Staircase UP..Elevator DOWN...

Thats it. Nothing else can describe past few weeks move. Just in one day, gains of several days were wiped out..In a few hours infact.

I just wanted to put up a quick update before going out. Once I am back I will add more details and charts as well.

Now, as I mentioned, I covered 25-30% of shorts..covered a bit more also but couldnt post. Idea was just to be safer - and also its a psychological thing. Once you cover few, you reduce your cost and things become much more easier on you. Thats what I did and slept very nicely.

So now, today a gap down open is very likely..And I expect over next few days we MIGHT try to consolidate here before breaking the 4800 level - After which we should see another free fall. I think the market might give one more opportunity to others to get short again over next 2-3 days. This is what I think. However I would never recommend going long. Shorts can either sit tight. Or part book and wait for more opportunities. The next major low is only around Oct 1st/Sep 30th timeframe. So there are quite a few more days before any sort of good playable bounce can happen - Unless ofcourse you do intraday hit and runs.

This has been an awesome trading environment. And Hurst has helped me a lot. I want to thank everyone for their comments in the earlier post - it means a lot to me. I have also replied over there to everyone..So dont miss it.

EDITS:

1. A very quick update..covered 10% more shorts and hedged the rest with 4900 calls..so now only 50%(or less) short. I will post more on this psychology later. Should have mentioned price.I did this around 4854.

2. Ok Folks. I think action so far tells us it might be a quite day - I mean relatively - i.e we might not break 4800 today. As I said before and consolidation move for a few days. Look at the fractal posted somewhere before and you can see this. Market needs to digest this move. Without that, it cannot move lower..Or even higher for that matter..You know my bias ;)

3. I dont know guys..I am taking profits here in this area on almost all shorts. 4825 Nifty. The profits are too much to ignore. So I am booking here to refresh and come back. Its good to do that. As I said I do not think it will break 4800 today. If it does, there its another quick elevator ride down to 4700 area and lower. So I dont know. I want to relax a little and take my profits - well earned I think. We will come back with a fresh mind tomorrow.

4. Oh yeah for the record. My trades since I closed them and also since I was talking about these for a while -

- Nifty Futures short from 5150(higher due to trading but for the record lets take this figure) down to 4825.

- Nov 4700 PUTS from 100 up to 205 today.

Yeah I will sleep good and relaxed today..Totally FLAT ;) Let the market crash without me if it wants to LOL.

Happy and Safe trading to all!


Best,
Lee

AND we're there!

Most Probably Yes..Action in US markets today was very clear. Almost half of the uptrend was wiped out within less than couple of hours.

I had been calling for past 2 days or so for 5150-5180 to top out this current upmove and for the next big wave down to start. In Hurst terms, for the 2.5, 5 and 10 week cycles to top out and the next big move down to start into the expected November lows(with a small pause October 1st timeframe).

So likely we started that yesterday.

Now price - Like I have been saying. 5000 first needs to break. Then 4900. Then only we can confidently say we are going to break the 4740 area also. But you know what my bias is :)

So I am short..probably too much..So as usual, I will book some as we go lower..And ofcourse then ride the rest...Hopefully into the abyss.

I am surprised guys..no comments around here..Is it that you dont understand what I am saying? If so, maybe I need to revisit the way I present things..OR is it that you fully agree with my analysis and dont want to comment and add anything more? :)
Or is it that you fully disagree with what I am saying..And dont want to argue with a crazy raving madman speaking gibberish..lol :D Well whatever it is, I always appreciate comments guys..Even if I dont reply directly, I appreciate it and if its a question, I always try to address it in upcoming posts - The last few posts are clear examples.

Ok nevertheless, back to business. A small note about cycles. Its funny. If this same news had come out lets say at a different point of time, the market would not have reacted this way. If you think about it, there was no need for such a big selloff but that is where cyclic pressures come into play and exert themselves. Bottomline is we dont need to worry about any news events. I was calling for a big top for past 2-3 days just like I called for a bottom around a week back.

Same ol game. Just need to be able to read it accurately and MORE IMPORTANTLY, be positioned for it in the right way with least amount of risk.

Wish you all a profitable trading day..And expect a bounce back from some level today..most likely around the 5080/5050 area if we can get there. If that doesnt hold, then 5000.

And as always, comments are welcome!

OH and EDIT: One thing more - the fractal I posted yesterday. Looks like its playing out. If so, close down the hatches - we are in for a bumpy ride down. Those who know me from 2007/08 know the amazing fractal I posted and traded at that time. This also has the potential to be something quite spectacular. Wait and watch. And as always trade safe!

One more thing is the USDINR pair - I was telling all my friends when we were at 42.XX that this is going to 48.XX first stop and probably above 50.XX soon. I think the call is already justified. Right now IT is rallying anticipating increase in profits but sooner or later a mean reversion will happen there are well..As I said, wait and watch. And dont forget to take profits periodically.

EDIT:

1. Booked around 25% shorts..Just to be on safe side. And also to sleep sound. Now my effective short price is way above 5200 - so I am safe for now. Its just good trade and money management. Cannot afford to be greedy in this profession.

2. Hmmnn...ever since I covered a portion, market seems to be building a base for a small move higher. So expect this. Maybe 5080 or 5050? Possible but I think not worth playing for - the big move is still short and stay short. But if you want to, covering here and reshorting higher might be prudent if you are awake and trading. I on the other hand dont have such luxuries. So I will sit tight.

Jesse Livermore once said "After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting"

Will go to sleep and see tomorrow what happens. Whatever it is my avg short price is way above 5200 like I mentioned due to trading and covering some portion right now. So I will hold. Wait and watch. I think this is JUST the TRAILER. Full movie will be released soon ;)

3. WOWZA..so much for the so called 'bounce'..LOL..Bye goodnight going to sleep..Still short and strong. ;)


Best,
Lee

Are we there yet?

I think so. If not, then close. Sorry I couldnt give an update yesterday..somehow got pretty busy :)

So yesterday..no denying it..Was very strong. Almost unbelievably strong. BUT now we are bang into the resistance or supply zone. I will be watching very interestingly over the next few days to see how the market reacts here. I think this is a very critical juncture here. Be very clear about this - I have been saying for a while we can get into the 5150-5180 zone and thats what we did yesterday. Honestly I did not expect this to happen yesterday but thats what happened. I had been saying for a while I will trade my shorts intraday to reduce cost and thats pretty much what I did yesterday - not an ideal situation but need to work with what we have.

So now we are in the topping range. As long as we do not get a strong close above 5200-5220, I will remain bearish and continue to trade like that. However a close above this and holding above this, we will have to admit something else is going on. But lets see. I think next few days should give us a concrete resolution.

I know its tough at times like this to hold the fort and trade believing in yourself. But need to do that. I know it was tough for me. But after a lot of study today, I see nothing to change my plans or ideas or market outlook. Still believe we are topping working for the next move down. But close above 5220, I will have to admit I am wrong. We shall see.

If you are not comfortable trading, my advice is - sit out for the next 2 months or so till November mid when we will be buying into some good stocks. This is safe to say the truth considering all the unknowns out there. But if you are into trading, then I would say these are one of the best times to be trading intraday and for a few days purely hit and run irrespective of whether long or short.

OK a look at a chart. I am not posting the Hurst charts because nothing has changed from last time. I.E topping for this current 2.5, 5 and 10 week cycle before the next move into first the 5 week bottom expected b/w Sep end and Oct 5th or so. And then a bounce before the final move into November 1st week. Rough guidelines for now..But we will refine.

Chart -



Ok I posted this a little while back mentioning its a probable fractal for the market. Looking at it right now, it has done exactly as projected - so likely we are closer to a top than ever. You can compare each move within the circles to verify whether what I am saying is correct. We shall see what the market says though!

Best,
Lee

A Look at US Markets - SPX

Been promising for a while that I will post my analysis and phasing on the US markets. So here it is - I have presented SPX here instead of DOW - I somehow have been following that index for a long time rather than DOW or NASDAQ.

Anyhow here is first a very long term look. Its a monthly chart.



You can see the longer term cycles here - First 9 year nest of lows shown here is in April of 1994. Next 9 year nest in March 2003. And now the next 9 year nest of lows sometime toward Dec end of this year? There is always a chance it can come a little bit later. Jan or Feb? This being such an important low chances are there it will extend.

Now I have been mentioning for a while that our Indian market lows will likely come in November 1st week because we have been leading the US market by few weeks. I think by around 7.5 weeks or so. This will also be similar to Oct end 2008/Mar 9th 2009 lows where we bottomed ahead of the US markets. But looks like the gap has reduced considerably right now :)

Anyhow now a look at the shorter timeframe.



The last 18 month nest of lows came in June end. And the last 40 week low came in March mid timeframe. And the last 20 week low came on August 9th. Right now we are in the last 20 week cycle within this 80 week cycle and also with the 4.5 and 9 year cycles. Timeframe for the projected 9 year nest of lows shows as around the last week of Dec. But it may extend also. Will see as we get closer.

A bit more of a closer look.



Monday 12th Sept likely made the first 5th week low within this last 20 week cycle and we had a good rally out of it. This is also the same timeframe that the Indian markets made the 2.5 week low. So we are just 1 week out of the 5 week low in SPX. So still quite early but likely we are closer to a top in both this 5week cycle and possibly the 10 week and 20 week cycles.

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An update on the Indian market -

As mentioned before, we got the first 2.5 week cycle low last week Monday/Tuesday in this last 10 week cycle before a major low which expected in November mid timeframe. This 2.5 week cycle has run around 1 week now so we are in the topping region. And likely it will also be the top for this 5 week and 10 week cycles. The only question is - Have we topped already?

I think its a very high probability that we might have. If we havent then we might have one more push higher into the 5150-5180 range. As I mentioned before stops for shorts have to be somewhere in the 5200 area. If we push above it, have to accept its going much higher. But for now, lets go with the assumption that we have topped or are going to this week.

This week and the next has the potential to become very bad very quickly - the way I see it. But still lets go with levels. First 5000 has to break for the bearish case. Then the 2.5 week lows has to break next at around 4900. If both of these are done, then we can safely assume that this thing is cooked and we will soon go below the 4750 lows as well. But take a deep breath..and lets go one step at a time.

Friday was quite a whipsaw day..Got whipped a bit on my positions but still held on to most of the shorts I had with some exits and re-entries. Might reduce some today if there is some weakness just to reduce basis costs. I think I already mentioned that I have been scaling into 4700 NOV PUTS. Still have been doing that little by little. NF shorts have been trying to trade in them to reduce basis cost...Will continue to do the same intraday as long as we remain in this range.

Best,
Lee