Hurst Cycles Trading Software - Accurately Forecast Nifty and Stock Cycles

Thursday, March 24, 2011

Market - 25/03/2011

Quick update. Market at the cusp of the triangle today. Can go on upward to test 5600 today assuming we can sustain above 5540 area. 5600 is the higher end of the trading range - will it break out? A little bit of selloff is due for a reset soon because market participants are bullish now. However OI data is quite bullish and continues to suggest higher prices in the very short term.

More detailed analysis and charts over the weekend.


Wednesday, March 23, 2011

Tuesday, March 22, 2011

Intra Thoughts

Interesting is all I can say. I am still bearish over medium term but short term is bullish no doubt. Lets see if we can test 5600-5650 levels. I am shorting at 50 point intervals for now. Scaling in. I dont think we will be able to sustain above 5610..but let us see if it will work out over time.

My current positions -

Short 1 lot at 5450
Short 1 more lot at 5500
Will short 1 more at 5550 and 5600 and then wait and watch.

Even though I say 'lots' above its a ratio of what I am doing. Meaning 1 lot can mean 10 also depending on the size if you know what I mean.

Let us see. I am a positional trader not an intraday one. Some folks seem to think I am over analysing and I can see what they are seeing from their perspective. Its all about timeframe. I mean an intraday trader cannot come here an make sense of what I am doing. That wont happen. My timeframe is 1 to 3 weeks. Remember that.

If it does not work out for you then please quit this blog. I will take a little bit of drawdown to make bigger gains. If you cannot stomach it then this is not for you.


Monday, March 21, 2011

Some Macro thoughts, Nifty shorter term and a look at a couple of stocks

Macro thoughts...Ofcourse this is only speculation. I think we are going to put in a very important low longer term toward end of this year - this will be a great opportunity for us in India to some some real good stock picking for longer term portfolios. I will be awaiting the next buy on my weekly chart. Shorting like I said before is always a game for the professional in my view. I feel retail guys should always be on the lookout for cash opportunities and focus on picking good stocks when there is doom and gloom in the markets.

I will show a great example in my next post on this and what I mean..What my plan is etc etc.

I think we are going to do a lot of volatile moves over next several months until we get a sustainable bottom.

Remember in 2009/2008, US market bottomed in March..We had our ultimate bottom in Oct and a secondary in March. What I mean to say is we are leading the US market by around 4-5 months. This time also we hit a top before them. Too early to say for sure if it was the ultimate top or not though I think it is for now.

Emerging markets are an excellent barometer for what the hot money is doing. And it does look like the 2009 March situation is playing in reverse. Just my take on this.

My very limited cycles knowledge also points toward an important low later this year. We will have to see how it works out over time.

At this moment I dont see any chance of 3500 on Nifty being breached. I think we might get to around 4200-3800 and stabilize over time.

Reposting my comment from earlier post here so ppl dont miss it -

Stop losses are a real ART Yoda. I have kind of given up on them and instead am focusing on my signals.

Sujatha - tough question. For me this is where a bit of discretion comes in - mean to say more of feel kind of trading. Also simple supports and resistances.

I know the larger picture. Then I take a top down approach from there. For example 5650 broke, I was already building shorts from 5700 odd (gut feel) and when 5500 hit, I covered up, reshorted higher etc etc..I dont know - these kind of things just come my experience over time..And managing trades means I keep risk lower nowadays.

Leverage - I almost keep it at 100%..Mean to say if I have 5 lakhs - I will just short 2 lots = correct value more or less. To add 1 more lot, I need 2.5 more lakhs.

Trading hours big challenge - But I try to manage for a few hours. If I feel some important move will come, I will sit out the full trading day.

Thanks Bee..Read your mail also.

Thanks Prashant..

Ashish, you have asked a very difficult question. I will be completely honest here. Every trader will go bust several times in the stock market. No way out of it. I too have gone bust atleast 2 times. But I always made sure I dont lose more money than I can actually afford to lose.

I remember within first 2 yrs, I went bust once.

I studied lots and came back. Things went well for 3 years or so. Very extremely well for the next 1 year - got very overconfident and starting playing with huge amounts..started playing without SLs etc etc. Ofcourse I dont need to tell you what happened.

I have come to find that money management is the most important thing in trading. Understanding your risk and playing accordingly.

I would say right now, I play with less or NO leverage. Sure profits are smaller but need to keep greed under control. I am net on net okay now. Net profitable I mean. So yes it is possible and you can do it also. First thing needed is belief in yourself.

Lets continue this discussion.

Now heres a look at a random stock just to show my methodology and how I trade with a top down kind of approach. This is for the long side only. Short side I just focus on Nifty. Lot of comments in chart - open in new window to read.

A look at nifty shorter term. Comments in the chart.

Range contraction is what it is. Today would be interesting for a variety of reasons. One thing I have noticed is the correlation b/w the Indian and US markets has diminished greatly over past few months. So todays strong US move - would be interesting to see how we are going to react.

The FIIs have been using this as a excuse to liquidate nowadays. I think that is when they get the volume to do what they want to do. Means good gap up on world markets; then sell off. It will be interesting to see if the same trend continues today.

5600 remains decisive for the medium term timeframe. IF and thats a BIG IF we manage to get over and sustain 5600 over next few days, then we can go above to test 5800. I would put this as a low probability for now and instead watch how we react at 5500-5550 range. I will be looking to put back on the shorts at this area and then see if we can get to 5600 or if we get back down to test 5300 area again - my money will be on this. Let us see.

Bottom line is this - Trend is down. Rallies should be used to short or exit from longs. How exactly you do this depends on your trade management and personality.

We will focus on EW counts next post.


More later.

Sunday, March 20, 2011

Back Again

Okay guys..after a break of almost 2 years, I am back. I hope I will be able to consistently post here for a while.

What I have been doing for the past couple of years..a bit of soul searching..trying to improve my trading methods. More importantly trying to improve my money management techniques - this is by far the most important thing any retail investor/trader should do - But it is the one thats ignored by everyone..More on that later.

I have found that the best way to do things is to focus on the bigger picture..Keep leverage down to a bare minimum. Have a clear idea on the RR ratio..Most folks dont try to determine the risk but instead focus on the reward alone and in the end get bombed.

Another thing guys - Option trading is NOT investing. I saw someone say on a forum some time back that they had 'invested' in 5700 calls. What the hell!...Thats not investing..its speculation lol.

Anyhow coming to the chart. I have posted something similar some time back. This is the weekly nifty chart with KPL's 20 period swing on it. So its a 20week swing. I have found this is the best way to catch the longer term trend and swings with a fantastic accuracy rate. You can see the buy and sell arrows for yourself. This tool is great for a longer term investor and trader.

As I mentioned before, when 5650 broke, I think our market has entered into a longer term bear. This will be negated only on trading above 6181. Over time the swing will come down and we have to keep monitoring this to determine buy point.

I think we are looking at a possible bad year in 2011 and if we get a good low toward end of this year, then I will start looking for possible longs toward then. It might turn out to be the buys of a decade if it plays out the way I am thinking it will...Speculation at this point but lets see. I will say more about this later.

More comments on the chart. Count the points from arrow to arrow. Only price as I have found that that is the only thing can be trusted. Most folks will focus on thousand different indicators which only muddies up the picture. Focus on price alone.

I have been trading on the long side last year until the swing turned down as shown in the chart.

Bear markets are tough to trade for the retail investor. Its a game best left to professionals. Still I am trying to do something on the short side - atleast trying to capture some of the down swing. Lets watch and see how this plays out. Patience will be of great importance here.

More later.