What I see.....

12:30PM: I said we'd test 2730, and here we are testing it...May sell off from here..Infact I think good odds for it..Above it and we can run very fast to 2750 and maybe even 2780..Low probability for now..

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11:00AM: Okay so initial upmove over..And a pullback..It looks like its taking support around here..So it will try again 2730 range...Need to see how it reacts there before determining what can happen next..I added bit more to shorts in the am..As I said earlier, I was 50% short earlier...added bit more today...Not yet at 100%...I will reserve that for IF we trade at around 2820.

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Before I get into the charts and forecasting...Let me say some stuff...Most of you guys think that when I come out and make a statement like market is going to rally and test so and so a figure or market is going to fall and test so and so a figure, I look into my crystal ball and dole that out to you..OR that I am an operator moving the markets :D ..OR well that I am bullshitting you...But well that is NOT the case...Absolutely NOT...There is a lot of study that goes into this forecast..LOTS..That most of the normal folks wont be able to wrap their head around it!..LOL..I am delusional..A little bit crazy...A little bit paranoid...And very dedicated to the market that probably Mrs. Lee will soon drive me out of the house! LOL :D ..Thats probably why :) Not trying to be coy..But just trying to say - Dont take this stuff for granted..There is a lot of effort going into this..I am not God..I am wrong more often than right..But thats what we have exit plans or Stops in place for..But when I am right, I WILL rock and roll...And thats when most naysayers come out I notice...like last week and before :) So today, I will try and show some of the stuff I am looking at..

Its a very very interesting juncture...Infact I'd call it the most interesting and confusing juncture since the BIG BAD BEAR began in Jan of 08. So lets get into it...Guys you can comment, you can criticize, do whatever you want. I love reading comments..I love reading thoughts from others...Whether its FOR or AGAINST..so pls post..With reasons ofcourse.. :)

The only thing I cannot tolerate is -
1. Blatant criticism about positions without ANY reasons.
2. Questioning about positions AS IF I am your financial advisor..Which I am NOT!.

Anything other than above, please guys, I urge you to post..Post charts thru stuff like imageshack or jing..I will comment..I will help if you guys are looking for help...Anything...

Ok lets start then, we shall look at some charts first with my comments annotated on them...And then we shall go into my thoughts on what market shall do this coming week -












Okay...now what do I think...I feel..that we have 2 possibilities..Test 2760-80 odd and move down for the finale capitulation...I dont know what the reasons will be but in TA we dont search for reasons :)

The 2nd possibility is that we go down from around 2720-2740 odd to test 2660-2600 range before pushing higher up into the 2810-20 range...before again the finale capitulation move..

The last possibility - I give low probability to this but as traders we need to have this always in back of mind - Is that we go above 2820 and 2850 and sustain there..This will mean a move to around 3250 first and then above than 3600 and 4200..LOL...Look at the charts objectively and you will see what I mean...

For now, I do remain bearish but I will be ready to change on a dime as we might be near to a MORPH point....More than Ever!

Comments welcome as always.

Best.

Wrap Up

So I did absolutely nothing today..Which is also why I did not post in case anyone was wondering. If I dont post, assume I did nothing.. Its either that I am also confused and thinking what to do. Or that I do see anything tradeable in there.

For me yesterday was a day I could do nothing or very little...No pattern reliable enough to trade. I actually have some more leeway to add shorts as I am only 50% short now.

Its basically what we call a narrow range day even though it was a huge gap up..atleast what I would call an NR tradable day..Almost for 3 hrs or so, the market just stayed in a very narrow range...Absorbed all buying and selling and then moved up - short covering or buying I do not know..But I would guess a lot of shorts may have covered.

I wanted to hedge if possible, but market did not pullback enough to do that. I wanted to also add shorts if possible, but market did not rally enough for me to do that...

So next week, I will be looking at 2740 first and then 2780/90 next to add in some shorts...If market does look like it will close above 2780/90 any day, I will take my lumps and close this in a loss.

We could move straight up to the target and fall. OR we could pull back a bit to 2660 range and then try to rally up to 2780 again. Essentially the possibilities I have drawn down in below post. So its all different possibilities.

Its a moving target - Will watch next week for more clues. We all trade as per what we see. Please do not question others trades - this will not be entertained in this blog. After all I have to assume everyone reading this is intelligent enough to know when they are wrong - by themselves. I do know this and I make my own decisions - Just a cautionary request to all. I saw some challenging and questioning on cbox lately - Its not good. Trade your own stuff - If you are MAN enough, then post your trades. If you get it right, well and good..If wrong, well another trade will come - Take your lumps and move on.

Best.

Another Squeeze on the Cards?

Looks like it based on the huge strength in all markets. And maybe this one will actually stick. As of now I dont have a clear trading plan even though I do want to hedge all my shorts with options - This rally may have some legs - I do not know at this point...Whenever the trend changes, its tough to get on board. At this moment I do not see anything to suggest a trend change - But I guess thats how something new starts always.

If market breaks back into the triangle, it will invalidate it and the bearish case will weaken considerably. So thats my line in the sand right now. Either case I will look to hedge today on a pullback.

Chart -


Best.

ITS WAR - Pure and Simple

Everyday I prepare for trading in the markets. During the US market hours, I watch the waves, try to understand where its going. During the time in between the US and our markets, I study different views, blogs, boards to get more ideas and thoughts..Not that I follow anyone but its to get different perspectives on things..Mostly I plan the trade and trade the plan. Before entering a trade, I have a plan - Meaning what will I do IF market does this? What is my exit point? What is my add-on point? At which point will market prove me wrong? How do I manage this trade? And a very important question - What is my RISK on this trade?

Most newbies ask me - what do you do to become successful in the markets. I dont have an easy answer to this. Markets are dynamic. There is no holy grail out there to making money in the markets. Its all a matter of experience. A matter of having a strong mind to weather out minor bad phases. A matter of understanding money management and risk management. Above all, you need real time experience trading - Its no easy feat - Hours and hours of effort is needed. One thing new traders always think about is WHAT is the profit potential of a trade? They never think or understand the concept of - WHAT is the risk potential of a trade? See trading is not about charts or TA alone. There are many factors which I have tried to explain above..

I always say - 3 things - Mental frame of mind, Money/Risk management and finally TA/Charting/Some kind of trading method or system. All 3 need to be there, all 3 need to gel together. Its a process...And each trader needs to evolve himself or herself into such a state. Its not easy but can be done.

When I trade, I feel like its a WAR. There is no concept of investment when you are trading in and out. In fact, I find it hilarious when some folks say they invested in calls and puts..LOL..Do you know what investment is? Where is the wealth creation? Trading short term or in FNO is a zero sum game. I take your money, someone else will take my money...You need to be ahead of the game to make a mark. The sharks are out there to take your money. Its WAR - pure and simple! :)

Maybe putting cash into stocks Buffet style so as to earn dividends - Yeah this is investment...Not what most people do or can do.

So when you go out to trade each day. Prepare for WAR...Bulls and Bears make money..Pigs get slaughtered :)

Charts and Views later.

Best.

THE GAPPER

12:30PM: Okay..Anyone shorted the pop to 2620? I added to shorts...Now hold and wait..Let us see..Good night all..Will try to post some charts tomorrow.
EDIT: Well on looking at intra charts some more, looks like we good have one more good push higher upto 2640 but not sure...More tomorrow!
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11:40AM: I dont see any intraday patterns worth trading today...So no charts. I am also not sure what will happen later today...If we do infact stretch up into the 2620-2640 area, I will look to add some more shorts.
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10:40AM: Hmmnn...Looks like shorting the open would have been a good trade..Nuts..Well I expected more strength today :) No trades yet today.

Something of interest and what I like for the BEAR case - Sentiment turned visibly more bullish over the 2 holidays we had...Based off a number of forums and blogs I visit..Pay attention here...I have been saying for a while we have to have one more low...Where exactly I do not know :)...Trade from point to point for now..
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After the Open: Well not that big of a bounce as I expected..But there is still time..Done nothing so far. I see 2620 as first point we need to get above on on a hourly candle. Then 2660 - This is for the bullish case..For bears exact opposite today...I am just looking for spots to short at now...

How far do you think current bounce goes up to today? Comments please..
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Uploaded the Zurich Axioms again -

The Axioms

Anyone missed reading this last time, please do. Its an awesome book necessary for everyone trading in the market..
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So looks like its a big gap up today for us after the 2 day holiday. Well got to take it as it comes. I will wait to see how market opens and trades today before making a decision. I see a few possibilities but would like to watch a bit before making any decisions.

Hedging against shorts is one thing I am thinking of. The other is to closing the shorts at loss and trying again higher. The last one is ofcourse add on to shorts at higher levels and so get to full short position size.

A decision has to be made :) More thoughts later.

Best.

US Bounce

Big bounce in the US markets...Will this one stick or fade like everyone else? My view - MAX upto 742-750 SPX is possible after maybe a pullback tomorrow..So pullback from 720 to around 700/690, then again one more move up after a little into the 740 area max..It may not even get that far...This is how I see it happening. Another classic ABC pattern before next move down - Also this should be the FINAL move down.

Now this kind of puts a quandary on the shorts I am holding now. Maybe the US market will be weak tomorrow and bail me out but I am not sure. But I am not too worried about this..Either way, I see this wonder bounce failing soon. And since I am at something like 50% of my planned short size, I can always add more if we bounce higher...But its a moving target - will see more on Thursday morning.

Also lets see how tomorrow in US markets plays though.

Best.

Week Ahead

After the close - So as expected the 2560 gave support which is why I said below, intraday guys can take profits...So this sets up a creek, break below 2560 will mean a quick decline to 2500 where we might bounce a bit again...Next 2 days US market action is key here but I expect we break it sooner than later unless something really unexpected happens on the news front..
Cheers...Have a good couple of days off front the market!
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12:10PM Update - Sometimes TA (and my calls :P) even amazes me :) Again I called this in realtime below...You guys owe me big time...j.k :)..If you are a day trader, take some profits now...I am planning to hold these shorts through the holidays..Good Night to All!...


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11:40AM Update - And THERE you have it....Breakdown baby...Breakdown :)
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11:00AM Update - A look at the charts...Added bit more to shorts...


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10:15AM Update - Entering first small tranche of shorts at around 2583..Just 30% for now...Watching for now...If we get a good bounce to 2660, I will add to these so that I get at 60% short...Probably wont do more than that today as its risky.

Risk averse folks - Dont follow me on these shorts..As I said before, the 2 holidays are a problem here...More later.
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Before the market Open - Most of my thoughts are on the charts.

Trade plan is to start shorting asap. Looks like we have a lower open in store today even though I am not sure why exactly...So looks like I might have to chase short entries today...But whatever...I will try to get short in small amounts today. Remember the next 2 days are holidays..So dont over commit to anything.

Also remember - We are building/or very close to building a very important bottom...Timewise as I have been saying, March end - April mid we shall get an important low.

Intraday comments will follow later.

Best.

One Year...

...Since the inception of this blog :)

My activity in this blog has been on and off at times..Even thought about quitting at times but came back strong..Started some new stuff but couldnt sustain that without harming other sides of the equation...But still, recently my blogging has gained more momentum and purpose and I am happy with that...Hope it continues the same way. I have always told my readers, if you like this blog, please tell your friends also.

I have always wanted to make this site more of a participation and sharing hub - something like evilspeculator.com here in the US..Hope my dream comes true...Need much more commenting and participation from you guys...

Join me in Wishing this blog a Very Happy 1st Birthday and many more to come! :)

Best.

The ABC

Wow 34 comments in earlier post...Not exactly for the reasons I had in mind but it was good entertainment last night. I will continue to post the same way I always have...Naysayers or not...Anyway how was that bit of TA for you? The ABC upmove I called for...2620 on the dot..Yeah I'm an operator hehe...I will explain more on the ABC target toward end of this post.

Coming to all the hulabaloo yesterday...I guess when you have money on the line, its natural to become a bit emotional. When positions go my way, I cannot help but feel happy right? I am only human. I try to control emotions during a trade but after a trade gets over, I think I have a right to crow a bit. If anyone does not like it, please scram..This blog is not for you. When you have money on the line, when you put your trades on the line, its your credibility on the line...I dont know if anyone else has the guts to do it..Or follow up. What I do in this blog is unique in its own way..Its based on ACTUAL Trading..Unlike other big picture analysts who make viewpoints which are not tradable.

Comments - I enjoyed them a lot last night...And today morning...Lets keep the comments and ideas going...If you have thoughts, ideas etc, please do post them in the comments section...I am always on the lookout for new ideas, views, stock ideas etc etc...Most of the time I dont get time to look at different stocks so things like that would be appreciated in the comments section..

I think Neil compared this to evilspeculator.com...Wow I am fan of that site and happy that someone thinks I am close...But miles to go...

Okay now coming back to the ABC up target I called yesterday...Whats this Voodoo huh? Nothing simple ABC structure at minimum...Even though I did not trade it, I enjoyed that move after covering the short...

Explanation goes like this - After the downmove to support area 2540, it was natural to expect an upmove..This is why I covered. Next after that, a deep retrace...So see the first upmove was clearly impulsive. And so after the downmove taking support at 2560, we had an equivalent upmove leg again to 2620 and higher. So at minimum we have 3 waves in every move...A-B-C. If this is developing into a more bullish wave, we will have 1-2-3-4-5. Right now its too early to say but yesterday, the odds of having atleast a 3 wave move was high which is why I said we can get to 2620 and above...




Just thought I'd explain a bit on my call yesterday..Not sure if it sunk in..Some things can only be explained so much :) but if any questions, shoot in the comments section...Remember I dont have anything against constructive criticism...Its baseless accusations that I or anyone else for that matter cannot tolerate.

We shall see more on market later...Have a good weekend all.

Best.

Intraday Update - March 06

1:10PM Update - Almost amazing isnt it..How the markets are following my ABC path given below..LOL..So much for my TA-less posts...Are you reading, you naysayers?
GOODNIGHT.

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12:30PM Update - If we are doing an ABC pattern off the lows, 2620 is first target Nifty spot...2640-2660 next. We shall see if we get there....I am going FLAT into the weekend..And as I said before, I am stumped by the comments here...Best.

Chart-




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12:00NOON Update - Not saying anything else here..Not doing anything more here...I dont see a safe trade to take here...Also after reading the comments section, I am stumped...I have commented there to one guy..please read and comment also if you missed it before...Frankly I am stumped..To be sincere to myself, I looked back at the last week worth of my posts, I saw one talking about the 5th wave, I saw one about a real time flag breakdown, I saw one about the triangle breakdown, indepth analysis about this, targets, wave counts...etc etc...A lot of TA in my book. Frankly I dont know what this guy is talking about in the comments section of this post. Is this not TA? Do I trade on my whims and fancies?..I dont know what is missing in TA over last several posts...The only logical thing about the post and criticism is jealousy or a big loss he made on the long side...Same as the CALM-COOL guy and the Anonymous guys from before...Okay I am waiting for other readers to comment here...I am stumped for now...Good night.

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10:20AM Update - Okay I covered - 2530 odd..Almost 100 pts profit as I said yesterday I entered at 2630 odd if you remember..One of my best trades of recent times...esp coz it came in one day...Anyway I fully acknowledge that it can go lower to maybe 2490-2450 range. But enough is enough..Taking profits here.

One of my main qualms is the 2 days holidays next week Tuesday and Wednesday..If this was not there, I would have been much more sure on my positions but now I might just do nothing else and wait till Thursday...Still a profit is ALWAYS a profit!

Best.

Thanks Sam n Shaq for the comments.

Best.
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A little after the open - Well I am totally confused right now...My gut is saying to take profits right now...My logic is also saying something close..But still I am not sure...What should I do? :)
Any thoughts?

Best.

At The End

How does the chart look at the end of day -



I have to crow and thump my chest a bit here .. lol .. It was a beauty of a pattern - bearish flag breakdown - Called here in realtime. I also made a very good trade yesterday and I dont think its over yet. This should put end to doubts in anyones minds on whether TA works on not.

So what next?

The ART of Sword Catching - I see a lot of ppl doing this on a lot of forums and boards - Be careful guys..This is no ordinary market. Dont know why you have to bottom pick/sword catch - It has never ended well for anyone doing this. Just my thoughts but wait for some more time before bottom picking. We all think that 2500 will hold...What if it doesnt? We will have a panic crash. You dont want to be holding longs if that happens - Believe me!

The decline seems to be accelerating now. We still seem to be in wave3 of 5 to the downside. We will have a wave 4 one of these days - I do not know if it will come from 2500 or 2400 or 2300 - So not going to trade this...Holding short for now.

Best.

Charts and Intraday Commentary

12:00Noon Update - Well there you have...Breakdown which I called in realtime..Hope you guys enjoyed it and also made some coin :-) We might consolidate from here - a little maybe - but I think market is saying it wants to go much lower...Will not be a straight line ofcourse...I am 50% short from today morning..Ofcourse I wanted to be at 100% eventually but not doing anything more today...This shows why scaling into shorts is important - instead of waiting for higher levels.



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11:05AM Update - See chart below...Could be important..I have increased shorts to 50%..Might not do anything else today...



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10:10AM Update - Starting the short campaign with a small position...As I said before, I am just scaling in now...First 25% at 2630 area...More later...I will be shorting more as time goes by today...Not going to post level by level

I am surprised at the lack of strength today...Anyone, any thoughts why?
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I dont know how far up we go...Right now, global markets look week. Need to wait and watch how our markets react. Either case, I will begin the shorting campaign today..Slowly scaling in like I did before also...Keep watching this space for intraday commentary.

Daily with some important comments outlined on the chart -

NIFTY DAILY


Best.

Interesting....

I find it quite interesting as to the timing on how they release these stimulus news :)...In the morning I got up and came to know RBI has cut rates again..

I wonder on what basis they do this? Was it preannounced? I dont know...Did they see something in the markets to do this? I dont know...

Its just a side thought I had..But again it shows that in trading, the charts are best to be relied on..Ignore all news...Still I know many new guys focus on news, tips, rumours etc etc...I have always told people like this - Quit now Else market will make you quit....I generally watch cn(BS) for entertainment...nothing else...When market goes down 5%, its fun to watch these guys run around like headless chickens...lol

Okay anyways coming to the market...As you could see from my realtime updates in post before, I covered all shorts...It was very good timing...I still got it..hehe :P
And I also said I started scalping on the long side. I do have a small long position even now which I did not post here as it was a risky trade and I did not want anyone else to get into trouble because of me. But nevertheless, I will close this today if we do get the anticipated rally.

Next, I will go back to shorting mode again...Scaling in as I explained before..This time range for scaling in will be 2680-2740...maybe a bit higher also...The plan is to keep selling those little rallies of hope.

Anyone still holding some short term longs, its a good opportunity to get rid of it and go short...The RBI has given us this chance...Dont miss it :)

Post with charts and then later intraday updates etc will follow today.

On a sidenote - I would like it if you guys comment more...In the posts...Does not even have to be about the posts...Just tell me who you are, what you do etc..Just nice to know who are my faithful readers :)...And then we can also get into discussing about the markets and moves and trading..Why not? I mean the comments section can be used as a forum also....I am also thinking of adding in 'disqus' over here..For those that dont know, it makes the comment section like a forum thread which is pretty good if the discussions get more active...We'll see

Okay later then!

Best.

The Fifth

12:45AM Update - Okay guys...after closing shorts close to the lows of the day so far, I am trying some scalps on the long side...Its too much work to post these trades here and also follow up on them since timeframe is very small..So I do not plan to do so...Cheers..Have a good trading day. I think we will get chance to reload shorts higher up around 2700 maybe even higher...Bye!
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11:45AM Update - Got out of all shorts at 2590 odd...I think we can still go down to 2550-2500 range but I will err on the side of safety...Good profits...So Cheers!
Not planning to go long for now...Not positional definitely...Cannot rule out a bounce to the 2680-2740 range in Nifty SPOT...So I might intraday scalp..Nothing else...Best!
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It is said that wave 3s are panicky, emotional moves where the majority of the selling happens and wave 5s on the other hand, are just slow descents/grinds down born out of apathy toward the markets. The analogy can be of "boiling a frog".

The fifth wave also brings about a wider acceptance of economic woes among the general public..Everyone knows things are bad...Everyone knows market is never going to recover again..Everyone knows we are in a recession OR worse a depression.
(compare this to sentiment when we were at 6350)

Above sounds familiar?

Yep where we are right now...The 5th wave of C...Which means the final decline before we get a very very significant rally upward. Maybe even a doubling from 2000-2200 odd levels wherever the market actually bottoms.

Within this 5th of C, we seem to be running in the 3 of 5 of C. See charts below and should make things more clear...

I expect this current selling wave might not breach 2500 so I will look to cover my shorts if I can...And try to again reshort higher for lower targets which cannot be determined accurately right NOW. If the market does not give me a good entry, I will not do anything but instead will plan how to trade the next big move up....Thats probably where the next BIG money will be made. Moving plan for now but I will fine tune it today and mention in the intraday updates.

Chart -


So thats my rough plan FWIW...Its a moving target and so I will adjust my trading accordingly...Always the last bit of declines will be tough to trade successfully.

My first target of 2550-2525 which I have been calling for long is very close. :)

PLEASE NOTE - VERY IMPORTANT: Even though I said there can be a small bounce at 2525 area and even drew the same on the charts, there does not have to be one...It can be a straight move down also - simple capitulation. I would not be surprised with this. The only problem I have is HOW to trade it..Just hold onto shorts or hedge somewhere in between? Well whatever I do, I shall post intraday.

Best.

Fear of Regret

1:00PM Update - Dont know...I dont see much reason for me to cover the shorts I have left. I can be wrong. As I said before, you can cover and try to reshort higher if you can but I am sitting tight...If we rally into 2740 range tomorrow, I will add back the shorts I covered yesterday...Maybe the last update for today. :)
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11:45AM Update - Well we got that first obligatory bounce to 2680 and decline back. Now we might be setting up a good bounce here into the 2740-2750 area. So risk averse folks close shorts and try to short higher. I might just sit tight. Wait and watch whats going on. 2740-2760 if we get there should be a good short for those not already short.
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I will start first with a section from the 'Zurich Axioms'

The Second Major Axiom
ON GREED
"Always take your profit too soon"

Amateurs on Wall Street do it. Amateurs in poker games do it. Amateurs everywhere do it. They stay too long and lose. What makes them do it is greed, and that is what the Second Axiom is about. If you can conquer greed, that one act of self-control will make you a better speculator than 99 percent of other men and women who are crambling after wealth.

Always take your profit too soon, the Second Axiom says. Why "too soon"? What does that puzzling little phrase mean? It refers to the need to cash out before a set of winning events has reached its peak. Don't ever try to squeeze the last possible dollar from a set. It seldom works. Don't worry about the possibility that the set still has a long way to go -- the possibility of regret. Don't fear regret. Since you can't see the peak, you must assume it is close rather than far. Take your profit and get out. It is like climbing a mountain on a black, foggy night. The visibility is zero. Up above you and ahead of you somewhere is the peak, and on the other side is a sheer drop to disaster. You want to climb as high as you can. Ideally, you would like to reach the peak and stop exactly there. But you know "ideally" doesn't happen often in real life, and you aren't naive enough to think it is going to happen now. So the only sensible course is to stop climbing when you have reached what you consider a good height. Stop short of the peak. Stop too soon. Sure, when the fog clears and the sun comes up, you may find you're less than halfway to the top. You could have climbed a lot farther. But don't nurse this regret. You aren't all the way up, but you are up. You've made a solid gain. What's more, you've made it and kept it. You are a good deal better off than all the blunderers who scrambled blindly to the peak and toppled over the other side.

This happened to a lot of stock market speculators in our Indian markets also recently!

Carrying out the precept of the Second Axiom seems to be extraordinarily difficult for some. The main difficulty may be the fear of regret.

The fear is particularly common and particularly intense around the stock market.

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Okay the market - Well the triangle is now officially broken. I am not going to post a chart of this today. Most blogs on the net already have this so you can look that up elsewhere.

So what next. This break gives a target of around 2250-2000 odd on the Nifty. Does not have to happen but thats what this breakdown is targeting. It will not happen immediately or in a straight line - Expect sharp rallies in between. BUT its not time to be bullish yet...Not yet...As I have been saying for long, bottom will be in March last week or April mid to end.

We can target 2525-2550 area first and maybe then have a bounce to the downtrend
line of the triangle...Or back to test the breakdown point of the triangle before collapsing again. Again this too will not happen easy - It will be a slow and tortuous ride.

I am not sure yet what to do with the rest of my shorts. I will wait and watch the markets today before making a decision. Maybe do nothing at all.

Why did I post the excerpt/axiom above? Well just wanted to say its okay to take profits early as a follow up to my earlier post. I used to regret doing this a lot..GREED is a very strong emotion just like FEAR(the 2 primal emotions that drive the stock market)...But nowadays, I tell myself - Its just another trade! Believe me - having this attitude in your trading will improve you as a trader by a lot.

I will post intraday updates later today.

Best.

Round and Round - Part Deux

1:00PM Update - Covering around 50-60% of my shorts here..Mostly the puts and some of NF shorts...Reasons because I want to go to sleep and dont want to watch the market here - its like watching PAINT DRY! :P AND ofcourse profits are always profits!

Next thing is looks like 2660 is holding for now...so covering and watching seems good and prudent...

Lastly I dont like this action...We could be basing for a quick move upward. Not sure anymore..SO when in doubt, be safe..We shall see tomorrow what to do with the rest of the shorts..This relative strength in our markets has me skeptical for now..But not fighting with the market..Lets see if we are setting up an important buy very soon. 2500 area obviously remains important medium term. Still holding few NF shorts.

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11:10AM Update - Okay market is hovering around the 2700-2690 mark so far. I am not convinced this is the low of the day. I think we see more downside today itself. Be careful with bottom picking. Either way I want to cover some of my shorts today. I will wait and watch for some more time before taking a decision.

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Okay next our markets for today. Might be pretty bad with the US futures also looking down. I will post intraday updates in this thread itself.

The triangle structure spanning the past 4 months has been lending support to nifty so far. Today might be the day it finally fails - A close below the line will confirm it. You can see how they stick saved the market past 4 sessions to avoid a meltdown. A daily close below 2730 will have me interested AND intraday move below 2650 will bring about a big move.

A gap down is also almost surely assured today. I think the selling climax I was looking for so long might finally be here :)

Position updates if any - I will state them in the intraday updates here itself.

Chart for now -

NIFTY DAILY


Nifty Weekly Comments - Stochastics on a FIRM sell. I trust this indicator a lot - people who used to visit my blog from the beginning would remember more on how I used to use this for trading.

We might be close to a selling climax. Not going to try to pick bottoms until I see some bullish confirmations or unless we get close to 2200-2000 NIFTY levels..

One other thing - One bullish looking stock that I think looks interesting is CAIRN. Nice volumes and a possible triangle breakout. After a long time, I am looking at a stock with a bullish perspective. Keep an eye on it. Not sure if its a good idea to start scaling into it now itself or wait a bit more...I am also bullish on OIL..So CAIRN is a good proxy play.

Intraday comments later.

Best.

Round and round we go....

"And those who were seen to be dancing were thought to be insane by those who could not hear the music...."

-- Friedrich Nietzsche

Well folks, finally what I was expecting to happen for some time has happened. We have broken and closed below the Nov lows on the SPX and on the DOW..On the DOW by a big margin.

Chart -



Why our market is still showing resilience is still a mystery to me. Manipulation? Or just a delayed effect? Either case, my gut is saying we touch 2525 soon.

The other side of the coin is the low which I expect will come sometime in March or worst case early April may just be the BUY of a lifetime. Its coming but not yet.

We shall see.

Have a good weekend...Ciao! :)

Best.

PS: Any ideas on how the RIL-RPL merger might affect markets on Monday? To me something smells fishy...But I'd appreciate thoughts from others...

Interesting Juncture

12:45 PM Update - Okay again lulling us back to sleep. Be alert for a quick move. 2730 on upside and 2710 on downside...Break of 2710 and we can move quick to 2660. Maybe thats it for today. Be careful out there. Consolidation at the lows in this kind of flag pattern is never good for bulls. I did not do any trades today. Still holding to positional shorts from 2780 odd. Last update from my side today. Goodnight!
====================================================================================

11:30 AM Update - Well well what do you know...2740 is broken...Interesting...Next support is ofcourse 2660. Break this 2660-2600 range and I think thats it for the bulls. This is typical market maker tactics...play the bullish side...or just let the volatility die down for a long time...lull everyone to sleep and then trigger move in one direction - This makes sure that very few players are on the bus for the move...And we all miss the move...This is why we need to be very alert in this market. :)

ALSO the inverse HnS I talked about before is also invalidated now.
====================================================================================
We are at a very interesting point in the markets...I cant believe that US market is so close to breaking the November lows and we are no where near it. I think this can get resolved very very fast - knowing our markets. VIX is down for now but things can change very fast. We are looking at a big move soon. I still vote for down...

Okay now coming to the levels. 2740-2720 is important support. 2800 is resistance. Above 2800, we can run quick to 2860, 2880 and 2920 areas. There is a very big intraday inverse HnS developing which projects to 2900 odd. So thats a danger point for shorts. But I am holding to my futures shorts and some puts I entered yesterday. The timing was bad on the puts but the futures shorts are looking good.

As I said before a move above 2920 means market is turning more bullish and I think the short strategy will have to be abandoned.

I see a lot of confusion in the markets now. And the market makers are using this to move the markets. Yesterday was a classic example.

I will post some more a little later if I see something important developing.

Also charts will follow later.

Best,
Lee

Expiry Fun

Yeah...2800...Someone wise told me never to trade on expiry days :) What a move in the end...Someone seemed desperate to get it close to 2800. Well tomorrow is another day - lets see if we get follow through.

The intraday inverse HNS has almost completed target BUT there seems to be another bigger one developing that could target 2880-2900. Danger for shorts. But let me look at some more data and charts before posting again later.

Cheers,
Lee

Building Cause - Intraday Updates

Okay last I promise :) ... We look to be resolving oversold condition intraday right now by going mostly sidewise..I wish I could stay up to see what happens but going to sleep..Good night!

Okay one final EDIT - I am dipping into some 2700 March PUTs right here. Very few. Scaling in. Will add more tomorrow.

EDIT: 11:20 AM IST : Hmmnn...Interesting position...Looks like we are back at 2740...Now we can take this on upside and never look back with a good rally or totally fail here..Its basically a toss up right now. I dont think I am going to do any trades today. Sitting with my shorts from 2780 odd yesterday. Goodnight All.
I intend to continue this tomorrow. So expecting more comments from everyone! :)

EDIT: 10:30 AM IST : Okay it looks like 2740 area is providing support for now. See chart below which shows why and the confluence of support in this area. For downmove to continue, we need to break this and then ofcourse break 2680-2660 as is clearly visible below in the chart. I expect we can try to move a bit more higher as long we as we hold 2740. I might add a few puts if we do manage to go higher - so far, I have done nothing today.



===================================================================================
I am starting something a bit new here. I.E a thread each and every day for intraday updates. I will post thoughts every few hours but ONLY if I see something worth posting. And ofcourse until I go to sleep. :)

So if you are a faithful reader of this blog, please visit during market hours also as I will post updates whenever I see something worth posting.

Another thing - I note there are many regular readers here. If you like this blog and the material posted here, please tell your friends also. Also if you think of any way I can improve this blog - new material you would like to see - or anything else for that matter, please let me know. If it is infact feasible, I will get it done.

Okay..One more thing..Earlier post, I know it was boring..Macroeconomics and all that..I know most of you guys are focussed on what will make you money today...BUT understand that all this macro views are important to us all..And simple fact of the matter is - It will help you make decisions on your short term trades also.

A simple example. 2 months back, I used to try the long/bullish side for positional trading..even though I fully knew that the situation is bad...And what happened? I lost on most of those tries. Bearish positions on the other hand continued to win big...What I learned in this is..Never trade against the BIG PICTURE. To do that, you need to understand WHAT that is..And I am sure most people do not know!

Now dont get me wrong..I still scalp on the long side..I dont post that here..Or its just a 1 day trade like I did a day back with good profits...But I dont do that unless 1) I can get out quickly 2) I know odds favour me 3) Risk vs Reward is good.

Okay coming to market today...The inverse HNS pattern I talked about yesterday targets 2800-2820 odd...So I expect we shall tag this area...I started shorting yesterday...Might do some more today via March PUTs...2860 above means I am wrong above this short term and we can go above to around 2920..Unlikely but something we should be aware of when trading in these conditions...

Either way I think we are building cause for the downside.

More thoughts later...I might add EDIT thoughts into this post itself a little later.

Best,
Lee

Counter

Now this is going to be a funda post...So if anyone wants to skip go ahead - But I would recommend to read it very carefully since its something that will affect our actual lives also...Not just trading.

In earlier post - Sajal(Long.Short) raised some very clear thought out and important points...I am pasting this in here as I think everyone should be able to see the counter points to my earlier post.

1.What I have understood from your explanation that you are trying to establish a theory where--i) US will suffer a depression in the coming years ;ii)while India and China will shine.I don't know if I understood correctly but at least that I got from your undertone.

Just here lies my problem. If your first premise is true then your second assumption should be wrong.
Rather it seems like the stupid "decoupling theory" that cropped up Nov -- early Jan last year in our market which was ultimately shattered by just 2 back-to-back down circuit in Jan.
My point is --
a) In 1944,Bretton-Wood accord established the US$ supremacy in exchange-rate world over.It is the US economy which creates and circulates US $.

b)Politically US is the super-power and I am not seeing any country who can dethrone US in near terms. So, Bretton-Wood will continue.

c)If US recovers then a mojor contribution will come from this US$ supremacy by Bretton-Wood.I mean other economies will help US to recover by forgoing their own growth.

d)What earnings you are looking today of the Indian Incs, can change dramatically within a quarter or two.So we should not give much importance to the present marksheet of them.

Lastly,in short,my point is If US suffers nobody in the rest of world can avoid sluggishness(at least).Once a French President said beautifully... tying with US is like sharing a life-boat with an elephant.

Now I totally agree with most of these points...Dont get me wrong...I like to see the 2 sides of the coin...And most of these things, I have already thought about a lot...I will try to outline my thoughts in order - But remember one thing...Economics is really a very very grey area - No one knows what can happen..Its more of speculation at a different level which is why I prefer to stick to TA - Atleast we have that to guide our trading...BUT its always good to have an idea of the BIG PICTURE...It will help in our trading - Always.

My thoughts - Sure USA is the major power now...And logically we must conclude that IF USA goes into a depression, the whole world will. Now this might be true in the beginning of the slow period but eventually others will step up to the plate is what my view is.

In every major economic cycle, we see one major economy crumbling, and another one stepping up to take its place. These are not 1 or 2 year events but a big process. For example, before the last great depression, England was the super power...Now its just a shadow of its original form. Same as for the Roman, Persian and Greek empires. The rise and fall - roughly will span around 200-300 years. I think the fall of the USA has started. And the rise of some other powers have also started. I feel for sure that China will be one of them. India on the other hand, not so sure but I do think we will also come close.

Now, HOW is the big question? Where will demand or growth come from? Well it has to come from within..Simple..No other way. This is one thing which I feel pained about - India is a service oriented economy - The way it is now - We will not be able to survive for long. We need to start building from within - Thats the only way demand and growth gets going. In the first part of the 20th century, there was a massive wave of infrastructure growth in USA - this is what fed the growth cycle. Same needs to happen elsewhere. China is on the right path - Recent plans show that. I am disappointed with the so called stimulus plans India has now..We need to stimulate growth from within...Period.

Okay enough of my rant.. :)

Now I can be totally totally wrong here. Its just a debate. Economists are probably more than often wrong - Else we would have seen this crisis coming. So what can we do?...Just trudge along trading these markets until we see some light. I will remain very long term bullish until that multiyear bull channel is taken out on the sensex. If this happens, well, I dont want to think about the state of the system then. Lets keep our fingers crossed that this does not happen.

Okay I know I bored you guys...Here is something more before I stop. See the image below.



It’s a geographic representation of the impact this financial crisis will exert across various nations as projected by a recent LEAP report -

LINK

LEAP/E2020 has studied the situation for the main countries and regions of the world along seven precise criteria enabling to measure their degree of immunity to the financial detonator.

CRITERIA:
Share of the economy dedicated to the financial sector
Share of the economy dedicated to services
Level of household debt
Quality of financial system and household assets
Relative amount of public debt (municipalities and social systems included)
Relative amount of external debt (trade and payment)
Share of capital-based pensions on overall pension fund system.

Based on these criteria, [the] team was able to identify 6 major groups of countries hardly related geographically but with similar profiles.

The report goes with a projection of approximately how long each of these regions will be affected and also elaborates on main challenges in overcoming this systemic crisis. Great stuff to say the least.

Now you can see, the US and UK will be the worst off...Africa - well nothing will happen to them because of this crisis. China and India will be in a recession period for 2-3 years (US will be in a depression spanning around 5-10 yrs by contrast)
[Different language on the image but you can see what they are saying here]

Now I stress again...All this is speculation. Makes for good debate but not much use in our trading - But it always helps to understand the BIG picture.

Thanks to Sajal for all the valid counter arguments.

Best,
Lee

Lull before the Storm?

EDIT: Wednesday morning after market open...Got out of my calls from yesterday...Thats it for me on the LONG side...Now slowly scaling into shorts...Dont getting me wrong...I will short slowly up to 2860...Cheers to all!
====================================================================================
Well how was my timing yesterday? :)
I for one was very happy with it...Covered shorts near the low and took some very low risk longs in calls...In a notional profit right now. I will likely look to cover it very soon - even before expiry - I am obviously not very comfortable holding longs at this juncture...Markets can reverse back down at any point of time...2850 would be the most aggressive target.

Now why did I cover? Below chart explains it...And I did point this out yesterday also...And we got a doji...Seems to be playing out according to plan...We should also get a big up day very soon if its playing according to the plan.



The other interesting thing - If you pull up the intraday chart from yesterday, we seem to have formed an intraday inverse H&S which projects a target to 2800 if we move above yesterdays highs...So worth watching. (pull up a yahoo 5 day chart and see what I am referring to)

Okay so thats my short term outlook and my trading plan...

Now coming to the bigger picture...MVP asked a very interesting and important question in the chat box...Something I have also been wondering for some time...Simply put...why is there a disconnect b/w our markets and the dow or spx...We have broken the lows in DOW or SPX and nifty is still strong...Why? Well I do not have answers but I can speculate...

Something else worthy of note here is that Nasdaq has not broken the lows and looks more strong...It looks more like Nifty so we can compare ourselves to that index...

But...coming to the discrepancy...There are 2 possibilities...

1. If you remember in Oct of 2007, US already started the bear..Much earlier than us...We waited till January to put in the big move down...Market might be held up right now and stealth distribution might be going on...Before the final capitulation move to a bottom...This is one possibility.

2. The second one is a more fundamental one...I.E India is more stronger and is preparing itself for the next bull market...Hence the relative strength.

I think its a mix of above 2. I expect we will tag the bottom of this chart eventually as I have been calling for a while. It may happen sometime within the March-April timeframe. Sensex Monthly attached below.



And I think this will be a very important bottom for our markets...And we might not breach this in the coming months...You can see we have been in a structural long term bull market...Recent bear market non-withstanding...A tag of 6400 on sensex and moving up from there will have me very bullish. We can expect several tests of the channel bottom before the next bull market begins...Ofcourse all this will take a lot of time...Its not a 1 or 2 day event.

But during this time SPX might might just form another term bottom at 650-600 odd and then mount another rally only to break it later...India on the other hand will become more stronger as time goes by...And as the fundamentals regain strength.

This is my longer term view and should be taken with large fists full of salt :)

Earnings wise, I am here in US, I see it, its bad...SPX might have negative earnings very soon...Do you see that for India? No...Sure we are in a slowdown...even recession...But we will recover within 2 yrs or so...US on the other hand if lucky will recover in 5-6 yrs...If NOT, worst case US of A is going into a depression.

Speaking more on the fundamentals, I am appalled at the way policy is moving here right now...Its not good...US of A is moving more toward socialism when we are trying to move more to capitalism...They are worsening the situation with every new policy step they take...If they had done nothing, market and economy might have recovered sooner...This is why I think USA has peaked...New Policy is making it worse...Sure it will stabilize somewhere but I think the boom here in US of A is over...

The next few decades belong to China and India.

Comments welcome.

Best.

Some more thoughts

ONE MORE EDIT: I took a gamble on some 2750 FEB CALLS...Pure gamble...If I lose it, I lose just the premium... :) Worth the risk here in my opinion.
=====================================================================================
EDIT: A little after the market open...Out of my shorts...Flat for now...Now the market can crash without me...LOL :)
=====================================================================================
We seem to be close to an inflection point right here. I would think that we are very close to a bounce point. Could come from the 2660 area...But if this fails, we could have a quick trip down to 2525-2550. So its a risky area for sure. Either case I am considering taking all my shorts off today and just going flat. I dont want to go long here because of the 'crash' possibility..And believe me, after the US market today, its a very strong possibility. We got to bounce right here on the SPX and DOW, else its crash time. But gotta take that risk I think as a trader..So I will take my shorts off and wait for a bounce to reshort again. Dont want to risk any longs in this market.

Chart below.



Comments welcome.

Best,
Lee

Week Ahead - Quick Post

EDIT: Well looks like today was a holiday that I was not aware of until a few minutes back....LOL...Well it happens...Anyways nothing changes in views...We shall see more detail tomorrow sometime....I promise a more detailed and indepth look at things and how I see the next few weeks - intermediate timeframe - playing out...Short term, well a bounce is on the cards...Not that it matters much for the intermediate/medium term.

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

Meant to do a much more detailed post over the weekend...But a friend of mine visited and right now watching the Oscars....So no cigar...Still a few words and a chart...A more detailed update will follow tomorrow.

Right now, we are at a bounce point...Which is why I reduced shorts on Friday as you could see from my earlier post. I intended to reduce more today but the US futures has screwed up this for me...Now let me clear...I wanted to cut some shorts and then add it back after a bounce...Not that I am turning bullish...

Levels...2730 was obviously very important as I said before...below this 2660 is most important. So from here a bounce into 2820-2860 area was expected...Which is why my plan of cutting and adding came into the picture...Sometimes we have to think on the run...And adjust our plans...More thoughts later...After this bounce, downmove should continue. Chart with important lines and points below - Its self explanatory.



Best.

Covered Few

I covered few shorts near lows today....Just taking profits...No change in outlook.
I think some bounces are possible...But I dont think it can sustain the gains.

Cheers,
Lee

Outlook

Unfortunately did not get time to make a more detailed post...But a few words on my outlook. I still think there is ATLEAST one more significant down wave no matter what the count is...

So if you look at the triangle we have been in for past several weeks, yesterday we tagged the bottom of it and bounced back....2730 odd....so for the bearish case to gain strength, we do need to break that and close below that...For the bullish case we obviously need to hold above that as much as possible...

Now you already know my bias. I dont like to post 2 sides of the coin...Very clearly, I expect we shall break 2730 soon and go on to test 2660, breaking which we shall touch 2550-2525 where I think I will cover my shorts for this round. All this should happen very soon as the down waves look impulsive to me...

2860 on upside is key for da bulls...And above 2920, I would say bearish case is dead for now.

This is my outlook. Should not be construed as investment advice and usual disclaimers apply :)

Best.

THE JINX

Yeah I know I know....I promised I wouldnt post for a while :)

But when the bear finally wakes up, shouldnt I be there for it? :)

Anyways all jokes aside...I am wondering if we are finally getting the big move. Or atleast the start of it...The move that has been so elusive for so damn long. Even shook me out of a few of my short positions. Yeah I have to say its not been easy being a bear for the past few weeks. Maybe the tide is turning?

Charts with comments below.






Hope I dont JINX it this time also :)

Best.

Walk the line!

Not going to talk about the markets here even though I have commented in the previous post...If you missed that, please read since there are a lot of valuable insights in there from different people.

I watched a movie...Walk the line...A few days back...And I loved this movie. Amazing stuff...The movie story line is a bit sad to say the least but overall a wonderful movie..More than anything the actors performances are superb and should not be missed..Since I loved the movie so much specially the songs, I thought I'd try the title song...An attempt below...

Now this song really needs 2 guitars with a lead for sure, I am not very happy with it but well it is what it is....He sings the whole thing so low..almost rock bottom base...But anyways, heres my take on it...enjoy :)



Best,
Lee

Sabbatical

Okay guys...its been a tough week...very tough for me...One day the bear case presents itself and the next day, the bull case presents itself...We are in a range...Period. And I have been wearing myself out trying to trade it positionally instead of scalping.

The fractal called for a down day yesterday which we did not get. Maybe because of the last minute stick save in the US markets but whatever it is, we did not get it....I thinned down a lot on my option positions yesterday only because the time decay was killing and ofcourse took a loss in them. Going to avoid option trading from now on...

Overall a disappointing week for me...We may have topped as I said before but as each day goes by, I am becoming more and more skeptical...Maybe we just stay in a range for some more time....Just frustrating everyone...The budget next week might provide more direction...Maybe.

I am still holding my core short position but I will likely bail if market makes more of a push higher...And again maybe try at higher levels.

Overall not happy with my trading over past couple of weeks...I see that some emotion also entered in lately.. So I am taking a break from blogging...
Definitely for a few days...Maybe even a bit longer.

In the meantime, best of trading to everyone.

Wishing everyone and good weekend and happy valentine's. :)

Cheers

Round and Round we GO

Update to the same fractal call I been posting here for a while.

EDIT: Damn - 'I AM' on the chart should read 'AM I' :)
Man last minute stick save on the US markets...Can you believe it..lolz



If this is right, Friday should also be a decent down day.

Cheers.

The Playing Field

EDIT: Forgot to mention something. See how they killed all the bears yesterday. See how they closed the gap - Exactly what I said might happen in previous post. Now what this achieved - bullish sentiment is stronger now...I find this very interesting. I think we are building CAUSE here. But I still have to say bottom line is we have to get out of the triangle below..

Simple and self explanatory chart. Thats the field...How high up will we go? Not sure at this point. But whenever we break 2850, it will be game over for bulls.



Notice also above how stochastics is close to tipping point.

2960 is a potential topping point...Above that it will be 3050 and above this 3120. Quite unlikely we run that far. I will be looking forward to adding more shorts today/tomorrow depending on the levels - whatever I had thinned down few days back.

Best.

Whats New?

Before I start, here is a GYAN -

What is the definition of insanity?
Doing the same thing over and over and expecting different outcomes! :)

A very smart guy...genius in fact said this...not not me :D....Yeah Albert Einstein.

My last 2 posts were just in jest in case you did not realize...Still some amount of seriousness is there lol...

Okay pure market views. Looks like we get gapper down today...And the usual attempts to fill that gap. It seems to me like we are being conditioned to a Pavlovian Dog instinct. One day a gap will come which will not fill...That day we will see real panic and maybe a bottom..Today is not that day.

Charts with comments.





Points to watch are 2860-50 on downside. I am not saying that the bull case is dead until a close below this point. In fact I think we shall close the gap the today or atleast try to. So its not like all is clear for the bear. Its just one more chip in our favour.

Even though I was mostly joking in last 2 posts, do not miss them since there is matter in them as well as the comments.

Best.

Damn! Somebody Woke HIM and HE aint happy :)

See this is what you get for taunting bears! :D (refer post below this)

All in jest of course - Just having some light fun....While the bear case
has been strengthened today by the US market action, its too early to
say if we can have one more marginal high - But less chance.

Thanks to all who commented in earlier post. I have posted my thoughts
and conclusion also there in case anyone wants to read it.

A more serious update later today.

Best.

There he sleeps...Somebody please wake him!! :)

:)

EDIT - WOW looks like the US Bear just woke up...be looking for a fakeout/trap :-|
Someone please wake the Indian Bear too :)

On a different note - Would you prefer my usual written updates or the videos? I noted that not many people download the video compared to those that visit here.

Markets - The beat goes on. 20day swing SL taken out. Now its on a buy...Likely this will also fail - stop is at 2660 odd I think. We are in the RANGE from HELL for now.

I still believe we are setting an important top right here. My beliefs should ofcourse be taken for entertainment purposes only! :)

Will post a more serious update later.

Cheers

Video Update - Feb 9th 2009

Latest Video update from my side...Video quality is good...But could only put the full file on another server...Go and download from there to watch -

LINK

Best.

Important Week Ahead

Meant to put out another video today...Unfortunately did not get time but still want to do this quick update since I think this week is a very important week.



The most important chart development I think is that the SL for the 20d swing has come down to 2930 - meaning that shorts should exit if market closes above 2930 any of these days. Will it happen? Well let the market tell us. I am going to review market action for next few days to decide how to manage my trades.

Something I have noticed recently is that few readers are turning aggressive, downright critical, mostly senseless comments that I cant even understand what they are trying to say. Come'on guys if you want to offer counter points, I welcome that since I can see the other side of the coin...But aggressive and taunting posts will get you nowhere. If it continues, I will be forced to take some additional steps like no comments allowed at all...Or even take this blog private so you can read by invite only....But we shall see. I dont like it when people come out taunting esp when I take a lot of effort to this analysis and updates...Its very frustrating to say the least.

The good thing though is that whenever these guys come out like this, market flips in my favour. So we shall see.

Okay enough of my rant.

Some interesting things I see on public sentiment also. Suddenly forums, news, blogs etc have turned bullish - They were bearish till Thursday. For me this is damn interesting. Market has not done much in this period to warrant this much bullishness...Is it the news? The stimulus plans? Well we all know how the last few stimulating plans helped the markets :D
Bottom line is this market should be allowed to heal by itself...sure it will be slow..but it is the only way. The more money you throw at it, you are only worsening the process.

There are a few things I am watching and also some cycles that say we are going to put in a real top within Monday-Wednesday timeframe this week. Whether this will happen or not I do not know but I am watching this week closely. I admit time is fast running out for the bearish case and the earlier fractal we were following can fail if the bullishness continues this week. I will be looking for an important top this week beginning.

I will post the video update tomorrow.

Best.

Reflexivity and Inverse Reflexivity

I meant to post earlier today but some work came up....Still here are my thoughts as promised...No charts today...Just typing some random thoughts and ideas.

Now the topic -
For those who don’t know about this concept, its very useful -

Reflexivity basically equals ‘a self forefilling prophecy’ - traders expect a gap and big decline, so they sell causing a big decline. This is actually a pretty widely followed concept. You can google for more information.

Inverse Reflexivity is a different idea - its an ‘unforefilling prophecy’ - its the contrarian flip side, where in this example, if too many traders go short anticipating the decline, the market makers aka operators can’t resist picking their pocket - coz believe me my friends, they know two very important things -

1. They can see how many short positions are out there and where hard stops are.

2. They know all the methodologies we use, what triggers setups, what triggers stops

If this is the case here, then likely it will roll over again down once the shorts are cleared, maybe by the close today or maybe by Monday.

Now above is what I think of the market now...As I said before I am just a trader...I am not a market GOD...You need to make your own decisions....I dont want you to lose money and then come back and post over here as that ANONYMOUS LOSER...I am sure that big loser lost so much money and he is totally pissed off at the world. Well my friend, no one but you is responsible for your own losses....Same thing I have to say to all....

Having said that, I thinned on some of my shorts yesterday...Still heavy so was looking to thin down some more today...If I get a good setup...But overall planning to hold shorts into next week. If you are risk averse, do not simulate my positions or my views :P

A wise guy once said about TRADING - The HARDEST WORK in TRADING is the WAITING ;)

Best.

Chill Out!

Another attempt...This time Bryan Adam's 'Back to you'

Comments appreciated.

One More Thought - EDIT*

EDIT: Sorry I had to delete earlier post and repost here...One idiota loser who probably has not even made a single cent in the market in his life has started posting anonymous comments that I will soon fail and commit suicide...LOLZ. I feel for you my friend - I think you have lost a lot in this bear and are just venting your frustration out...I guess you are also the same guy who commented a while back that 2250 is not the short term bottom but it would be 1860...Hows that working out for you?

Sorry could not resist...

I have changed settings...No more anonymous comments...

So that the latest post and comments do not get lost, I have pasted them below.

Latest read on markets - Well I dont know...I am still seeing possibility of a big down day...Or even cumulative down...Either way I have to start seeing sub 2700 in next 2-3 days. Else have to start thinning down on shorts....Already I managed a few, took profits on some and so on....But probably will think about really cutting them down soon.

Cheers.


OLDER POST AND COMMENTS
=======================
I have a pretty good feeling that we can have a very big down day today or on Friday. Be very careful out there if you are trying to bottom pick. For the down day to trigger, 2750 should break first..Then 2700. If so, then I think the goose is cooked and we head to 2525 first stop.

I will put up a new analysis video over the weekend.

Cheers!


COMMENTS
========

Yoda said...
Something about this fall isn't right. Can't put my finger on it.

Most stocks by this point are uniformly poised to drop - that syncing hasn't happened yet.

I'd advice caution since yesterday's fall was so controlled.

February 4, 2009 6:36 PM


Lee said...
Yoda, I agree with you to some extent...Something is not in sync...I can feel it also...Which is why if you see my last 2 posts, I am advocating lots of caution in case the whole premise is wrong...lol...I cant put a finger on it either but STILL...I have to play the odds...And short still seems the way to go...If we dont drop in next 3-4 days, I have to rethink this whole fractal...

Cheers

Thoughts

Hope you all enjoyed the video in the post before...The quality in the video posted in the post was really bad which is why I uploaded the video in full quality. If you download those, you will be able to see it in full resolution. The blog embedded one sucks...

If anyone has a more effective solution on how to put the video IN the post itself, I would really appreciate it...Suggestions welcome.

Some folks had problems with actually playing the downloaded file. If you are having problems...Go to this link -
http://www.videolan.org/vlc/download-windows.html

Download VLC media player...Superb player and will play pretty much every video file under the sun..Few it will not but thats fine...

Do this, and I am sure your problems with actually playing the file will be solved...

Regd the earlier posted poll, majority was bearish..But I think this is because you guys are reading my views and are influenced by it. Mainstream as I see is not so bearish...Sure there are bears but there seem to be a lot of baby bulls. Scary.
The other thing I feel is this...We are probably in the terminal end of this decline phase..So this means lots of people are bearish...But still the decline will come to wipe out the last smidge of bullishness so that the new baby bull market can start.
This is my feeling and interpretation. I can be wrong also. :)

Okay now coming to the markets...

So far, the market has been driving both bulls and bears crazy...Rangebound moves...And very volatile both ways and taking out both bulls and bears. I expect we will continue to be in a wide range of maybe 2500-2900 for atleast few more weeks...And the interesting part is we might test BOTH ends of THIS RANGE very soon. Get ready for some fireworks! :)

Be careful though playing in these conditions. What we have in some serious volatility compression...And we are building cause for a move in a certain direction. I am still looking for down as per my fractal map but still will be playing things cautiously...For example day before, I got out of some of my puts which I will likely enter today...Only thing I am not sure is whether to go for Reliance or Nifty but will see...Either case, I believe in next 4-5 days we have to start the big move down...2525-2600 first stop.

Charts and Commentary below -

NIFTY


RELIANCE


SENSEX


Okay...now something important...Even though I am raving bearish here and I am sure many of my readers are...Its important to play safe...We never know what can happen in these environments..SO...Play Safe!

Best.