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

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

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

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

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