of forums and blogs I visit..Pay attention here...I have been saying for a while we have to have one more low...Where exactly I do not know :)...Trade from point to point for now..
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After the Open: Well not that big of a bounce as I expected..But there is still time..Done nothing so far. I see 2620 as first point we need to get above on on a hourly candle. Then 2660 - This is for the bullish case..For bears exact opposite today...I am just looking for spots to short at now...

How far do you think current bounce goes up to today? Comments please..
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Uploaded the Zurich Axioms again -

The Axioms

Anyone missed reading this last time, please do. Its an awesome book necessary for everyone trading in the market..
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So looks like its a big gap up today for us after the 2 day holiday. Well got to take it as it comes. I will wait to see how market opens and trades today before making a decision. I see a few possibilities but would like to watch a bit before making any decisions.

Hedging against shorts is one thing I am thinking of. The other is to closing the shorts at loss and trying again higher. The last one is ofcourse add on to shorts at higher levels and so get to full short position size.

A decision has to be made :) More thoughts later.

Best.

Tuesday, March 10, 2009

US Bounce

Big bounce in the US markets...Will this one stick or fade like everyone else? My view - MAX upto 742-750 SPX is possible after maybe a pullback tomorrow..So pullback from 720 to around 700/690, then again one more move up after a little into the 740 area max..It may not even get that far...This is how I see it happening. Another classic ABC pattern before next move down - Also this should be the FINAL move down.

Now this kind of puts a quandary on the shorts I am holding now. Maybe the US market will be weak tomorrow and bail me out but I am not sure. But I am not too worried about this..Either way, I see this wonder bounce failing soon. And since I am at something like 50% of my planned short size, I can always add more if we bounce higher...But its a moving target - will see more on Thursday morning.

Also lets see how tomorrow in US markets plays though.

Best.

Sunday, March 8, 2009

Week Ahead

After the close - So as expected the 2560 gave support which is why I said below, intraday guys can take profits...So this sets up a creek, break below 2560 will mean a quick decline to 2500 where we might bounce a bit again...Next 2 days US market action is key here but I expect we break it sooner than later unless something really unexpected happens on the news front..
Cheers...Have a good couple of days off front the market!
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12:10PM Update - Sometimes TA (and my calls :P) even amazes me :) Again I called this in realtime below...You guys owe me big time...j.k :)..If you are a day trader, take some profits now...I am planning to hold these shorts through the holidays..Good Night to All!...


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11:40AM Update - And THERE you have it....Breakdown baby...Breakdown :)
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11:00AM Update - A look at the charts...Added bit more to shorts...


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10:15AM Update - Entering first small tranche of shorts at around 2583..Just 30% for now...Watching for now...If we get a good bounce to 2660, I will add to these so that I get at 60% short...Probably wont do more than that today as its risky.

Risk averse folks - Dont follow me on these shorts..As I said before, the 2 holidays are a problem here...More later.
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Before the market Open - Most of my thoughts are on the charts.

Trade plan is to start shorting asap. Looks like we have a lower open in store today even though I am not sure why exactly...So looks like I might have to chase short entries today...But whatever...I will try to get short in small amounts today. Remember the next 2 days are holidays..So dont over commit to anything.

Also remember - We are building/or very close to building a very important bottom...Timewise as I have been saying, March end - April mid we shall get an important low.

Intraday comments will follow later.

Best.

Saturday, March 7, 2009

One Year...

...Since the inception of this blog :)

My activity in this blog has been on and off at times..Even thought about quitting at times but came back strong..Started some new stuff but couldnt sustain that without harming other sides of the equation...But still, recently my blogging has gained more momentum and purpose and I am happy with that...Hope it continues the same way. I have always told my readers, if you like this blog, please tell your friends also.

I have always wanted to make this site more of a participation and sharing hub - something like evilspeculator.com here in the US..Hope my dream comes true...Need much more commenting and participation from you guys...

Join me in Wishing this blog a Very Happy 1st Birthday and many more to come! :)

Best.

Friday, March 6, 2009

The ABC

Wow 34 comments in earlier post...Not exactly for the reasons I had in mind but it was good entertainment last night. I will continue to post the same way I always have...Naysayers or not...Anyway how was that bit of TA for you? The ABC upmove I called for...2620 on the dot..Yeah I'm an operator hehe...I will explain more on the ABC target toward end of this post.

Coming to all the hulabaloo yesterday...I guess when you have money on the line, its natural to become a bit emotional. When positions go my way, I cannot help but feel happy right? I am only human. I try to control emotions during a trade but after a trade gets over, I think I have a right to crow a bit. If anyone does not like it, please scram..This blog is not for you. When you have money on the line, when you put your trades on the line, its your credibility on the line...I dont know if anyone else has the guts to do it..Or follow up. What I do in this blog is unique in its own way..Its based on ACTUAL Trading..Unlike other big picture analysts who make viewpoints which are not tradable.

Comments - I enjoyed them a lot last night...And today morning...Lets keep the comments and ideas going...If you have thoughts, ideas etc, please do post them in the comments section...I am always on the lookout for new ideas, views, stock ideas etc etc...Most of the time I dont get time to look at different stocks so things like that would be appreciated in the comments section..

I think Neil compared this to evilspeculator.com...Wow I am fan of that site and happy that someone thinks I am close...But miles to go...

Okay now coming back to the ABC up target I called yesterday...Whats this Voodoo huh? Nothing simple ABC structure at minimum...Even though I did not trade it, I enjoyed that move after covering the short...

Explanation goes like this - After the downmove to support area 2540, it was natural to expect an upmove..This is why I covered. Next after that, a deep retrace...So see the first upmove was clearly impulsive. And so after the downmove taking support at 2560, we had an equivalent upmove leg again to 2620 and higher. So at minimum we have 3 waves in every move...A-B-C. If this is developing into a more bullish wave, we will have 1-2-3-4-5. Right now its too early to say but yesterday, the odds of having atleast a 3 wave move was high which is why I said we can get to 2620 and above...




Just thought I'd explain a bit on my call yesterday..Not sure if it sunk in..Some things can only be explained so much :) but if any questions, shoot in the comments section...Remember I dont have anything against constructive criticism...Its baseless accusations that I or anyone else for that matter cannot tolerate.

We shall see more on market later...Have a good weekend all.

Best.

Thursday, March 5, 2009

Intraday Update - March 06

1:10PM Update - Almost amazing isnt it..How the markets are following my ABC path given below..LOL..So much for my TA-less posts...Are you reading, you naysayers?
GOODNIGHT.

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12:30PM Update - If we are doing an ABC pattern off the lows, 2620 is first target Nifty spot...2640-2660 next. We shall see if we get there....I am going FLAT into the weekend..And as I said before, I am stumped by the comments here...Best.

Chart-




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12:00NOON Update - Not saying anything else here..Not doing anything more here...I dont see a safe trade to take here...Also after reading the comments section, I am stumped...I have commented there to one guy..please read and comment also if you missed it before...Frankly I am stumped..To be sincere to myself, I looked back at the last week worth of my posts, I saw one talking about the 5th wave, I saw one about a real time flag breakdown, I saw one about the triangle breakdown, indepth analysis about this, targets, wave counts...etc etc...A lot of TA in my book. Frankly I dont know what this guy is talking about in the comments section of this post. Is this not TA? Do I trade on my whims and fancies?..I dont know what is missing in TA over last several posts...The only logical thing about the post and criticism is jealousy or a big loss he made on the long side...Same as the CALM-COOL guy and the Anonymous guys from before...Okay I am waiting for other readers to comment here...I am stumped for now...Good night.

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10:20AM Update - Okay I covered - 2530 odd..Almost 100 pts profit as I said yesterday I entered at 2630 odd if you remember..One of my best trades of recent times...esp coz it came in one day...Anyway I fully acknowledge that it can go lower to maybe 2490-2450 range. But enough is enough..Taking profits here.

One of my main qualms is the 2 days holidays next week Tuesday and Wednesday..If this was not there, I would have been much more sure on my positions but now I might just do nothing else and wait till Thursday...Still a profit is ALWAYS a profit!

Best.

Thanks Sam n Shaq for the comments.

Best.
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A little after the open - Well I am totally confused right now...My gut is saying to take profits right now...My logic is also saying something close..But still I am not sure...What should I do? :)
Any thoughts?

Best.

At The End

How does the chart look at the end of day -



I have to crow and thump my chest a bit here .. lol .. It was a beauty of a pattern - bearish flag breakdown - Called here in realtime. I also made a very good trade yesterday and I dont think its over yet. This should put end to doubts in anyones minds on whether TA works on not.

So what next?

The ART of Sword Catching - I see a lot of ppl doing this on a lot of forums and boards - Be careful guys..This is no ordinary market. Dont know why you have to bottom pick/sword catch - It has never ended well for anyone doing this. Just my thoughts but wait for some more time before bottom picking. We all think that 2500 will hold...What if it doesnt? We will have a panic crash. You dont want to be holding longs if that happens - Believe me!

The decline seems to be accelerating now. We still seem to be in wave3 of 5 to the downside. We will have a wave 4 one of these days - I do not know if it will come from 2500 or 2400 or 2300 - So not going to trade this...Holding short for now.

Best.

Wednesday, March 4, 2009

Charts and Intraday Commentary

12:00Noon Update - Well there you have...Breakdown which I called in realtime..Hope you guys enjoyed it and also made some coin :-) We might consolidate from here - a little maybe - but I think market is saying it wants to go much lower...Will not be a straight line ofcourse...I am 50% short from today morning..Ofcourse I wanted to be at 100% eventually but not doing anything more today...This shows why scaling into shorts is important - instead of waiting for higher levels.



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11:05AM Update - See chart below...Could be important..I have increased shorts to 50%..Might not do anything else today...



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10:10AM Update - Starting the short campaign with a small position...As I said before, I am just scaling in now...First 25% at 2630 area...More later...I will be shorting more as time goes by today...Not going to post level by level

I am surprised at the lack of strength today...Anyone, any thoughts why?
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I dont know how far up we go...Right now, global markets look week. Need to wait and watch how our markets react. Either case, I will begin the shorting campaign today..Slowly scaling in like I did before also...Keep watching this space for intraday commentary.

Daily with some important comments outlined on the chart -

NIFTY DAILY


Best.

Interesting....

I find it quite interesting as to the timing on how they release these stimulus news :)...In the morning I got up and came to know RBI has cut rates again..

I wonder on what basis they do this? Was it preannounced? I dont know...Did they see something in the markets to do this? I dont know...

Its just a side thought I had..But again it shows that in trading, the charts are best to be relied on..Ignore all news...Still I know many new guys focus on news, tips, rumours etc etc...I have always told people like this - Quit now Else market will make you quit....I generally watch cn(BS) for entertainment...nothing else...When market goes down 5%, its fun to watch these guys run around like headless chickens...lol

Okay anyways coming to the market...As you could see from my realtime updates in post before, I covered all shorts...It was very good timing...I still got it..hehe :P
And I also said I started scalping on the long side. I do have a small long position even now which I did not post here as it was a risky trade and I did not want anyone else to get into trouble because of me. But nevertheless, I will close this today if we do get the anticipated rally.

Next, I will go back to shorting mode again...Scaling in as I explained before..This time range for scaling in will be 2680-2740...maybe a bit higher also...The plan is to keep selling those little rallies of hope.

Anyone still holding some short term longs, its a good opportunity to get rid of it and go short...The RBI has given us this chance...Dont miss it :)

Post with charts and then later intraday updates etc will follow today.

On a sidenote - I would like it if you guys comment more...In the posts...Does not even have to be about the posts...Just tell me who you are, what you do etc..Just nice to know who are my faithful readers :)...And then we can also get into discussing about the markets and moves and trading..Why not? I mean the comments section can be used as a forum also....I am also thinking of adding in 'disqus' over here..For those that dont know, it makes the comment section like a forum thread which is pretty good if the discussions get more active...We'll see

Okay later then!

Best.

Tuesday, March 3, 2009

The Fifth

12:45AM Update - Okay guys...after closing shorts close to the lows of the day so far, I am trying some scalps on the long side...Its too much work to post these trades here and also follow up on them since timeframe is very small..So I do not plan to do so...Cheers..Have a good trading day. I think we will get chance to reload shorts higher up around 2700 maybe even higher...Bye!
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11:45AM Update - Got out of all shorts at 2590 odd...I think we can still go down to 2550-2500 range but I will err on the side of safety...Good profits...So Cheers!
Not planning to go long for now...Not positional definitely...Cannot rule out a bounce to the 2680-2740 range in Nifty SPOT...So I might intraday scalp..Nothing else...Best!
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It is said that wave 3s are panicky, emotional moves where the majority of the selling happens and wave 5s on the other hand, are just slow descents/grinds down born out of apathy toward the markets. The analogy can be of "boiling a frog".

The fifth wave also brings about a wider acceptance of economic woes among the general public..Everyone knows things are bad...Everyone knows market is never going to recover again..Everyone knows we are in a recession OR worse a depression.
(compare this to sentiment when we were at 6350)

Above sounds familiar?

Yep where we are right now...The 5th wave of C...Which means the final decline before we get a very very significant rally upward. Maybe even a doubling from 2000-2200 odd levels wherever the market actually bottoms.

Within this 5th of C, we seem to be running in the 3 of 5 of C. See charts below and should make things more clear...

I expect this current selling wave might not breach 2500 so I will look to cover my shorts if I can...And try to again reshort higher for lower targets which cannot be determined accurately right NOW. If the market does not give me a good entry, I will not do anything but instead will plan how to trade the next big move up....Thats probably where the next BIG money will be made. Moving plan for now but I will fine tune it today and mention in the intraday updates.

Chart -


So thats my rough plan FWIW...Its a moving target and so I will adjust my trading accordingly...Always the last bit of declines will be tough to trade successfully.

My first target of 2550-2525 which I have been calling for long is very close. :)

PLEASE NOTE - VERY IMPORTANT: Even though I said there can be a small bounce at 2525 area and even drew the same on the charts, there does not have to be one...It can be a straight move down also - simple capitulation. I would not be surprised with this. The only problem I have is HOW to trade it..Just hold onto shorts or hedge somewhere in between? Well whatever I do, I shall post intraday.

Best.

Monday, March 2, 2009

Fear of Regret

1:00PM Update - Dont know...I dont see much reason for me to cover the shorts I have left. I can be wrong. As I said before, you can cover and try to reshort higher if you can but I am sitting tight...If we rally into 2740 range tomorrow, I will add back the shorts I covered yesterday...Maybe the last update for today. :)
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11:45AM Update - Well we got that first obligatory bounce to 2680 and decline back. Now we might be setting up a good bounce here into the 2740-2750 area. So risk averse folks close shorts and try to short higher. I might just sit tight. Wait and watch whats going on. 2740-2760 if we get there should be a good short for those not already short.
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I will start first with a section from the 'Zurich Axioms'

The Second Major Axiom
ON GREED
"Always take your profit too soon"

Amateurs on Wall Street do it. Amateurs in poker games do it. Amateurs everywhere do it. They stay too long and lose. What makes them do it is greed, and that is what the Second Axiom is about. If you can conquer greed, that one act of self-control will make you a better speculator than 99 percent of other men and women who are crambling after wealth.

Always take your profit too soon, the Second Axiom says. Why "too soon"? What does that puzzling little phrase mean? It refers to the need to cash out before a set of winning events has reached its peak. Don't ever try to squeeze the last possible dollar from a set. It seldom works. Don't worry about the possibility that the set still has a long way to go -- the possibility of regret. Don't fear regret. Since you can't see the peak, you must assume it is close rather than far. Take your profit and get out. It is like climbing a mountain on a black, foggy night. The visibility is zero. Up above you and ahead of you somewhere is the peak, and on the other side is a sheer drop to disaster. You want to climb as high as you can. Ideally, you would like to reach the peak and stop exactly there. But you know "ideally" doesn't happen often in real life, and you aren't naive enough to think it is going to happen now. So the only sensible course is to stop climbing when you have reached what you consider a good height. Stop short of the peak. Stop too soon. Sure, when the fog clears and the sun comes up, you may find you're less than halfway to the top. You could have climbed a lot farther. But don't nurse this regret. You aren't all the way up, but you are up. You've made a solid gain. What's more, you've made it and kept it. You are a good deal better off than all the blunderers who scrambled blindly to the peak and toppled over the other side.

This happened to a lot of stock market speculators in our Indian markets also recently!

Carrying out the precept of the Second Axiom seems to be extraordinarily difficult for some. The main difficulty may be the fear of regret.

The fear is particularly common and particularly intense around the stock market.

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Okay the market - Well the triangle is now officially broken. I am not going to post a chart of this today. Most blogs on the net already have this so you can look that up elsewhere.

So what next. This break gives a target of around 2250-2000 odd on the Nifty. Does not have to happen but thats what this breakdown is targeting. It will not happen immediately or in a straight line - Expect sharp rallies in between. BUT its not time to be bullish yet...Not yet...As I have been saying for long, bottom will be in March last week or April mid to end.

We can target 2525-2550 area first and maybe then have a bounce to the downtrend
line of the triangle...Or back to test the breakdown point of the triangle before collapsing again. Again this too will not happen easy - It will be a slow and tortuous ride.

I am not sure yet what to do with the rest of my shorts. I will wait and watch the markets today before making a decision. Maybe do nothing at all.

Why did I post the excerpt/axiom above? Well just wanted to say its okay to take profits early as a follow up to my earlier post. I used to regret doing this a lot..GREED is a very strong emotion just like FEAR(the 2 primal emotions that drive the stock market)...But nowadays, I tell myself - Its just another trade! Believe me - having this attitude in your trading will improve you as a trader by a lot.

I will post intraday updates later today.

Best.

Sunday, March 1, 2009

Round and Round - Part Deux

1:00PM Update - Covering around 50-60% of my shorts here..Mostly the puts and some of NF shorts...Reasons because I want to go to sleep and dont want to watch the market here - its like watching PAINT DRY! :P AND ofcourse profits are always profits!

Next thing is looks like 2660 is holding for now...so covering and watching seems good and prudent...

Lastly I dont like this action...We could be basing for a quick move upward. Not sure anymore..SO when in doubt, be safe..We shall see tomorrow what to do with the rest of the shorts..This relative strength in our markets has me skeptical for now..But not fighting with the market..Lets see if we are setting up an important buy very soon. 2500 area obviously remains important medium term. Still holding few NF shorts.

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11:10AM Update - Okay market is hovering around the 2700-2690 mark so far. I am not convinced this is the low of the day. I think we see more downside today itself. Be careful with bottom picking. Either way I want to cover some of my shorts today. I will wait and watch for some more time before taking a decision.

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Okay next our markets for today. Might be pretty bad with the US futures also looking down. I will post intraday updates in this thread itself.

The triangle structure spanning the past 4 months has been lending support to nifty so far. Today might be the day it finally fails - A close below the line will confirm it. You can see how they stick saved the market past 4 sessions to avoid a meltdown. A daily close below 2730 will have me interested AND intraday move below 2650 will bring about a big move.

A gap down is also almost surely assured today. I think the selling climax I was looking for so long might finally be here :)

Position updates if any - I will state them in the intraday updates here itself.

Chart for now -

NIFTY DAILY


Nifty Weekly Comments - Stochastics on a FIRM sell. I trust this indicator a lot - people who used to visit my blog from the beginning would remember more on how I used to use this for trading.

We might be close to a selling climax. Not going to try to pick bottoms until I see some bullish confirmations or unless we get close to 2200-2000 NIFTY levels..

One other thing - One bullish looking stock that I think looks interesting is CAIRN. Nice volumes and a possible triangle breakout. After a long time, I am looking at a stock with a bullish perspective. Keep an eye on it. Not sure if its a good idea to start scaling into it now itself or wait a bit more...I am also bullish on OIL..So CAIRN is a good proxy play.

Intraday comments later.

Best.

Friday, February 27, 2009

Round and round we go....

"And those who were seen to be dancing were thought to be insane by those who could not hear the music...."

-- Friedrich Nietzsche

Well folks, finally what I was expecting to happen for some time has happened. We have broken and closed below the Nov lows on the SPX and on the DOW..On the DOW by a big margin.

Chart -



Why our market is still showing resilience is still a mystery to me. Manipulation? Or just a delayed effect? Either case, my gut is saying we touch 2525 soon.

The other side of the coin is the low which I expect will come sometime in March or worst case early April may just be the BUY of a lifetime. Its coming but not yet.

We shall see.

Have a good weekend...Ciao! :)

Best.

PS: Any ideas on how the RIL-RPL merger might affect markets on Monday? To me something smells fishy...But I'd appreciate thoughts from others...

Thursday, February 26, 2009

Interesting Juncture

12:45 PM Update - Okay again lulling us back to sleep. Be alert for a quick move. 2730 on upside and 2710 on downside...Break of 2710 and we can move quick to 2660. Maybe thats it for today. Be careful out there. Consolidation at the lows in this kind of flag pattern is never good for bulls. I did not do any trades today. Still holding to positional shorts from 2780 odd. Last update from my side today. Goodnight!
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11:30 AM Update - Well well what do you know...2740 is broken...Interesting...Next support is ofcourse 2660. Break this 2660-2600 range and I think thats it for the bulls. This is typical market maker tactics...play the bullish side...or just let the volatility die down for a long time...lull everyone to sleep and then trigger move in one direction - This makes sure that very few players are on the bus for the move...And we all miss the move...This is why we need to be very alert in this market. :)

ALSO the inverse HnS I talked about before is also invalidated now.
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We are at a very interesting point in the markets...I cant believe that US market is so close to breaking the November lows and we are no where near it. I think this can get resolved very very fast - knowing our markets. VIX is down for now but things can change very fast. We are looking at a big move soon. I still vote for down...

Okay now coming to the levels. 2740-2720 is important support. 2800 is resistance. Above 2800, we can run quick to 2860, 2880 and 2920 areas. There is a very big intraday inverse HnS developing which projects to 2900 odd. So thats a danger point for shorts. But I am holding to my futures shorts and some puts I entered yesterday. The timing was bad on the puts but the futures shorts are looking good.

As I said before a move above 2920 means market is turning more bullish and I think the short strategy will have to be abandoned.

I see a lot of confusion in the markets now. And the market makers are using this to move the markets. Yesterday was a classic example.

I will post some more a little later if I see something important developing.

Also charts will follow later.

Best,
Lee

Expiry Fun

Yeah...2800...Someone wise told me never to trade on expiry days :) What a move in the end...Someone seemed desperate to get it close to 2800. Well tomorrow is another day - lets see if we get follow through.

The intraday inverse HNS has almost completed target BUT there seems to be another bigger one developing that could target 2880-2900. Danger for shorts. But let me look at some more data and charts before posting again later.

Cheers,
Lee

Wednesday, February 25, 2009

Building Cause - Intraday Updates

Okay last I promise :) ... We look to be resolving oversold condition intraday right now by going mostly sidewise..I wish I could stay up to see what happens but going to sleep..Good night!

Okay one final EDIT - I am dipping into some 2700 March PUTs right here. Very few. Scaling in. Will add more tomorrow.

EDIT: 11:20 AM IST : Hmmnn...Interesting position...Looks like we are back at 2740...Now we can take this on upside and never look back with a good rally or totally fail here..Its basically a toss up right now. I dont think I am going to do any trades today. Sitting with my shorts from 2780 odd yesterday. Goodnight All.
I intend to continue this tomorrow. So expecting more comments from everyone! :)

EDIT: 10:30 AM IST : Okay it looks like 2740 area is providing support for now. See chart below which shows why and the confluence of support in this area. For downmove to continue, we need to break this and then ofcourse break 2680-2660 as is clearly visible below in the chart. I expect we can try to move a bit more higher as long we as we hold 2740. I might add a few puts if we do manage to go higher - so far, I have done nothing today.



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I am starting something a bit new here. I.E a thread each and every day for intraday updates. I will post thoughts every few hours but ONLY if I see something worth posting. And ofcourse until I go to sleep. :)

So if you are a faithful reader of this blog, please visit during market hours also as I will post updates whenever I see something worth posting.

Another thing - I note there are many regular readers here. If you like this blog and the material posted here, please tell your friends also. Also if you think of any way I can improve this blog - new material you would like to see - or anything else for that matter, please let me know. If it is infact feasible, I will get it done.

Okay..One more thing..Earlier post, I know it was boring..Macroeconomics and all that..I know most of you guys are focussed on what will make you money today...BUT understand that all this macro views are important to us all..And simple fact of the matter is - It will help you make decisions on your short term trades also.

A simple example. 2 months back, I used to try the long/bullish side for positional trading..even though I fully knew that the situation is bad...And what happened? I lost on most of those tries. Bearish positions on the other hand continued to win big...What I learned in this is..Never trade against the BIG PICTURE. To do that, you need to understand WHAT that is..And I am sure most people do not know!

Now dont get me wrong..I still scalp on the long side..I dont post that here..Or its just a 1 day trade like I did a day back with good profits...But I dont do that unless 1) I can get out quickly 2) I know odds favour me 3) Risk vs Reward is good.

Okay coming to market today...The inverse HNS pattern I talked about yesterday targets 2800-2820 odd...So I expect we shall tag this area...I started shorting yesterday...Might do some more today via March PUTs...2860 above means I am wrong above this short term and we can go above to around 2920..Unlikely but something we should be aware of when trading in these conditions...

Either way I think we are building cause for the downside.

More thoughts later...I might add EDIT thoughts into this post itself a little later.

Best,
Lee

Counter

Now this is going to be a funda post...So if anyone wants to skip go ahead - But I would recommend to read it very carefully since its something that will affect our actual lives also...Not just trading.

In earlier post - Sajal(Long.Short) raised some very clear thought out and important points...I am pasting this in here as I think everyone should be able to see the counter points to my earlier post.

1.What I have understood from your explanation that you are trying to establish a theory where--i) US will suffer a depression in the coming years ;ii)while India and China will shine.I don't know if I understood correctly but at least that I got from your undertone.

Just here lies my problem. If your first premise is true then your second assumption should be wrong.
Rather it seems like the stupid "decoupling theory" that cropped up Nov -- early Jan last year in our market which was ultimately shattered by just 2 back-to-back down circuit in Jan.
My point is --
a) In 1944,Bretton-Wood accord established the US$ supremacy in exchange-rate world over.It is the US economy which creates and circulates US $.

b)Politically US is the super-power and I am not seeing any country who can dethrone US in near terms. So, Bretton-Wood will continue.

c)If US recovers then a mojor contribution will come from this US$ supremacy by Bretton-Wood.I mean other economies will help US to recover by forgoing their own growth.

d)What earnings you are looking today of the Indian Incs, can change dramatically within a quarter or two.So we should not give much importance to the present marksheet of them.

Lastly,in short,my point is If US suffers nobody in the rest of world can avoid sluggishness(at least).Once a French President said beautifully... tying with US is like sharing a life-boat with an elephant.


Now I totally agree with most of these points...Dont get me wrong...I like to see the 2 sides of the coin...And most of these things, I have already thought about a lot...I will try to outline my thoughts in order - But remember one thing...Economics is really a very very grey area - No one knows what can happen..Its more of speculation at a different level which is why I prefer to stick to TA - Atleast we have that to guide our trading...BUT its always good to have an idea of the BIG PICTURE...It will help in our trading - Always.

My thoughts - Sure USA is the major power now...And logically we must conclude that IF USA goes into a depression, the whole world will. Now this might be true in the beginning of the slow period but eventually others will step up to the plate is what my view is.

In every major economic cycle, we see one major economy crumbling, and another one stepping up to take its place. These are not 1 or 2 year events but a big process. For example, before the last great depression, England was the super power...Now its just a shadow of its original form. Same as for the Roman, Persian and Greek empires. The rise and fall - roughly will span around 200-300 years. I think the fall of the USA has started. And the rise of some other powers have also started. I feel for sure that China will be one of them. India on the other hand, not so sure but I do think we will also come close.

Now, HOW is the big question? Where will demand or growth come from? Well it has to come from within..Simple..No other way. This is one thing which I feel pained about - India is a service oriented economy - The way it is now - We will not be able to survive for long. We need to start building from within - Thats the only way demand and growth gets going. In the first part of the 20th century, there was a massive wave of infrastructure growth in USA - this is what fed the growth cycle. Same needs to happen elsewhere. China is on the right path - Recent plans show that. I am disappointed with the so called stimulus plans India has now..We need to stimulate growth from within...Period.

Okay enough of my rant.. :)

Now I can be totally totally wrong here. Its just a debate. Economists are probably more than often wrong - Else we would have seen this crisis coming. So what can we do?...Just trudge along trading these markets until we see some light. I will remain very long term bullish until that multiyear bull channel is taken out on the sensex. If this happens, well, I dont want to think about the state of the system then. Lets keep our fingers crossed that this does not happen.

Okay I know I bored you guys...Here is something more before I stop. See the image below.



It’s a geographic representation of the impact this financial crisis will exert across various nations as projected by a recent LEAP report -

LINK

LEAP/E2020 has studied the situation for the main countries and regions of the world along seven precise criteria enabling to measure their degree of immunity to the financial detonator.

CRITERIA:
Share of the economy dedicated to the financial sector
Share of the economy dedicated to services
Level of household debt
Quality of financial system and household assets
Relative amount of public debt (municipalities and social systems included)
Relative amount of external debt (trade and payment)
Share of capital-based pensions on overall pension fund system.

Based on these criteria, [the] team was able to identify 6 major groups of countries hardly related geographically but with similar profiles.

The report goes with a projection of approximately how long each of these regions will be affected and also elaborates on main challenges in overcoming this systemic crisis. Great stuff to say the least.

Now you can see, the US and UK will be the worst off...Africa - well nothing will happen to them because of this crisis. China and India will be in a recession period for 2-3 years (US will be in a depression spanning around 5-10 yrs by contrast)
[Different language on the image but you can see what they are saying here]

Now I stress again...All this is speculation. Makes for good debate but not much use in our trading - But it always helps to understand the BIG picture.

Thanks to Sajal for all the valid counter arguments.

Best,
Lee