Friday - EDITED

SO..market reopening after 2 days off. Will be interesting to see how we perform today. In my opinion its bit of a toss up today. Since we were closed for 2 days and other markets performed reasonably good in those days, we should have a tendency to catch up. However today US markets were weak. So we might also exhibit weakness sometime during the session today.

Last time, I mentioned that the 10 week low was in and we are bouncing out of it..And what a bounce. Going in even at 4840 levels yielded awesome profits. So it was a good trade and call. Now as I have mentioned several times before, we are in the last 10 week cycle of the 80 week, the 4.5 year and the 9 year cycle. So this is an extremely bearish cycle. Which basically means the top of this cycle will be left translated. Basically that is how the bearish cycles will work - The tops will come in very very early in the cycle - thats how we get left translation. In bull markets - exact opposite - Right translated cycles where the peak is formed very late and then weak and quick declines. Hope I am making sense. This one might be forming the peak already around here or maybe a bit more higher around the 5100-5150 range. This is what I am looking for now to slowly scale into shorts.

I am not sure if I should start today or wait for a few more days. I will take a call as we go through the trading the day. 5100 area and above might be good to start scaling in slowly. The important thing is not to get too confident on this and also to play position sizing adequately.



Now if you look at this chart, the breakdown point is quite clear - 5200. This is where the descending triangle broke down and culminated in a devastating move down to 4750. So this is why I was saying any rallies have a maximum cap of this area. If we do manage to go above and sustain above, then we have to admit that something else is going on. We arent supermen with insights into the future - we are traders - so we have to operate on IF-ELSE scenarios - sorry just grounding expectations here. We have good odds but that does not justify not using stops or stop out points.

So for the bearish case, 5200/5220 is the point where it should not go above.

Over next few days to 1 week is the timeframe I expect for this topping process. We should back in and out toward this. Not sure exactly what structure we will take but let us see. My bias is very clear - I will be looking for a top during the next few days - maybe sometime next week - maybe sometime today. Will wait and see how we trade today because making any further decisions.

Thoughts and Comments are welcome.

Oh and by the way, Chandra, I do have analysis on US markets also. I will put this up over the next few days. I do tie up my analysis b/w India and the US very closely even though I dont mention it here. I will explain more in next post(s).

EDITS

1. Big Gap up..Shorted a pilot position on the gap up and hedged it as well. Now wait and watch if this warrants additions to position.

Best,
Lee