Hurst Cycles Trading Software - Accurately Forecast Nifty and Stock Cycles

Monday, December 19, 2011

Week Ahead - 2

For the same of completeness, here is how the cyclic picture looks like now. 80 week low is ahead of us sometime. I think maybe b/w now and first few days of Jan. This is my best guess for now. I am however not trading it positionally. Just hit and run.



When we have bigger bearish cycles like this one, its normal for them to extend and that is what is happening right now. Thats why trading rules are needed - to keep us out of trouble. Run your trading like a business instead of blaming your tools and everybody else except yourself :)

Ok. Thats it from me for a while..Holidays, Christmas, New year all coming up..Gonna take it easy for a while.

Have a great Christmas and New Year..Everybody.

Best,
Lee

Sunday, December 18, 2011

Week Ahead

Well, last Friday was brutal. No questions about it. I thought maybe market might hold and try to move above 4840. But could not and fell strongly down to 4650 area. It looks bad folks..I dont know what to say. Looking at the cycles, I am again thinking the 80 week cycle is extending and we have new lows ahead of us. For the bulls, the market needs to rally here and now else we are going to be comfortable below 4600 and in that case, lower targets open up..First 4450-4300 area and if that breaks much lower. I dont know for sure I am in kind of limbo right now and cannot be sure of anything. We can go much much lower right here or we need to take support right here and rally upward. So I am not trading anything right now - in wait and watch mode for now. I will review again in few days. I dont have any charts to post today but I will do so in next couple of days. Overall my feeling is - if you dont have a clear opinion or no signal, just dont trade until clarity emerges.

Best,
Lee

Wednesday, December 14, 2011

12/15

So like I said before..the charts look ugly. But we still seem to be working on that 2.5 week low.

There are 2 possibilities here -

1. The 2.5 week low is still exerting its influence here and cycles are extending. We were supposed to ideally hit this on Monday but today looks like it is extending. Do we see it today? I think it is possible.

2. We saw the 2.5 week low on Monday and had a quick bounce up from there and its OVER..And now we are declining into the 5 week low. If this is the case, then market will break 4600 and head much lower in coming days.

Both scenarios are equally likely right now and since the charts look like crap right now, I am not very comfortable either long or short.

So whats the trade?

Heres the chart -



So now we are playing around with the 5 week FLD here. And I think it even broke it for some time and then got above it. So its quite dicey here. If it breaks again and stays below, it implies the 5 week top is done and market is down from here with small bounces in between.

On the other hand, the 2.5week low is coming in and if we can make it above the white line/5 day FLD and the next higher one the 10 day FLD, then we can go higher till 4900 or so...Above that we can get to 5050 area. These are all very rough numbers. I want to see if we can make it above yesterdays high first before refining the targets. Yesterdays high was 4840. You can see the importance of this from the above chart.

So again whats the trade?

Maybe best thing here is to stay out and wait for more clarity to emerge. I dont think shorting here is a good idea unless we break 4600 conclusively. And wait to go long above 4840 only. 2nd option is ofcourse to build longs here today and maybe tomorrow as long as we manage to hold 4600. And we get confirmation of bull case above 4840 where we can add more to longs. I am thinking of going with the 2nd option today in panic. Let us see.

Best,
Lee

Monday, December 12, 2011

2.5 week low but extensive damage on charts

I really did not want 4800 to break yesterday. But it did and in the process it has done some good damage on the charts. I mentioned that my stop was 4800, market sliced through it so I got stopped out. Still have some puts(hedge) which I will close today. So not really a loss but I am disappointed with the way this trade worked out. Not because of anything I did wrong - just disappointed. So the setup was there, the risk reward ratio was very good - Risk 100 points, Reward 400 points. So you just take the trade and see how it works out. This one didnt.

So now, we wait for the next setup. I dont have anything clear right now except a risky buy for a possible good bounce. I mentioned before I was expecting the 2.5 week low on Friday or Monday. So did we see it yesterday? Or do we see it today in morning? We shall see. I never expected it to be so dramatic and I think all the data this week has amplified the cycles right now.

So what did yesterday's downmove do? I broke down through the 5 week FLD. What this generally means is that the 5 week high for this cycle has been seen. Ofcourse anything is possible but most likely the 5 week high is in and so we shouldnt exceed it in this 5 week cycle(until Jan2nd or so when we see the next 5 week low). The other possibility is that this is a whipsaw and we regain the FLD today but its not good to trade on hope of this happening. Chart below -



So now the 2.5 week low has come. So its not a good time to short - risk reward will be horrible. Long also is bit dangerous without getting some more clarity. However we can play for a bounce back from this low to setup the next short trade. Bit dicey right now - I will prefer to do short term trades until more clarity comes in and the next FLD trade sets up - More on this tomorrow.

All the fundamental news and events out there are skewing up the cycles but this is expected. It will alter the amplitude but cannot change the timing by much.

Bharat asked some good questions earlier -

1. You mentioned on December 07 that the 5 week FLD has been crossed generating a target of 5350.... So when we look into FLD's, is the time span of 5 week target from the date of it crossing it? i.e. target is within January 14, 2012?

- My ans: 5 week low was on Nov 23rd. So the 5 week cycle will run 5 weeks from that date. So next 5 week low will be around Jan 2nd. So we need to hit the target in this timeframe. This point is ofcourse moot right now with yesterdays price action and this target is now null and void.

2. When you calculate these time frames, do you count weekends also? cause I have seen you counting them at times...

- Calendar days. Hurst says that even on holidays and weekends, the market is trading(in the sense somewhere some market is trading, and some event is happening..what would the market do if it were open at that time?)..so we need to factor them.


Best,
Lee

Sunday, December 11, 2011

Week Ahead 12/12

No change in my earlier updates. 5 week FLD cross is still valid BUT need to be bit careful in here because a downcross is also looking like a possibility here. But still I think the 5350 target is still valid due to the FLD cross. Stop 4800 odd. I know there were many questions and comments. Havent been able to reply so far but I will be doing edits to this post in next 2 hours with whatever updates I have and also charts. I will answer all comments there.

Best,
Lee

Thursday, December 8, 2011

5 Week FLD

As I mentioned yesterday the 5 week FLD is crossed. Chart below with comments added.



So yeah it would have been nice to hold to the shorts for one more day or two. But ok a profit is a profit. What we are seeing right now is action into the 2.5 week low. I want 4800 area to hold as a maximum. Break of this will damage whatever the bulls have built till now. 2.5 week low is expected Friday or Monday as I mentioned earlier and from there we should have another decent rally into the target mentioned in chart. So I started going long yesterday with 4900 Puts as Hedge. I will add more today and on Monday as per the plan.

I read the comments. See the way the FLD works is its sloping down here right? Its an image of price action in the past. So crossing it on one day - and next day a 2.5% drop happening might not be enough to push it below the FLD. The cross is still valid. If you see the chart you will understand what I am talking about.And the FLDs do tend to act as support and resistance lines.

Chandra, not intraday. It happened a day back. See the chart posted above. And its still a valid crossover.

GD, I remember you asked about SPX analysis. While I dont have a latest chart. You can take a look at this analysis. Maybe on weekend I will do one of mine. This guy is very good and is one of the people I learnt a lot from on Hurst. He was earlier looking for the 80 week low same as I was but now he seems to have changed his views a bit looking for a major low next year mid. I can see his rationale so something to keep in mind. But bottomline is, it does not matter right now for short term trades.
2 analyses done below. One for Nov 28th and one for Dec 7th. You can see in the posts the difficultly right now everyone is facing with coming up with an accurate phasing of the cycles.

Link to SPX Analysis Nov 28th

Link to SPX Analysis Dec 07

Best,
Lee

Wednesday, December 7, 2011

5 week FLD

Quick update. 5 week FLD has been crossed generating a target of 5350. So I was short from yesterday because of the expected 2.5 week low expected Friday/Monday. I covered most shorts at 4950 Nifty TODAY - I was very clear on this and the rationale behind it. I also started to go long because the FLD has been crossed today and we can anticipate close to 5350 soon. Charts will be posted tomorrow.

Best,
Lee

Tuesday, December 6, 2011

Wednesday

I dont have time for a detailed update today so will do so tomorrow.

Bottom line is 5 week FLD is not crossed. And the 2.5 week low is expected around Dec 12th - Which is next Monday. So we might not cross the 5 week FLD instead might try to but fail and then fall down a bit before moving back up.

This is really just speculation but I dont have any action signals yet. I might try some small shorts today via puts playing for the 2.5 week low OR I will use hedged futures to try to play for some downside. Target is however anybody's guess. 5000 seems to be strong support and ofcourse below that 4950-4875 area. 4800 is rock solid as per options data. So I think shorts should be hit and run only. Or be defensive in playing for it. The 5 week FLD cross is near - So we will have to be long from next week onward as per my calculations. Will post charts tomorrow.

EDIT
Changed my mind. Posting a chart here with some comments and showing the current FLD position. Keep in mind no short signal is generated but I am trying some shorts with tight hedges. I will add until bit more higher into the 5200 area. I agree with Kumar Sir - above 5235, then better cover all shorts. Hedges should protect me till then. More comments on the rationale in the chart.



Best,
Lee

Sunday, December 4, 2011

Week Ahead 12/5

Well last week was a pretty great one for the markets. It was also a good one for me. A excellent target based trade driven by FLDs and followed out to almost the dot. So since my target was achieved on Friday, I exited all longs at 5050 area. I know we are higher now and might also gap up today. But my target was achieved and so I took profits. I think we will get a chance to reenter or we can reenter on the next FLD cross.

I have tried to explain things below using charts.







The first 2 charts just show an explanation of things that happened so far and how the trade worked out last week. The last chart shows the next move to look for.
As you might have noticed, ST has almost confirmed the last low at 4650 as the 80 week low. But remember its not up up and away from here. I still think we have major pain coming next year...but just speculation now.

Anyhow back to the last chart. Note that the earlier 2 charts shows that targets of the 20day FLD cross was achieved at 5050. And now we are actually in between FLDs. So at the moment no higher targets are generated. But it will once the 5 week FLD is crossed as shown in last chart. I expect we will have some pullback this week and then try to cross the 5 week FLD. So lets say we cross the 5 week FLD at around 5000. If so, we have a move to around 5350 generated (5000+(5000-4650)). Note that this will also generate a bigger target due to the 10 week FLD cross. And this cross is giving a very unbelievable target even for me - 6050 Nifty (5350+(5350-4650)).
(EDIT: I just read Kumar Sir's update...Funny!..And also makes me a little more confident on this.. :) But still damn skeptical! )

Well keep the last one one the backburner for now. I am really really skeptical about it. First let us cross the 5 week FLD which will generate a 5350 target. Then we see.

Chandra, I dont have good charts generated using Nifty. It might be because of lesser amount of data. This is why I use Sensex. Somehow have to deal with it this way..i.e I think Sujatha used to say - Watch Sensex and Trade Nifty :)

BTW, thanks to everyone for their compliments on last weeks analysis. Its always nice to get appreciated. Things really worked that time. Hope it does this time too.

I am totally flat now..But I will post as soon a the next trade is generated. Till then wait and watch.

Best,
Lee

Wednesday, November 30, 2011

Wednesday

I have been very happy with the way FLDs have been working so far. I have explained about FLD's in earlier posts in detail - Keerthi please read the post I did on Sunday night with the charts. I have tried to make it as detailed as possible and also with examples so anyone can understand.

Pilot, 80 week lows, even though we dont have 100% confirmation yet, I think its very high probability we did set the low at 4650 odd. However how long this low will hold is another story. I did do posts earlier on this speculation recently. Hope you did not miss it.

Chandra, if it is the 80 week low, we will have upside - yes - but it does not have to happen very very fast. There will be backing and filling so form a good base. See Oct 2008 - Mar 2009 period to see what I mean. 2nd thing about FLDs..see its a cascade, this is why I was sticking with the 5050 target from beginning. See FLD cross, projects next cross, then that cross projects next cross and so on. So based on my rough calculation, I came up with those levels i.e if we close 4770, its extreme high probability that we get to 5050 with some resistance expected in b/w at 4850 area. This was shifted down from 4865 to 4845 as the FLD lines came down.

The formation of FLDs I described above is called an FLD cascade and it basically projects a good upside in the method I explained above. One by one.

Here is a look at the current view. As you can see, we are at the next FLD cross. So basically it is crossing today at 16100 Sensex (around Nifty 4830). Bottom at 15500. So difference is around 600 points = Approx 200 Nifty points. So adding this to 4830, we get 5030. So 5030-5050 is the current projection for the 2.5week FLD.



Now the market has run around 7 calendar days from the 4650 low. So we need to start looking out for the 2.5 week cycle now. I think we will top in the next 2 or 3 days and then maybe try a consolidation move into the 2.5 week low - this is however not likely to be a major low - we might try to consolidate at around 4850 area - in effect test this area from above. All speculation for now. For now we have the FLD outstanding target of 5030-5050. Then we see.

I might book profits today atleast partially and re-hedge the rest just to be on safe side.

Best,
Lee

Tuesday, November 29, 2011

FLDs

Hope you guys have been watching the power of FLDs. I mentioned in last update 4865-4875 needs to be cleared for higher targets of 5050 and little higher. Market reversed exactly at 4865 yesterday. One reason I booked some profits at 4850 as updated and tried to buy back lower.

Anyhow for today, looks like if we clear 4840-4850, we are looking at a 2.5 week FLD cross which will generate a target of 5050+...Wait and watch..I think trading with FLDs have been going well..so far.

I will reply to comments later...

Best,
Lee

Monday, November 28, 2011

4850

Well yesterdays FLD call turned out to be a very accurate one. 4770 to 4850 - not a bad little trade. But it might just be the beginning in this little upmove. Today we are facing resistance in this area and might be just consolidating before the next move up - but need to watch carefully because as of yet, there is still no confirmation of the 80 week low yet and when dealing with very large lows like this one, flitting back up and down is quite common.

Anyhow, I took some profits off above 4845-4850 NF, hedged the rest with 4800 puts. Now will just wait and watch. Will update if I do anything.

FLD cross 1 target was satisfied yesterday. 2nd is still pending - i.e above 4860-4870 area, we trigger target of 5050-5080. But this might take a few more days to trigger.

EDIT: 1.5hrs after open: Now that I got some more time for review, this is what I have. Yesterday first FLD cross - 5day FLD - generated 4850 as target and we hit it to perfection. Next the 10 day FLD - generated a higher target of around 4910-4920. This target is still outstanding. Then the 20 day or 1.25week FLD - this will generate a target of approx 5050-5080 once 4865-4875 is crossed. So basically the 10day FLD and 20day FLD are tied together and they together generate a target of 5050-5080 maybe bit higher to 5100. This is the outstanding target for now and what I am playing for. As I mentioned before, this will not happen in 1 day so play defensively but on the long side. Thats it for today. Questions are welcome.

Best,
Lee

Sunday, November 27, 2011

FLDs and the Week Ahead

Back from a few days off from Thanksgiving Holidays over here. It was a good relaxing time away from everything.

Last week, we were trying to find some sort of bottom. I mentioned before that I have some signals that I am going to use for going long. I am still flat since none of my signals triggered yet. I will outline here now what is this signal so that you have some idea.

Till now, I have barely scraped the surface on the utility of the Hurst model or did not reveal too much to avoid confusion. I have been thinking that I will do that for past few days and mentioned it in my last update as well. Its called FLD - Future Line of Demarcation and is a Hurst concept. Basically it is price line of daily average price moved forward in time by a certain value - this value is determined by the cycle values - like 20 week, 10week, 5week etc. 5 week which is also the 40 day low for example, would be moved forward by approx 20 days. And will be called the 5 week FLD.

FLDs have a lot of utility - Crossing of an FLD confirms that that particular low has been set. And also gives us a target for the price move. See chart below -



I have added some annotations here - The 10 week FLD is offset by approx 34 days here because the 10 week is running 68.3 days right now. This is the light blue line I have shown on the chart. I just gave this as an example but you can see how it worked. Once crossed on downside, it confirmed the 10 week high and also projected a move 1000 sensex pts lower which we got as well. Its uncanny how often this works very well.

You can see several other examples in the chart. Just look at the light blue line - the 10 week FLD and see how it generated a target for the Oct 4th move up. Many more are there. See if you can spot them. When you combine multiple FLDs, it gives a lot of information on what to expect next in the market.

Each FLD cross generates a price target, this price target can generate another price target and so on. This is my trade setup right now. See chart below.



So first for me, the 5 day FLD or the white line should be crossed to the upside. This will generate a target equal to the move until it crosses the white line. Then the pink line and so on. The bigger the FLD line, bigger targets can be generated. And when there are multiple FLDs like this in this position, the move upward can be explosive. Maybe just like the downmove. I will add more on FLDs in coming days.

For now a move above Friday's highs on Nifty at approx 4770 gives very high probability that the lows might be in. And also projects a likely move above 4850(based on FLDs) and above 4850, I become quite confident that the 80 week low also might be in. I will go long today in small quantities with above prices to guide me on where to add and where to cut - Also will have a strict stop at the recent lows of 4650 area - Breaking below this level means the market has more work downside and also that the 80 week low is NOT in. How prices are acting with the FLDs will show me when to take profits or when to stop out the position.

Hope I made sense. This has not been an easy market to trade with all news noise out there. So hope everyone is still 'intact'. Trade Safe.

EDIT: Few minutes after open - 5 day FLD cross at 15800 SENSEX (4740 NIFTY) - Projects 16100 SENSEX (4840 NIFTY) : All approx figures. Lets see if this works out. 4840-4850 cross will give a target of 5050. One step at a time and I will fine tune these values tomorrow.

Best,
Lee

Tuesday, November 22, 2011

Action into the 80 week low

I strongly believe what we are witnessing right now is action into the 80 week low. The problem is that this is a longer cycle low hence for it to expand by a couple of weeks or 3 weeks even can be considered normal.

Expect more ups and downs - We should hold 4500-4450 area for this low. I would like it if we can hold the 4600 area but if that breaks, then we should see 4500-4450 area which I think will hold. Oh and I should also mention that 4700 first needs to break before entertaining any bigger bearish targets. Go from point to point and dont get greedy since we are so late in this cycle. Maybe we touch 4720, go up to 4900 and then do the final down to 4600 or slightly below - dont know just speculation for now. But it might happen quite quickly.

I know that there is a lot more possibility of big downs from here - but that is what we should expect in this cycle. But being short is also not easy due to the large swings going on. I am trying to trade here but its going back and forth too quickly - hence not easy. So I am trying to mostly scalp nowadays while we wait for the 80 week low. There are some ways of confirming that the 80 week low is in - I will explain this another day but I am keeping an eye on it.

BTW, I have replied to comments in earlier post.

Best,
Lee

Sunday, November 20, 2011

A Review and the Week Ahead - 11/21

I thought I would start today's post with a review of the past few months, what my thoughts were, what actually happened and then what I think is going on now and what might happen in the future. I think this will be good for me also as I will be kind of thinking out aloud here.

Last couple of months or so have not been easy to navigate..But still there were lot of nice intraday opportunities and nice scalp trades out there.

Going back a bit, I think before Oct, I was expecting the 80 week low to come in sometime in November. But what actually happened was for Oct4th to show some kind of major low and put in a spectacular move out of it. The amplitude of the move out of this low was not expected for a 5 week low because a 5 week low was what I was expecting in Oct first week. The enormous rally out of that low had Sentient also confused and it started to label that low as the 80 week low which means it came very early for such a major low. You may remember the flip flopping and confusion at that time. I was very skeptical but eventually 'turned' and started to count Oct4th as indeed a major low. Once we took out 5200, I became confident that we were going to have a good rally for next few months. But market stalled at 5400 and broke down badly from there. Once we took out 5200 to the downside, I sold all cash positions and started to lean in bearish. And now..surprise surprise..Sentient also has changed its count and is thinking now that the 80week low is dead ahead of us. Infact we are very much in the time range for that low. Below is a screenshot of ST's latest view.



As you can see ST is expecting a major low right ahead. Is it already in last week? Could be..but we do not have any confirmation yet. And looking at how the momentum was last week, I think we might have some more work on the downside but it should be over very soon..Maybe next few days will do it. But price can quickly breakdown in matter of few days. Last week showed us that.

So bottom line..
We saw the last 80 week low around May 25th
The last 40 week low around Feb 11th
The last 20 week low on June 20th
The last 10 week low most likely on August 26th
The last 5 week low most likely on October 4th

So now projecting forward, we are around 40weeks from the last 40 week low and around 17.8 months from the last 80 week low. So we are well within the window of the 18month(80 week) low.

So maybe we can go up retest the 5000-5050 area again before revisiting the lows..maybe 4750 again to set low? Or maybe a bit lower to 4650-4600 area? One thing however need to be very careful here because we are in the window of the 80 week low. And rallies out of these major lows can be pretty spectacular and also very unkind to shorts.

Looking at the higher cycles. If you remember my older posts, I was thinking that along with the 80 week nest of lows, we would get the 4.5yr and 9yr lows as well. But after seeing price action over past 2 months or so, I am rethinking on this. I dont think this is a valid scenario anymore. i.e the higher timeframe longer term lows are not yet in...But we still can see a rally for couple of months in another 18 month bear cycle before it tops and goes for the next leg down. Yes too much to think right now but just wanted to put this out there because its a deviation from my original views. So what I meant to say is even though the 80week low can be bought for a positional trade, we will most likely see lower lows sometime next year. But then let us trade cycle to cycle..The smaller timeframe cycles.

I expect the bounceback to continue and then maybe we can go for one more shot down to set the 80 week low. All this can happen very quickly since we are in the 80 week low window. I will post updates if I see something different from this scenario in this immediate timeframe.

Best,
Lee

Wednesday, November 16, 2011

Bounce is on...For Now..

Well what can I say..been a tough few weeks in the market. This is the reason why I havent been posting much. I dont want to say something stupid and cause anyone else to make a mistake. I had suggested best thing to do maybe stay out until more clarity emerges. I am also really confused what is going on bigger picture wise.

Let me just try to think aloud here - We do know that some sort of major low was seen on Oct 4th at 4740 around. Lets assume this is the 80 week low for now. It was quite early but let us go with that for now. If we go with that assumption, then the 10 week low is due around Nov end/Dec beginning week. From there again, we can expect a decent rally. We should continue to decline into that low area. BUT for now however, yesterday, I think we saw some sort of very short term low below 5000 and we are doing the bounce up. For longs the obvious stop is yesterday's low.

Last 2 days, I got rid of most of my cash positions - the drawdown was not looking good on paper. But still its a small loss only because of the hedges. Overall I havent done so good last few weeks - so I decided to get rid of cash and go back to trading in Nifty. Since outlook is uncertain, I will be able to get in and out of positions. Also I am beginning to rethink on my longer term ideas. But I will keep that to myself for now and present them here when I have some more confirmation.

So long for now in NF..hope to get out around 5100-5150 area. From where again will try to build some short positions up into 5250 area.

Charts posted below.







Trade safe.

Best,
Lee

Monday, November 14, 2011

Pullback continues

So we got a higher open and then pulled back a lot..Today looks like 5100 test might be on the cards. I think its very important for the market to hold 5050-5080 area - worst case should hold 5000 area. Its been very confusing for few days now..I havent been trading much. Using puts to hedge, cashing it when its making some money - this is what I have been doing. Overall like I said yesterday, it does look bearish and expect it to remain this way until last week of Nov when the 10 week low will come in. The problem though is that I see this as the first 10 week cycle after our Oct 4th 80 week low - so we can expect lows to come in early.

After we get the 10 week low, I still expect a good year end rally from there. Problem is how much we will decline until then. We will wait and see. Ideally we should hold 5050-5080 worst case 5000. Lets see what happens. I might not update for few days atleast until I see some more clarity emerge OR I have something substantial to contribute.

Best,
Lee

Sunday, November 13, 2011

Week Ahead

Dont have much time for a detailed update. Whatever I said earlier still stands. But I am seeing a few more bearish signs out there. So maybe we remain rangebound until Nov end or Dec first week which is when we can expect the 10 week low?

Today we should attempt higher and then maybe fallback to consolidate. Last week's lows are important. Breaking will lead to a test of 5080-5050 area. This should hold for the bullish case I think. Overall dicey here. Still holding to cash longs but will hedge them today. I have been buying the big scary declines as I have been saying for a while.

More later.

Best,
Lee

Thursday, November 10, 2011

Friday

So big global turbulence going on while our markets are closed. Dont know why this always seems to happen when we are closed :) I have wondered about this before also on the blog..Its weird. Anyhow, it is what it is.

I still stand with my earlier views. I.E the 80 week low did come on Oct 4th at 4700 and we are unlikely to break that for next 4-5 months(till the 40 week cycle top). Next the 5 week low - I did mention it came likely came in last week. But not very sure now - it could be right ahead of us maybe today. Then the 10 week low likely around end of November. Maybe we will just chop around a bit more.

Looks like today market will gap down below 5200 so 5150 becomes important and below that 5100. But unlikely to get so far - Atleast I think so. But we are at potential supports here and so we might get a good size bounce here and then we can re-evaluate. There is pretty good put support at 5100 and 5000 so I do not expect these to break this month. I can be wrong but just seems extremely unlikely unless something really really bad happens on a global scale.

I mentioned in last time update I will be using these scary declines to buy back into stocks..All with the expectation that the 80 week low is behind us and the next 10 week low end of November will provide a base for a good end of year rally into Jan/Feb timeframe. Will phase out my buying until Nov end. Need to wait and watch.

Hope I answered all your queries here Aly.

Have a good trading day All.

Best,
Lee

Tuesday, November 8, 2011

80 week low confirmed

Yeah I know quite late. But better late than never right?..Anyhow I have the 80 week low confirmed on Oct 4th at 4740 odd. And the next 5 week low came up much higher at approx 5200. This 5 week low came up approximately where we expected our 80 week low. So overall since this low came up very early, its bullish in cyclic terms.

Latest ST outlook -



As you can see in the chart, the 80 week nest of lows is confirmed. And so we are cleared for atleast a few months worth of rise. If I have to guess, I would say cleared for upside until Feb end. This is when we can expect the next 40 week cycle to top. But lets take one step at a time.

What am I doing? - After selling most of my longs at approx 5300-5350 range, I accumulated a good portion back as per my earlier post in the 5200-5280 range. So still net long but have more ammunition to add longs if we do get some one or two day scary declines. It will be a good opportunity if we get that.

Next we have the 10 week low around end of Nov. So this can be another good opportunity to add to longs. So buy the dips will be my mantra going forward.

Target wise - I have a very rough target of 5700 based on Hurst methodology. But I havent fine tuned this yet. Sustaining above 5700 can open up 5900 and even a challenge of our all time highs.I will do a detailed post on this tomorrow. This is based on FLD(future line of demarcation) crosses which generates targets per Hurst Methodology..I havent spoken about this yet but will do so tomorrow.

Best,
Lee

Thursday, November 3, 2011

Thrown off the bus?

Looks like a big gap up today. Again I am in a quandary here. Did we get the last 5 week low at 5200? A little early but still in the window. So did the market just throw us weak hands off the bus, consolidate ABOVE 5200 and is getting ready to take off? Funny how that works. And I did mention that possibility a little while back. Nuts!

See the ST screenshot below.



Sentient Trader Software

See those question marks? Its actually ST's way of saying possible low might have been seen and as some more days and price conditions are met, it confirms the low.

I do not know exactly what to do right now. I covered some shorts yesterday when we tested 5200 area. The rest is hedged with 5300 calls. So today likely will just take the pain and wait for more clarity. I might also start buying back into the cash positions I sold few days back. Yeah I know dumb move on my part but this is how cycle lows work..throw most people out of the bus and then reverse.

The other big thing here is the downslopping trendline which comes at approximately 5450-5500 area. Unless market clears that area, we cannot confirm anything at all.
I might not post for few days until more clarity emerges.

One more thing..I mentioned I would address the longer term buy question. I am not very sure but I think if this 80 week low is in which it most likely is, then we should be cleared for upward prices atleast until next Feb-March timeframe. This will be when the next 40 week cycle tops approximately. We will fine tune as we go along. But markets might be bullish into that timeframe..maybe even very bullish once we clear 5500. Then again I am expecting a bear move into the 40 week lows toward end of June timeframe. All very fluid right now and we need to see as we go along. Cannot assume anything right here. I remember someone mentioning Vivek Patil's views which seems to gel with what I am saying above. So I also concur with it..Can anyone post a direct link to his latest views?

As always, comments are welcome. Have a good long weekend all!

EDIT: I just wanted to add one more thing. The most likely scenario here is that we test 5400-5450 range here and then go down again to test the 5200 support again before taking off to the upside. Else we could just take out 5450 and take off. Wait and watch.


Best,
Lee

Wednesday, November 2, 2011

Que Sera Sera

So..looks interesting right here what the cycles are doing...If I were not trading or directly involved in the market, I think I might have taken this as a serious academic exercise. Thats how interesting these cycles are playing out right now.

In college, I used to hear, cycles, fourier transforms, spectral analysis etc..But now I see the practical analysis of it. Funny right? Now we see the practical aspect of it!

Ok so now coming to the market, I sold cash positions yesterday. I dont know maybe market will brand me as a fool very soon because I did this. I know most of you will lol..but I have to go with what the market told me to do..So sold cash positions, established shorts at the 5300 area with hedges at 5300 calls. So I will just watch today most likely. We are declining now into the the 80 week low but the problem here is that the US 80 week low is projected toward Nov end while our 80 week low should come in sometime next week. This is the reason why we are more bullish that the US or other western markets.

This is the reason why I mentioned better to sit out and then buy in size when we have more confirmation on the low. I know in earlier post comments, there were questions on longer term buys etc..And what will happen next year..I have some ideas on this..so I will do a post on this a little later. It looks like we are NOT THERE YET.

Best,
Lee

Tuesday, November 1, 2011

Tough Call

Once again I feel we are at some sort of crossroads here in the market. Today we have to hold 5200-5160 area. Else the trapdoor to lower lows might open up again. My idea of shorting in the 5350-5400 area was correct but I also covered too early I guess when I did yesterday. There are some quite bearish possibilities opening up here atleast for the next 1 month. I think we need to be very careful here over the next 2-3 weeks. Remember I was looking for the next low in the next week but it can extend a bit being a major low. So its time to be careful I think.

So I am wondering what to do today. I do have some long cash positions as I have been mentioning for a while. But today I am again wondering whether it makes sense to close most of them and again rebuy again in a couple of weeks. Its a tough call. I would say if you dont have any positions, better to just sit out the next 2-3 weeks and then buy in size. Break of 5160 opens up 5050. And break of that opens up 4800 and maybe even new lows. But we might bounce about a little today and tomorrow before the market makes a decision on what to do next. Lets go point to point without any preset notions. On upside market needs to break above 5450-5500 to go higher. Maybe much higher.

I am sorry I am not able to make much of a directional call here but market has once again thrown us a curve ball and so need to do our best to navigate it.

Bottom line is I will be taking a very defensive position here for the next few days until more clarity emerges. And we should get this over the next few days.

Comments are welcome. Remember always - I am also just like you guys trying to navigate the market.

Best,
Lee

Monday, October 31, 2011

Bottom Line

Likely the 80 week low has already been seen price wise. This was on Oct 4th. So the next 5 week low is expected to come in around this week Friday or next week Monday/Tuesday. So shorts should not be taken beyond that and buys are going to be more profitable...Buying the dips that is. Shorts taken yesterday can be covered today and retaken at higher levels or managed with some sort of trailing stoploss. But I still think the big money is to be made on the long side buying the dips into the next 5 week low.

Charts posted yesterday are still valid.

Best,
Lee

Sunday, October 30, 2011

Week Ahead - 31/10/2011

Updates for the week ahead. I have included most of my comments in the charts itself but increased the font size so should not be a problem to read now - right click and open in a new window to see the charts. Let me know still if anyone has a problem reading and I will move all my comments to the text section only.

Bottom line is the nominal lows of this 80 week cycle might have already be seen and we are in an uptrend. However we are close to resistance at 5450-5500 so expect a pullback and consolidation for next few days/week. Infact if you remember, this was one of my preferred scenarios - break out above 5200 and then retest it from above. But several possibilities are there.

See the charts and study them. I have tried to analyse various timeframes and possibilities here. I have included a GOLD chart also. Also the final picture is the portfolio update. I think I will move this to be a bi-monthly update from now on - being a cash portfolio will take time to grow. Posting weekly does not make much sense.

Nifty Normal View - Daily



Nifty Weekly View - Weekly



Nifty Hurst View



Nifty Hurst View - Expert Model



Gold Hurst View



Cash Portfolio Update



Link to Sentient Trader Software

Comments are welcome.

EDITS: 10:07AM - In case you guys are wondering whats going on, there is a major currency intervention going on in the Japanese markets. This is what is causing the turbulence in the markets..Yeah its a reason..but we are going for the cycle lows soon looks like..A higher low as I have been saying..So I have been slowly building into shorts here in futures. Cash positions remain as is. The last time they intervened in Forex was Aug 4th. You all know what happened Aug 4th, 5th and after that also. Play cautiously

Best,
Lee

Thursday, October 27, 2011

Update for 28th of October

Will Update a little bit late..probably 15-20 mins late.

EDIT: WILL UPDATE TOMORROW. NOT MUCH OF UPDATE TODAY. UPSIDE CONTINUES.

Thanks,
Lee

Wednesday, October 26, 2011

Wishing everybody a very Happy and Prosperous Diwali

First of all wish everybody a very Happy and Prosperous Diwali!

So looks like this confused bull is maybe slightly vindicated right now with the markets above 5200. So the next thing to see is can we get into the lower 5300 range and then consolidate above 5200 - this is what I will be watching out for. Let us see.

I got up today early morning for this special session. I have few NF longs from the 5050 area which I will be covering today. Its a pretty good profit to take today. Still holding the cash portfolio - To tell the truth its not performing as well as I would have liked but then need to give it more time in the larger scale cycles..We shall wait and see. I am churning it around..cutting down the losers and adding to winners..will be doing this for some more time. Market needs to gain more momentum and confidence. It might only happen after the next 5 week low(and higher scale possibly) expected in the 1st week of Nov. I will post a more detailed view with charts tomorrow.

Happy Trading!

Edit: 5pm: Covered NF after some time after the open and now bought back some. Frankly speaking, not seeing much bearishness. Maybe because its today :) still the Nov 1st week cycle low is looming in there..need to be watchful.I would really love to see some consolidation around here building a base and then moving higher. Anyhow, we will see in coming days how it all works out.

5:10pm - Out again..Thats it for today.

5:20pm - One more add..Buying few 5200 puts now. Not sure if this is a wise move with a lot of big news coming tomorrow but this is in part to protect my cash positions and also because of the upcoming cycle low in Nov 1st week. We shall see.


Best,
Lee

Monday, October 24, 2011

5160-5200

This obviously remains the BIG barrier right now for market upsides. This needs to be cleared before we can say all clear for higher prices. I earlier thought market might clear it an then retest it from above. But does not look like it at this point. So we might consolidate and move lower here for a few days to set the 5 week low before we can rally higher.

Of course today is a big news day so anything can happen. And together with that expiry. So could be quite a day. I still have some future longs from 5050 area. I think I will close them today to be on safer side and wait and watch. Cash side I have already spoken about before. I will be doing some rebalancing today - removing some underperformers and freeing up some funds for later.

Charts are still relevant from yesterday. And I will post some more thoughts later on the market cycles. Dont miss the comments section from last post.

Best,
Lee

Sunday, October 23, 2011

Week Ahead - 24/10/2011



PS: I changed my profile picture to a 'confused bull' LOL :D



Maybe now the market can go down in earnest!

EDIT: 10:05AM: Looks like my comments have been taken in wrong sense. It was part in joke. See my confused bull comments and picture were just to put forward a humorous view on my mentality right now. I am bullish dont get me wrong. But I am still cautious till Nov 1st week end. After that I think we wont see a lower low so buying is the way to go. So Today I had lot of NF longs from Friday.I covered some today...and still holding the rest FWIW for higher prices..But if I think it wont go higher from here, I will be quick to cover..will post updates.


Best,
Lee

Wednesday, October 19, 2011

Oct 20th

So looking at the market action, I think maybe the 2.5 week low came in on Tuesday Oct 18th..Early..but still valid..And now we are in the bounce from there. And likely this will also top soon or has topped yesterday. From here we should have atleast a few down days into Oct end/Nov 4th. Lets see how it plays out.

Another thing I just wanted to show. See this below chart. This is a slightly modified model(expert model in the software) I am using. This one actually says the 80week low is already in. I dont like the 'look' of this due to various reasons..So not favoring it at the moment. But it is however a very good possibility considering the strength over past several days.



Lets see how far the next low comes - depending on that we can confirm. Remember shorter term this doesnt make any difference - 2.5, 5 week cycles are all operating fine.

I have been building into stocks whenever we have been having big bad down days..Its been going good so far. Around 30% into cash stocks right now. Rest I will be building in whenever we get big down days.

I am including a snapshot of what I hold right now..Entry price and current price along with current profit percentage. For obvious reasons I am not including quantity/size here. But I am 30% invested now - will add more on declines. The way I operate is very simple - I will monitor this basket every few days and whatever is outperforming on looks good on the charts - I will add more to them. Whatever looks bad, I will either give it a few more days or cut the position. I will post this snapshot every week maybe Friday going forward. This is to monitor a pure cash portfolio performance using Hurst cycles.



EDITS:
11 AM: Should have updated before..Todays move kind of shows the downpressure. Unless we take some support around here, we will go down to test 4950-4920 range again. I have been adding shorts from 5090 NF since the morning. Looking good so far. Regd the stocks portfolio, like I said, days like these are an opportunity to cherry pick. The key is not to get over excited and do everything in one day. We have till Nov 1st week.

11:45AM: May be overdone for today. Exiting shorts at 5040 and going flat. GN!



Best,
Lee

Tuesday, October 18, 2011

2.5 week low is close...

3 charts posted below. Most of my comments are in there. 2.5 week low seems to be coming in...Maybe today or by tomorrow..From where we should have another bounce before declining into our expected nest of lows toward Oct end-Nov4th timeframe.









If you missed it, check out my last post where I have explained how the Hurst software works. And also given more details on its benefits. Also check the comments section.

LINK TO SENTIENT TRADER

Best,
Lee

Monday, October 17, 2011

Some thoughts..

Charts are there in previous posts. Still relevant for today. Just thought I would add some words to it for today :)

Looks like the 2.5 and probably the 5 week cycles have topped and we are now moving toward the 2.5week low expected this Friday(+or-1day). From there we are likely to have a bounce which can be again reshorted for a downmove into the 80week cycle nest of lows expected in Nov 1st week.

Now there has been a lot of good debate on the extent of the next downmove - some of this can be read in the earlier post comments. We are clear about the direction but its the magnitude that is doubtful at this point to me. Why? Because the upmove we saw from the last 5 week low was pretty awesome. And its not something one might expect from the last 5 week low in this 80 week cycle. So for this reason, the downmove also might not be as big as was initially expected. Now remember this is all speculation - we are sure of direction..so let us play that for now. Let the market go where it wants to go - we will profit from it as we know the time cycles.

Now why do I think this downmove wont be as big as initially expected? Market Internals are the major reason. Sunil over at TIMAMO has given some good studies on it. This is just one thing. Breadth is important - its like looking under the hood at a car's engine - on the surface things can look great or ugly..its only when you lift up the hood and look at the internals that you begin to see things that werent very obvious before. Sunil does some pretty good studies on this.
Apart from this, I track internals of the US market very closely..Better tools are available for this. And things are slowly becoming bullish.

All these reasons are telling me we might get at best a higher low. And for this reason, I do not think we will break 4700 this year. But I still reserve the right to change my views at any point :) I have been wrong many many times before! :D

But remember as I said above - Trading has got nothing to do with these so called forecasts. We trade for money and NOT to be RIGHT - Want to stress this point.

Many times I end up being wrong - but still manage to make some money out out it. As traders this should be our aim. Ego can be costly to any trader.

Now coming to cycles - I have some ideas as to why we might be turning bullish earlier than expected - Its because of sectors. Meaning there are many sectors out there..Oil and Gas, IT, FMCG etc..some of these sectors might have already bottomed out with their 80 week cycles..And so they might be lending upward pressure even though the broader 80 week lows have not yet come in. So...what I would say is be careful either way out there..The fag ends of cycles can be brutal if we have fixed mindsets - So I just say be flexible in your thoughts and positions.

Position Updates - I am short from yesterday open. Will try to cover at the 2.5 week low and reshort on a bounce into the 80 week low. This is the plan. I will also be looking to buy into good stocks for delivery as we go into the expected low. I am starting some pilot positions already just to track them. Let the market decide how far it wants to go in this downmove.

I hope with above post and explanation, my stand on this is a little bit more clear.
I dont really care how far down we might go.


=====================================================================================


Ok, so thats my thoughts on the market. Next, several folks asked me about the Hurst software that I use and they wanted to get some more idea around it. I am going to do a write up here..show some examples of how the S/W works. The trades it generates, projections etc.

The software is called Sentient Trader. I have given a link on the top of this page which will direct you to the home page of Sentient Trader.

About the S/W - It is a great package out there in the market today which sticks to Hurst Cyclic principles to generate cyclic projection both time and price based. So it will give you projections in time and for price as well. And you can use this to analyse any market out there provided you have the data for it. Overall the software package is pretty awesome. It is expensive but worth every cent. I was very skeptical before buying it but have to say was pleasantly surprised by how much it has improved my trading. And whatever it cost me, I easily made that back and more within few weeks. It aids me a lot in all of my trading decisions and views nowadays. Readers on this blog would have seen the calls I made over time and you can judge for yourselves. Sure there have been duds - but that what makes the market. Cannot expect to hit home runs all the time. But on balance the software is an excellent aid to any serious trader out there in the market - Any market. We as Indians are always stingy when it comes to buying software - I know - But believe me this is worth every single cent.

CLICK HERE FOR THE SENTIENT TRADER HOMEPAGE

A chart that shows better what the software does -
(see also the charts from previous post: I think they are very clear)



There are many many other features also in the package. FLD lines which generate price targets..VTLs which will show if a low has passed on not and so on..Too much for me to go into in one post..But I will try to in later posts.

Feel free to ask me questions. I will be happy to answer.

Bests,
Lee

Sunday, October 16, 2011

Thursday, October 13, 2011

Crucial Juncture

No other way to describe it. It is a crucial point right now for the bull/bear case. I am not talking about short term here but little bit longer term.

Earlier I was looking for the 80 week low to be a good low..I mean a serious long term low below 4700 maybe closer to 4000 which would give lot of confidence for going long for a longer period of time. However, past couple of weeks action has had me rethinking on this. Now this might just be a way of conditioning by the market where after the weak shorts are weeded out, we just continue the decline in earnest and break all previous supports and lows. Remember this is still a possible scenario. However seeing the strength so far..the strength in internals and so on..Its making me think..that we might not go below 4700 this year. Maybe not even close. I still expect some basing and downward moves till end of this month to set the 80 week low..But am thinking it JUST MIGHT be a HIGHER low. Now this is just speculation at this point. But I am getting ready my 'BUY LIST' of stocks. To buy after this 80 week low..or during it scaling in.

I know market is supreme..prices are king..this is the reason why I have to tone down my bearish expectations at this point. Frankly speaking, it would have just been much better for the market to go lower than 4000 now itself and make a long lasting low. But it looks like that is not meant to be and we might not get much better than 4700 to buy here. So bottom line is expect weakness till end of month but it might be nothing more than a consolidation before the next big move up.

If this is what the market decides to do..I do not think it will be a long lasting low but just a low for this current cycle and the REAL long term lows will only come sometime next year...Preferably after the March-April timeframe - that will be when the next 40 week cycle tops out...And then bottom toward June-July timeframe. So again bottom line is, we seem to be creating some type of bottom here with backing and filling and it will be a good enough bottom until March-April of next year when we might go back to BEAR MODE.

All speculation at this point of time. But I think this is what is happening. So time might be close to buy for a few months to take advantage of those gains. I am not talking about FNO here..But cash..I will post when I start buying but I already started looking for good stocks with potential..Still refining the list. I will post here when I am ready.

Chart -


I think whatever I said till now shows up in this chart. For now indecision and probably and consolidation kind of move lower until the overbrought situation is resolved after which we can move above 5235 and higher. Frankly I dont like it..I wish it worked out differently but the market is what it is..And fighting the market will quickly bankrupt us. Our aim should always be to get on right side of market. Now its indecisive but I think market will show its hand in next couple of weeks. Till then hit and run trades will be optimum. If you know how to trade intraday, do that..else do nothing at all..Covering the few shorts I have today will my aim..I might just change it to puts to reduce my risk..And also I am looking at longer term stock holds toward end of month - I mean buying into stuff. I will post on that when I do..with prices..so that we can track it in a spreadsheet. I used to do this for FNO but it became such a hassle that I stopped. I think I can do it for stocks..So I will be doing the same very soon.

Chart shows last 5 week low came in Oct 4th..so now in last 5 week cycle. So like I said its downward right now..But as of now it looks so far like its not a new bear move but a consolidation before another move upward. Now this is just speculation on my part..Market will show its hand soon. Need to see where this might stop...Important points are 5000 and 4900 areas. Breaking 5000, can get us to 4925 area quickly. Breaking 4900, will get us to 4800 area. More than this at this point I see as doubtful - looking at the strength shown by market so far. I know all this can change in one day..This is why I am waiting till end of October before making any longer term decision. Till then hit and run only. Protection of capital is supreme.

I know someone asked me about INFY cycles..I tried so much couldnt get clean data for it..so many splits and bonuses that prices are skewed. If anyone has clean data, please feel free to share with me..CNXIT data is preferred rather than INFY..I will post an analysis after that.

EDITS: Market open: Covered all shorts. I am just going to trade intraday from now on. Atleast until some more clarity emerges. Did some longs..now covered and doing some shorts..Will keep doing this for some time

10:00 AM: Interesting..Looks like intra resistances are starting to kick in..Back in short like I mentioned..But I am doing intra for now..So I wont be posting updates on trades from now. But my broader view is posted above.


Best,
Lee

Wednesday, October 12, 2011

Oct 12th/13th

Well after I well and slept yesterday, the market just took off and looks very strong right now. Even I have started questioning my earlier views - have to say looks damn bullish. I am still holding the shorts with the hedges. Today I will roll the hedges upward. Oct 12/13th - this is the timeframe I mentioned for a top. We are there. Now who has the guts to short? lol :)

I will be back a little later with more thoughts. Today we have to see how the market deals with 5150-5200. Above this and I think game changes.

Best,
Lee

Tuesday, October 11, 2011

INFY..

..Thats what will drive things today. And well the IIP number also although to a much lesser extent. We can speculate a lot about the results - IF it will be good or bad..But ultimately its the markets's REACTION to the results that will matter.

I dont have much more to add to yesterday's post. Except I am beginning to see a lot of bullish signs but my timing model is still saying low at end of October. So I will respect my system. Will continue to try and short but I will be reducing my aggressiveness on this for the time being. Its better to live and fight another day. Things are murky right now. Hit and Run trades seem to be the best option for now.

EDIT- 11:15AM IST: Well 2 big new items are out. Not so impressed with action so far. My earlier call was for a top today or tomorrow(Oct 12th/13th timeframe). So far it is looking quite possible. Reshorted today back at higher levels. I have hedged with 5100 calls. Now will wait and watch. We need to get below 4900 area to start feeling comfy on bearish positions.


Best,
Lee

Monday, October 10, 2011

Dicey here...

...Have to admit yesterday's rally was a good one..I dont care much for rallies that show a big gap up and then do nothing for the full day. Yesterday's was good..Went and tested support at which I covered a big amount and then tried to reshort as we went higher. I say it is good because this is how a strong rally is built. Test support and then try to make a move higher.

Not that it makes much of difference. Today also looks like a gap up. So now I am uncertain how to deal with this. Do I cover? Do I hold and watch? Do I add to shorts? Dont know. Dangerous here either position. As I mentioned before, the Oct 12/13th date was when I was expecting a top to come. So still on target but price wise this is going much above what I expected. Today if it clears 5030 and stays above, it opens up the 5150-5200 range again. So lot of pain to take if you are short. So I am confused :) Whats new. If we go above 5200 without much of correction, then have to admit we might be going much higher. However I still think we have one more downmove lurking in the shadows which will come once majority is once again bullish. Too many unknowns out there..Infy results is another one..I have posted some thoughts on this in earlier post's comments section.

However, for today, will wait for clues after opening and act accordingly. Will post updates. I am holding some shorts so its a toss up as to what to do at this point. Will watch price action and make a decision.

EDITS:
1. Looks like going up..Covered almost all shorts..Will look to readd back later. Intraday scalping till then

2. Very uncertain here..Shorting back in slowly. They never make it easy do they?

3. Part booking and reshorting higher might be a good plan of action here. Will add back later. INFY results is also a wild card here.



Best,
Lee

Sunday, October 9, 2011

Market Updates - Oct 10th

So its pretty sure now I think..That we got the 5 week low on Oct 4th. And that we are in the last bounce from there. I think this is an ABC move from the lows and I think I mentioned last week, we have done the A looks like and in a B now after which we might get a small move high in a weak C. I mentioned Oct 12th as an important date. I see this bounce or sideways move will continue into then. Price wise I already mentioned - 4910-4950 range and then 5030. On Friday market couldnt sustain above 4900 and came down from there. So shorts in that area did well. If we get some more down from here, part booking and reshorting higher will be good. Trade management is important to reduce risk and also remain on right side of the market.



Ok so bottom line is - 5 week low came on Oct 4th. This is the last 5 week cycle before our expected 80 week nest of lows(nest of lows means its also the 40, 20, 10 and 5 week lows). So its an important low. And it will come around 5 weeks from Oct 4th. So around the Nov1st week-Oct 31st timeframe. Will be watching closely in this timeframe for a low and also a chance to buy into some good stocks on cash side. I know there were some comments and questions around this - remember I am waiting for broader market to bottom before looking at stocks. So we will start doing that in Oct end.

But first more work to be done on the downside. Lets watch Oct12/13th as a possible timeframe for topping out this 5 week cycle and heading down. Why does it top early? Because its a bearish 5 week cycle being so late in this 80 week cycle. So it tops early and should head down for 3 weeks or so after that into our 80 week low. Price might remain in this range until Oct 12th before heading down hard OR it might have started already - I am not very sure. But risk reward favours short side greatly right now until a clean close above 5030-5050 range. Keep shorting the rallies till then with some trade management.

A note to all - Please dont ask me questions about you personal trades. I will no longer answer. I did not ask you to get into any trade - then why consult with me on getting out? Is it fair? Also dont ask me questions like - is market going up? Is it going down etc etc. I am posting my clear cut views here daily. If you cannot get that info from here, then I cannot help you. Sorry for being a bit brash. But I have been getting some tiring mails and chats. See its technical doubt or a genuine question, I will answer. Just cannot spend time and energy to try and help with others trades at this point of time.

Will post edits if anything new comes up today.

Best,
Lee

Thursday, October 6, 2011

5 week low is probably in

Yeah I know. Sucks doesnt it? Holidays in our market..And then the GAP from HELL when we reopen..LOL..I have always wondered why we dont have futures trading after hours. Kinda sucks when all the US markets have derivatives of our indexes and stocks. Kind of dumb if you ask me. But its what we have to work with right now.

Market will always throw us curve balls and bouncers. That is the aim of the market. To separate you from your money.

So looks like a big gap up today. I alluded to this possibility a couple of times in earlier posts. I.E that the 5 week low might be in. This is one reason why I covered shorts on that day I missed the 100 point downswing. Yes it happens. I tend to get these intuitions and signals a few days early. I had a feeling the 5 week low was coming in that day which is why I covered the shorts. What use? :) Still went and entered some shorts past 2 trading days. Nowhere fully as before covering but still around 40-50% short. Still the very good thing here is because of this conflict in my mind, I hedged up nicely..almost too much I think..So today's possible big gap will not injure me..maybe slightly. So I cannot complain.

Updated Hurst Chart -



Ok I mentioned in the last post that it is possible, the 5 week low has already come in. And this chart kind of puts lot of evidence to this view. I earlier thought the 5 week low might come in the Oct 10-14th timeframe as I had posted before. BUT when we talk about lows and cycles we need to give some allowance to the timeframe. So it looks like the 5 week low might have come in on Oct 4th. Ok now coming to possible upside from this low. Remember, this is the last 5 week cycle, so its a bearish cycle. So this is still a bear bounce. Quick and sharp. But it will also quickly roll over. Need to wait for it thought. Price points are 4910-4950 and 5030 levels. One of this areas should provide the rollover and return to downtrend. Before that we have 4860. So lot of points but short covering in atleast first few hours will happen, after which we might get back to the trend.

I think until next week mid. Oct 12th i.e, we might not see major downmoves and will be in a corrective sequence..i.e an ABC move..So A might complete today, B down will come and then maybe a weak C..I feel it might not get above 5030 level for this full corrective move. We shall wait and see.

Another thing what this new evidence does to us is it puts the 80 week low that we were expecting in Nov mid to come a bit early maybe in the Oct end timeframe to Nov 1st timeframe. So need to watch out for that. Either way since we are so close to a major low, caution is advised on bearish positions and we need to start looking for evidence of a more sustainable longer term low very soon.

I will post updates. I have some shorts. I might close them on opening and just keep the hedges I have. This in itself will put me in profit. Have some puts and NF shorts and more than 150% hedges on them because everything was uncertain. So will close/play with them accordingly.

EDITS:

1. 10:00AM Update - Covered all shorts at open. Holding the hedges which are in good profit right now.

2. 11:30AM Update - Covering the hedges..And slowly building into shorts..I might keep some higher hedges just in case. Just remember I think the bounce can go up to the Oct 12th timeframe.


Best,
Lee

Tuesday, October 4, 2011

No Update Today

Very tired..Going to sleep early. I will try and put up a detailed post tomorrow. Position update is short(40% only) - I plan to hedge today and also add to the shorts over time. I am expecting some sort of possible bounce(small chance only but it is out there) over next few days(did the 5 week low come in early?)..And then the downtrend to resume heavily. Not sure on this as I havent done any analysis yet. Will do so tomorrow.

Best,
Lee

Monday, October 3, 2011

Not Much..

...of an update today..Same as yesterday..Looks like market is trying to bounce..However I really doubt it gets much far in this bounce..4900 is a good point to watch..If it gets there..And if it can sustain for atleast 1 hourly close. Till then downside risks remain and risk reward favours shorts. Remember we are trying to build a bottom but until we do so...Sudden downside moves will keep coming in..Atleast until the 5 week low expected in Oct mid and the 80 week low expected in Nov 1st/2nd week.

EDITS:
1. I am covering some shorts here to reduce risk..and also like I mentioned before to sleep well..It removes lot of pressure to book some profits and let the rest ride..And if market does bounce back from here, we can always add back them shorts. Still short in the range of 60% or so. Whatever I booked now are shorts from the 5000 area - so excellent profits also.

2. Not sure anymore..Today's action is quite uninspiring from a bearish perspective. I am reducing shorts even more to just a bare bare minimum(just token position) at around 4840..Earlier shorts were cut at around 4830 and below. For now market is looking strong. I will readd based on market action tomorrow. Going to bed.

3. Gotta love it. Has it topped for today? I am readding shorts again..But in a very phased manner. I want to have shorting power till 4950-5000 or so. So going slow and steady. Started from 4860 NF.

4. Definitely not looking like it wants to hold 4860NF..Added some more when we got there just now..Market not letting me sleep!

5. Stopping out again on the shorts since its sustaining above 4860..Shoulda gone slept lol..Will come back tomorrow fresh!

6. LOL this is too much...As soon as I cut the shorts, market goes down :(
Yeah I got up just for this..Shorting back in slowly on this pullback. Gotta love the market though for the conditioning it does.


Best,
Lee

Sunday, October 2, 2011

The Next Two Weeks

So last week was quite a tumultuous week with expiry also thrown in. I have posted my thoughts on expiry in earlier posts. There is no doubt that some kind of manipulation always comes in on expiry which will throw us off.

So now we are back to the trend which is down. Important price levels are at 4900 which I have been saying for a while. Break this and interest goes down to 4800 which we should do today. Break of this and a 3rd test of 4720 is assured and we should break that this time. Bottom line is I believe the past few weeks consolidation and breakdown level of 5200 test is complete and we will break 4720 soon.



As you can see from the chart 4720 is an important support cluster. More accurately 4720-4675 level is support. Break of this and a test of lower levels like 4400 will be on the radar. One step at a time.

Hurst wise, the Oct 10-14th timeframe should give us the 5 week low. And I expect this to be a very very weak low being the last one in this cycle. We might have a couple of days bounce from there before continuing along the primary trend into our 80 week low. Expected Nov mid timeframe. Again lets go one step at a time.





I shorted last Friday..Not fully but ok enough. So today if we gap down heavily it might not be a great time to add to shorts but we should have bounces which will give us that. Will post updates.

I will do a long term post sometime within the next few weeks. Because we are getting closer to an important low which should offer some safe tradable opportunities on the long side for several months.

EDIT:
1. Is that a bearish island formed on the charts? I can see it on the intraday chart on Ilango's site. If so, the its going to be bad for the bulls for the next few weeks I feel. For now a bounce seems to be on. Use this bounce to build into shorts if not already short..If already short, then can add a bit more which is what I will be doing.


Best,
Lee

Friday, September 30, 2011

Expiry Sucks!

Well what can I say..expiry really does suck and throws us off our game. I wanted to do a more detailed post yesterday before market opened but could not due to other committments. Anyhow like I posted yesterday at around market open, I kept on adding shorts throughout the day. And got an average price of around 4995. So not bad for a days work. Also got into Oct 4900 Puts. Overall size is not as great as I would have liked - around 75% short. I could have gotten more in but wanted to wait and watch a little.

Coming to expiry. All my observations were correct but this is what expiry does. Option players are the big guys..In the end, market will end up where they want it to be. When we started taking off above 4940, I started covering as I outlined in earlier post until I had just a little left..So I closed that also..Overall got out around 4950-60. So all in all not a bad thing since got to reshort again higher.

There were several important signs on expiry day.
One is the rupee still went weaker.
FIIs still sold.
Advance decline numbers were poor - showing that just few stocks pushed up.
And still market went up.
These were all signs that Friday would be weak. I wanted to outline all these before market open but didnt get time. Still thought I would mention now.

And really above were the reasons I shorted back into the market in the 5000 range. All in all a decent week. We shall review some charts and setups over the weekend.

Have a good weekend!

Best,
Lee

Thursday, September 29, 2011

New Shorts

Not much of an update today. All relevant charts are there in last post. Today as per my last comment in last post, I am building shorts from open till now both NF and 4900 PUTS.

Best,
Lee

Wednesday, September 28, 2011

Top in?

I really think so. For this particular move. There are various portions of evidence supporting it. I think unless we manage to get above the 5030-5050 range, I think it makes sense to sell all rallies. And cover on declines partially to reduce cost.
Today we should see sub 4900 for atleast some time. Whether we can stay there is the question. If we can, then below 4870, we can see more declines.
If we get to 4720 area this time, I do not think it will hold. We will slice through it and the next level to respect would be 4650. Still once step at a time. Its always easy to think oh we are going to 4650, 4200 etc or even 5500, 5700 and sit on a losing position. Take one day at a time.

OK enough of today's rant :)

Coming to markets, like I said, 4870 level is crucial. And above 5030-5050 level. In between kind of no mans land but still lot of opportunities to go in and out to get a better price on your positions. This is important. I mean if you are in profit, just book 1/3rd of position. Hold the rest. While this reduces your profit potential, it is a great psychological boost - to hold the rest of the position until target. And as it gets closer to target, cover one more 1/3rd. Then ride the rest of it. I cant tell you how much of a difference this makes!

OK thats it I promise :)

So I did cover a little yesterday..might just sit tight today or cover a little bit more..Reasons are as given above. Just balancing. Rallies will come to re-add back.

First the cycles chart -



Ok next a normal chart look. I have commented on the chart this time -



Another look. This is interesting. This is the Nifty Dollar Index - Defty - Are you able to spot whats interesting?



The DEFTY had already broken the lows corresponding to 4720 on Nifty. So basically the Nifty in Dollar terms is much more bearish that Nifty in Rupee terms. So what do you think FIIs are doing or will be doing? Think about it a little.

Ok thats it. Trade Safe!

If I do anything today, I will post. One thing I didnt post yesterday was that I reentered by NOV 4700 PUTS that I was trading with on the last big fall. I had sold them to buy back and I did that yesterday in preparation for the next leg down.

I also posted some comments in earlier post(s) - you may read them if you missed since I think some good info is there.

EDITS:

1. Not exactly sure what is going on. So stopping out of several of my shorts. Covered few in the morning like I mentioned I might. And rest at around 4936. Better be safe than sorry and live to fight another day. Unfortunately too much of news is coming out tomorrow..so another wild card. Probably around 40-50% short now. Above 5030 something else is happening so will likely stop out fully. Shall wait and watch.

2. Wow..that was some spike..toned down on shorts again..When in doubt better to stay out or reduce exposure..Maybe around 20% short only now. Will reevaluate tomorrow. Yeah I know I might regret this tomorrow..But still better safe than sorry.

3. Dont know. I am out fully. Hope the market does not crash tomorrow. Will reevaluate and come back. For now, bulls look very strong. Expiry sucks! :)



Best,
Lee

Tuesday, September 27, 2011

Quick Update

Ok..now I suppose everyone is feeling slightly to raving mad bullish and not at all bearish..cursing themselves for taking those short positions hehe..Its good. This is how everyone is feeling..and is a natural cycle of market psychology nothing else.

So as I mentioned..Options were disintegrating yesterday so I covered them all..I had OCT PUTS...did not want to hold against the obvious decay in price and this turned out to be a good decision.

SO...I am holding shorts today..October NF..hedged with 5000 calls which I entered yesterday around 17-18. Its 33 right now. So it offered me some sort of protection. Not much but something. And also in these kind of situations, I hedge at the ratio of more than 1:1..Means if I have 2 lots NF short, I might have 3 or 4 lots Options 5000 call long..This is because of deltas. A google can help you understand this better. I am not the best person to explain.

So coming to the crux of the matter, I dont think we are entering a new bull move. This is just a squeeze of the shorts. And this is the same game thats played always..over and over again. Once all the shorts have covered or have been squeezed, the next move down will start. Is it ready? Are we there yet? Maybe..But definitely close.I will be trading today according to this principle.

Updates will follow with charts. Havent got a chance to look or analyse them yet.

EDIT:

1. If you have been trading/adding short like me since morning, now maybe a good time to take some off just to be on safe side and also to reduce shorts cost. I have done this and will be going offline in a little while.


Best,
Lee