Short term bottom in or close?

Well as I said last Friday, I did short near the top around 4870 and am enjoying some nice gains as of now...I believe we are close to a short term bottom or might set it today.



Need to watch this a little bit. Now we can assume that the last 20 week low was set around June 20th timeframe. I believe there was a question on this in the comments section so yes my answer is this is my preferred possibility. If so, then right now we are setting the 10 week low around now and from here we can expect a short term rally for a few days if not for a couple of weeks. But as has been the case for the past few lows, this one also should be left transalated and we should set the high in a few days and continue down until the Nov low - the 80 week major low.

So a dead cat bounce is all we can expect at this point. Lets see...Around this area till 5000? Possible. Clearing 4960-5000 and staying above will target 5100 around. More than that, is tough.

So today my plan is to cover shorts today..I am not sure, we might get a gap up and then consolidate for a while..a lower low is also possible. So wait for a while is what I think..And when going long, I will also hedge it considering the uncertainty and also the shortened trading week this week. If I go long, 4650 is the area I will be watching with great interest. Holding this is crucial for the short term uptrend. Longer term, I expect the market to slice through this like a hot knife through butter. But lets wait a little bit on that ;)

EDIT: Covered at open and trying few longs...

Best,
Lee

What next?

Good question right? I am in a dilemma right now. As I mentioned earlier, cycles are very unclear right now so trading this is tough. I was expecting some sort of bounce into 5100 range - may happen or not - need to wait and see.

But, so far, the pressure or money flow has remained on the downside and that is expected to remain so until the projection of the Nov low.

Trading short term has been volatile and full of whipsaws.

This is the problem. And I am not sure how to resolve it unless you are ready to take some pain.

Today, I will look to close the few longs I have and maybe go short in few amounts. Not sure if the market will let me. Its very fluid right here. Need to see how the market is trading before making a decision either way.

The other problem is within US, tomorrow is a big day...there is a fed statement..there is lot of news coming out...So news will direct the trading atleast on a short term basis.

Wait and watch.

Best,
Lee

Trying on long side

Just started..4800 is support for today..Just started very small..will buy on dips.

Best,
Lee

Looks Corrective - For Now

Its corrective all the way and may last for some more time. There is an outside chance that the 5 wave down has started but it only gets confirmed below 4800. And then also it can quickly find support.

So for now, its essential to be quick and nimble. Scalping and very quick trades might work. So for some time I am not going to post my trades because it will changes quickly in and out. Yesterday is an example. I couldnt post frequently enough depending on how I traded.

As I have been saying so many times - one thing is sure - longer term/medium term is bearish into the expected Nov 80 Week low. Nothing else is certain at this point of time but it should clear up over time.



Now as you can see from above..Its very confusing. The main confusion point is where is the last 20Week low. Unless this is placed, we cannot resolve the lower timeframe lows. 10 Week, 5 week etc. See the questions marks? That shows the confusions. I am hoping things clear up by next week or so. Till then we have to scalp.

Problem is earlier I was thinking that the June mid low is the 20 week low. And what we are getting now could be either a 5 week low and then in few days the 2.5 week and so on. But this picture shows something different. That the last 20 week cycle may have extended - which is bearish - and low we might be coming out of a low point.
If this is the case, then a bounce higher above 5000 into the 5150-80 range cannot be ruled out. So as I said confusion overall. But being bearish overall is safer. If you are bullish, I will suggest, keeping the trades short(timeframe) and safe. Also hedging while it reduces the profits, gives some peace of mind. This is how I will be playing for next 1-2 weeks - both longs and shorts.

If you guys have any questions, please feel free to ask. I sense that some questions are there..I saw a few here and on mail which I tried to answer..but still anything else, please feel free to shoot and I will answer them over a weekend post.

Best,
Lee

Talk about bad timing

Yeah..I know..should have held on..Its funny how the market works and plays with our emotions..I am back short in very small amounts. Will add if conditions work out.

Meshach, Already posted details of the cycles below. You may check the charts below.

EDIT: Can see a 5 wave move intraday. This may be an A wave of the B wave within this 4th wave move. So means we can add shorts on upmoves today to cover either later today or early tomorrow. Then one more bounce upward lasting maybe couple of days to complete the 4th wave move.

All guidelines only. Trading 4th waves are always tough - Its what separates the men from the boys! :) If in doubt, stay out.

Best,
Lee

OUT

Got out of shorts on the morning dip. Closed all positions. In hindsight, I should have closed around 4800-4850. Nevertheless I did earn some money through the hedges but not ideal. Will watch for now..And plan to short higher. My biggest worry right now is a possibility of 5150-5180 coming in few days.

There is still chance for dips here..But want to watch for some time.

Thanks,
Lee

4950-5000 range

Well the rally continues. I did not expect it to do this much. I guess thats why they call it trading and the stock market. Cant expect things to work out all the time.

Anyhow today would be a very interesting day. Because after this big rally in the US markets, it would be interesting to see how we react. A gap up is sure but then what? We have been notorious for spiking on overseas markets and then giving it all back and more..So today will be interesting to see if we stay to form or do infact take support somewhere and rally.

For now 4750-4800 has established itself as temp support. And clearing 4950-5000 range and staying above, we can attempt the 5180 area again. Kpl provides a view on this here-

5180

I am not very sure how to trade around this with my existing positions but I will post updates later today after seeing a bit of the action.

Cycles wise, things are murky again. And this tends to happen in the fag ends of cycles. Once again, taking profits early would have proved to be very prudent. Hurst always mentions on trading short - need to be much more cautious than when trading long. Because as I have mentioned many times - Lows tend to be spiky and fast. Highs on the other hand can be a bit more rounded out giving us more opportunities to get out of longs.

Still over the medium term, nothing has changed. The 80 Week low is still scheduled for Nov mid timeframe.

More later today.

Best,
Lee

Rolled Up

Rolled over to higher strike calls(5000) in the morning pop up as I said, after booking profits in 4800 calls (from 80s until 136..so made up for any notional losses in the shorts).

Now we wait for a retest of the lows or lower. Maybe maybe not :) Wait and watch!

Best,
Lee

Bounce..for now

Ok we got the bounce. 4900. 4950 can come. I hedged yesterday with 4800 calls. Today I plan to roll that to either 4900 or 5000 calls. Now why did I hedge yesterday? Because in this intense volatility, it becomes extremely difficult to forecast cycles. Even my software is having problems placing the lower timeframe lows..let alone the higher timeframe ones. So I expect the 10 week low to come in around 6-7 days. But thats not what the Hurst software is expecting. So I have to go with my judgement. So I will go with my expectation that the 10 week low is coming and will coincide with the EW wave 5 down of this full wave 3 structure down. If I am wrong I will give some money back but overall will still be ok.

Today, I will cover the calls I have for a good profit and roll to higher strikes anticipating more bounce.

BUT since this whole month has been weak, expect expiry also to be weak. Longs might need to wait a little while more..maybe for a retest of the lows..maybe a bit lower to set some divergences. Somehow I dont expect a V shaped bounce.

I meant to post some charts but not now..a little later today.

Best,
Lee

4800 Bagged and Tagged - Hurst Updates 8/22

Excellent week I had last week..was completely in sync with the market..got most of the moves I was anticipating.

Looking ahead to coming week, it might not be as easy to trade I feel. Because there are some changes coming up - most important of which is that we are closer to a temp low than before. Pricewise I am bit uncertain but timewise it should come around this Friday to next week Monday timeframe. Maybe a little bit more than that but in that timing vicinity. This will be the 10 week low as per my calculation and from here we will get a sidewise bounce sort of move for few weeks atleast.



Okay so bottom line as before - still bearish over medium term into the November 80 week low. Bearish also into the 10 week low in the next 6-7 trading days. Slightly bullish after that for couple of weeks and then again bearish for the final move. You can visualize this from the chart above. If we saw the last 20 week low in June 3rd week or so at around 5200 and from there we are in the last 20 week cycle before Nov. So this is a bearish cycle and we have already broken several key lows along the way.

Now we are in the last 10 week cycle in this 80 week cycle so its also a bearish one however some small bounce can be expected soon - this may come in the form of a larger scale wave 4. Ilango gives good counts on his blog around this scenario. Assuming we are in a wave 3 now, we should finish the downmove into the 10 week low and from there start the wave 4 I was talking about.

All ideas only. Does not have to pan out. And when trading we need to remember not to get fixated on any single idea but be flexible.

My trading plan for today is to get some hedges thrown in for my shorts because we are at some sort of support levels and also because my earlier hedges I had closed couple of days back. And then wait and watch. Levels wise, 4800 showed some support, breaking of which will lead to more downsides - 4700 might be another area we test soon. Below that, 4500 also comes into play. But one step at a time. Remember this might be the last portion of this section of the downmove so dont get overly bearish and fall into a trap.

If you arent short, then this is not the time to get into fresh ones. If you are short, take portion of profits off and hedge the rest. If you are long, expect some pain..maybe lot of pain before a low takes hold - Just a guess - Might be wrong on this also.

Wanted to post more charts and thoughts but no time..So will try to add some stuff later.

If you missed earlier posts on Hurst, you might want to read up again my earlier posts.

Best,
Lee

4800 is here..what next?

So we are so close to 4800..I am feeling an intense urge to cover my shorts. I am not sure. I see some bounce over here but..I feel its only a waystop to lower lows below 4750 next week. Yeah I think next week will be bad as we go into the 2.5 week Hurst low. Normally I wouldnt give much importance to this but consider all longer term cycles are down, we have to give more importance here. So I am continuing to hold the shorts (2/3 only) from approx 5160 area. Covered 1/3 around 5000 yesterday and holding rest.

I think next week will be bad...After some sort of bounce. Waiting and watching.

Best,
Lee

Wow 4800 is really calling now :)

Even I underestimated the weakness of this market...In the morning yesterday, I was expecting a bounce from 4970-5000 area to a little bit higher - As I had mentioned, a very weak bounce. This is why I covered 1/3 of the shorts I had from 5160...that and money management rules. But market as usual had other plans and continued to breakdown.

I had mentioned in my earlier post about internals. It was a sea of red yesterday in all the broader stocks - I mean mid and small caps. This was the first red flag. The second was the inability to hold the support range. Yeah I wish I were holding all the shorts but I will take what I have. :)

Technically from a Hurst viewpoint, yesterday was bad. Because the market breached the 5 week low implying that the market is breaking down from a cycles viewpoint as well. Now it looks like 4800 is coming quite fast. Like I said before, break of 4950-5000 range will get us to 4800-4750 in a jiffy. And as I mentioned in one of earlier posts, first target is approx 4768 - the 38.2% retrace of the full rally from Oct 2008.

Long live the power of Hurst! :) ..Ofcourse combined with traditional TA and sound money management.

Later.

Best,
Lee

Very Weak

Looking very weak..Still holding the 2/3 shorts..The hedge lost some money but in excellent profits overall with the shorts from 5160 area. Market not being able to stage a bounce from here shows how weak this market is now.

Will see tomorrow.

Best,
Lee

4800 is calling...Updated...

Ok..some more thoughts and charts..

Past few days, Advance decline stats have been absolutely horrendous..This is very important information because it shows the market's internal makeup and structure and that is quickly falling apart. Now when we look at the full market not just Nifty, it shows a lot of weakness and lot of stocks are crashing every day. This shows the internal weakness and without internal strength, the market cannot move up from here..Apart from weak bounces that will quickly fail.

Today a small bounce is possible which can extend into end of this week. And then next week might again be bad. Either way, the maximum time I would give this current pause in the downtrend (thats only what it is - pause in the downtrend) is until the last few days of August or by September 1st/2nd..After which we should see a move below 4950 and below that 4800/4750. Take it for what its worth!

Now a chart.



Now what I would say first is my software is a bit confused here. So am I. Its a little bit uncertain now on the smaller term cycles. But longer is very clear..i.e we are going toward the longer term low in November mid timeframe maybe a LITTLE bit early.

Shorter term, uncertainty rules now. My main confusion is whether to place the 20 week low on the June mid low or whether to place it on the most recent August 8th low at 4950. If I place it this late, it shows an extended 20 week cycle which I am not very happy with. Still it will be clear after some more time.

So the next 20 week cycle has started - only question is when did it start?

So this recent low could be the 20 week cycle low OR the 5 week cycle low. Confused yet? :)

Even though this might seem confusing, the picture is clear in the medium term to longer term..Not a time to be bullish or bottom pick - YET!

Trade Safe.

Best,
Lee

4800 is calling...

...But expect a small bounce of couple of days(?)..Not very sure but we are close to support so its possible for market to try one more time to bounce from here.

Still 5200-5230 is rock solid..Short on rallies is still the mantra.

I covered 1/3 of shorts and hedged the rest. Will wait and watch.

I will update this post in some time with some charts and more thoughts.

Best,
Lee

Intraday - 8/17

Ok I had thought of covering 2/3 of my shorts..but I am not getting enough signals for me to go ahead or my targets...So I am holding 60% shorts as of now..I will look to reshort if we continue to rally higher. I am not very sure about this since my initial feel was to cover shorts and reshort higher but looking at the moves today, I think we have more downside coming and risk-reward is in shorts favour. If you want to reduce risk, please go ahead and reduce shorts and reshort higher...But I would not recommend going long considering the shape of the cycles right now. If in doubt, stay out!

Best,
Lee

Update - 8/16

So far downward pressure has been exerting itself as I thought it would and it should as we go into the 80 week low expected in Nov mid to end timeframe. Expect small bounces in between but the longer term trend will remain down until Nov mid/end.

Today/tomorrow, if we hold above 5000, we might stage a small bounce from there. If however we lose the 4950-5000 range, then like I said before, we will get to 4800/4750 in a jiffy.

I am still short from 5160(mentioned few days back)..added on the bounce yesterday..Today tomorrow I will watch to see if we can hold support..I might close most of the shorts if so.

There was a comment from Nagendra on how low we might go into Nov low and how high/timeframe after that - I want to be clear on this - Hurst defines the timeframes clearly. Targets we get hints on how far it might go..In this case, I have a target of 4500 on Nifty by November mid. I think even 4250-4300 is possible. Can we see below that? Its possible but for me the absolute worst target is 3800/3600 range. Not lower than that.

After the low, then what? Too early to say. But I would suggest you to read my earlier 2-3 posts below..There are lots of important information in there..Some stuff will give you clues on what to expect. Crests will be always translated - Since the next 80 week cycle will be bullish, you can expect a right translation. Read my posts from before to understand more on what I am saying here.

I will post the cycles chart in a few days. Not much change in what I posted before.
We are likely topping the first 5 week cycle in the last 20 week cycle of this bearish 80 week cycle. Its bearish all the way apart from small bounces. Sell the rallies and cover/take profits on the panic dips.

Take a look at CNX IT and S&P CNX 500 normal charts for how bearish it looks..IT index shows a breakout of an Head and Shoulders and even target achieved! Anyone trade this? :)



CNX 500 on the other hand shows a clear breakdown as well over past 2 weeks..Target is more than 20% lower! Check it out...



Best,
Lee

Some more thoughts - 8/15

I see us in a 4th wave now..so backing and filling confusing everyone is the name of the game. 5230-5250 is resistance..If it manages to get above that, 5350 is the next one. I dont think it will get there but closing above that will be very difficult. So a 5th wave is pending to new lows - Break 5050-4950 range and we will get to 4800-4700 range very quickly..Likely lower.

Till the 80 week low is set in the November timeframe, downward pressure will be there - I would not expect any major rally before that. So short the rallies with stops is the way to go. Also make sure to keep position size very less - we can never know when rip roaring short covering rallies will occur within bear markets.



See attached chart. Looks like a descending triangle to me. So 5230 area is strong resistance. Short with stops around that level in rallies. As always do your own due diligence.

The important retracement levels of the whole rally from March 2009 are 4768, 4285 and 3801...Important numbers which may be possible targets for the upcoming 80 week lows. We shall see as we get closer.

Best,
Lee

Nifty Hurst Cycles - 8/15

Starting an update for coming week.

First of all - Happy Independence day to All!

Had a good question in comments from last week from Chandra..A very good and valid question indeed. I will try to explain to the best of my knowledge -

Question -

Lee,

Thank you for sharing this method in detail. Very interesting indeed. But one question, from your picture, May 2010 seemed like the period where multiple timeframes were converging. Why wasn't that an important low and why should the another 18 month cycle from 2010 may leading into 2011 oct/nov should be given higher importance?

Yes May 2010 period was the last 80 week/18 month low but it was not as pronounced as expected. Why?

While we can never be sure about anything, I think there are 2 reasons for this.

1. Like I explained in earlier posts, always there are multiple cycles running in the market, the combination of which makes the complete composite movement in the market price movement. What we are trying to do with our Hurst analysis or phasing is trying to determine which cycles are present and trying to determine what might be the important possible lows in the market. At certain periods of time, a larger cycle might be pointing down while a smaller one may be pointing up..Hence the larger cycle will dominate the smaller cycle and push the market down. Now take this to the next level; Imagine many cycles acting together in concert - this might not give the expected results and instead we will get a sidewise movement. I believe this is what happened in May 2010.



Take a look at this monthly chart. Now we have the 40 and 80 week and the next highest cycle, the 4.5 year(or 54 month) cycle shown here. 3 80 week cycles make up the 54 month cycle. (there is an important point here - lets see how many spot it)..So in May 2010, we were in the 2nd 80 week cycle of the 54 month cycle. And now in the last 80 week cycle of the 54 month cycle. So now you might be able to get the importance of this particular low - its not only the 80 week low but also a 4.5 year low and also very possibly the 9 year low as well(not shown here)! So the importance cannot be understated here. Watch the falling and rising of the arcs shown here and you can understand..The 54 month and the 18 month and possibly the 9 year are exerting downward pressure here - hence the importance. While in May 2010, not so much.

2. Next, fundamental pressures. Now imagine the intense monetary easing that was happening since the 2008 crash..All this effect was there even in mid of 2010. Hence we got a muted low..Now on the other hand, we dont have that much monetary effect or liquidity..Hence this low might take the natural course. Hurst says that fundamental factors will affect cycles - and cause them to deviate slightly from the norm.
I will give more importance to reason number 1 above..But thought of mentioning this also.

Now you might ask why is this a 4.5/9 year low and why not the Oct 2008 bottom. There are several reasons and methods used to arrive at this which is too much for me to go into at this point but as we go along, you may understand more. Suffice to say, when we phase back, this timing fits best. And also when you look at other markets specifically US as well, this model fits the best overall - this is known as commonality in Hurst language. More on that later.

Either way we are getting a bottom and our job is to figure out when it will happen and after that also, when it might top.

A shorter term look again -



Pretty much same as before. As I said before I believe that the 20 week low came on 6/20 and then the low we had few days back around 4950 was the 5 week low. And now we are having a weak bounce out of that low. So as I have been saying before we are within the last 20 week low in this 80 week cycle. So its a bearish 20 week cycle within likely a bearish 80 week cycle. And the fact that we are severely left translated (read earlier post) confirms this fact.

Still looking for a major low sometime in November. I would harbor a guess of around November 2nd-3rd week for a major low. But as I said we will fine tune as we get closer.

Comments, questions etc welcome.

Best,
Lee

Hurst Cycles - 8/7/2011 - Backup from VFM

I was thinking for a long time about closing down this blog and restricting my posts to VFM only going forward due to various issues. But after thinking for a while and after seeing a good response to what I posting on VFM, I am bringing that here also. Basically taking a backup because VFM has got a notorious history of losing older posts. I think this is valuable stuff so I want to keep it here as well.

Will be posting actively from now on..both here and on VFM.

I think this is very valuable stuff..Please go through if you missed on VFM. And you can also see how I traded using cycles.

Best,
Lee

FROM VFM - Link : http://www.vfmdirect.com/forums/show.cgi?topicid=1312717195#1313194596
=====================================================================================
Hurst Cycles - 8/7/2011

Posted by: princely.k.mathew on 07-AUG-2011 (11:39:55)

Hello All,
Several months back, I cam back to this forum and I was trying to post more actively, revive my blog again etc..but over time I have found that I have not been able to concentrate on my blog frequently enough..so I stopped posting there..Over here also, I havent been able to do much constructive..

But anyhow, I have made a decision not to update my blog going forward..But I will try to give a weekly or bi-weekly update here on a normal case and in case of some important low or high, I will try to post earlier on an adhoc basis..Need to see how it will work out.

Now, as I mentioned in another thread, I have been dabbling in Hurst cycles methodology for past several months..And I like what I see so far. This is an abstract kind of methodology and I find very very few people out there who can practice this successfully.

A writeup on who JM Hurst was and what he did : "In the late 1960's a small group of private investors in California rented time on a mainframe computer---the only kind that existed at that time---and asked an aerospace engineer, J.M. Hurst, to help them in their stock market research. The results of over 30,000 hours of computerized data analysis were distilled and revealed in Hurst's 1970 book, The Profit Magic of Stock Transaction Timing , which has become a classic work on cycle analysis.
In the early 1970's Hurst authored a full-length course on cyclical analysis and on how to apply it to actual trading. It was published by Cyclitech Services, and Hurst taught the principles of this course in a series of seminars for a year or two. The material in this course is considered by many to be the clearest and most thorough material ever made available for those interested in learning about cycles and how to trade profitably with them. There were only 250 copies of the course ever sold. It has been out of print for the past 25 years.
In the mid 1970'2, Hurst, an intensely private individual, disappeared and has not been heard from again. We have had many customers over the years who were tremendously interested in Hurst and his work and were extremely interested in contacting him. They wanted anything he had written or done beyond his The Profit Magic of Stock Transaction Timing , but until now, there has been nothing available. I had only heard about this course in rumor for years. Only recently did I actually locate a copy of it"

I finally managed to get a copy of the book..very damn expensive..and have been studying it for past few months..I have to say its been enlightening to say the least..

I have dabbled in elliot and classical TA but I have not anything like this capable of pinpointing cycles to this level..I mean major lows and tops only this one can do..And together in combination with other forms of TA, it forms a very powerful tool.

A little bit about it..Hurst said that cycles move in a nominal model with deviations..there is a 5 day cycle, 10 day, 20 day, 40, 10week, 20week, 40 week, 80 week and so on. There will be deviations and thats what we try to figure out using Hurst methods..There is so much of work involved in the background that it will be futile for me to try to explain here..I will however try to explain bit by bit in future posts...But for now it will suffice to say, that the Hurst Theory trys to identify major price lows and highs in time...Each of this low and high will have a certain degree based on the timeframe..80 week low, 40 week low etc.

Most people will remember from my posts in beginning of year when Nifty was around 6000 when I said we are going to get an important low toward end of this year..Oct end/Nov mid timeframe..We will fine tune when we get closer. This was based on Hurst methods and specifically the 80 week cycle. March 2009 was an 80 week low..so you can imagine the potential for a rally from end of year..we will see..



This is what I wrote last week -

For now, if you see the chart attached, the 40 week low was in Feb mid, we had a good bounce from there..then the 20 week low was in June mid..Another good rally from there..and now we are moving into the next 20, 40 and 80 week nest of lows toward end of Oct/Nov mid timeframe. Right now, a 10 week low is due in 3 week or so of August..So I also expect market to remain week till then and even after that, the bounce we get will be weak..Infact I see potential for 5200/5150 to be broken before that..I mean before we get a good bounce..Then again another big fall from Sept mid or so into Oct end/Nov mid..Before all this is over..
I hope I made some sense..Hurst is tough stuff..But I have been dabbling in this for some time now and I have to say, I am very happy using it..Its complex..so not for faint of heart..

Now in future posts, I will try to bring some more clarity to what I am trying to say...put up more info on longer and shorter cycles and so on..And what I expect going ahead..

I hope some people find this useful and I would appreciate comments and thoughts as always.

Best,
Lee


Posted by: princely.k.mathew on 07-AUG-2011 (12:00:54) [IP address: 197:253:94:----]




Ok now a look at the longer term cycles..see chart attached..the stacks of diamonds show major lows in the market..this is a weekly chart...so shows 80, 40, 20 week lows..And higher ones also like 4.5 year and 9 year lows..I dont pay too much attention to these but for me the 80 week cycle is very important..

As I mentioned earlier, the rows of diamonds or the semicircles indicate which cycle it is. The diamonds indicate the lows and on the extreme right you can see which low it represents..The semicircles help to visualize a bit more easier..Showing the rising and falling of each cycle...from the 9 yr down to the 10 week/80 day cycle.
You can see from my comments the important lows marked and the projection in time for the next important low. Complex spectral analysis is behind all this analysis..I will touch upon this more detail later.

Now shorter term, this is always more difficult to fine tune..but like I mentioned in my last post..We are close to another important low..I expect by 2nd week to 3rd week of August...This is the 10 week low from where we should get another pop up after which the decline should continue into another very very important low..the 80 week low around end of Oct or mid of Nov. This is what I have been saying since beginning of year and still reiterate the same..I will be looking to recommit long term fund around that time which I had exited earlier this year.

I hope I have been able to make some sense..Watch out for future posts. I will be focussing bit more on shorter term cycles in next post..probably tomorrow.

Comments are what will encourage me and make me go ahead..so I would always appreciate the same.

Best,
Lee

Posted by: princely.k.mathew on 08-AUG-2011 (08:43:29) [IP address: 197:253:94:----]

Hi Guys,
Thanks for your comments and interest...much appreciated!

Nikhil, from the other thread -
Yes complex..but maybe its for me alone since I just started couple of months back..Already I can see some differences in my approach and its a good thing so far. Account balance speaks!
And the good thing is over time, this might come also simple and natural to me..I hope so..Atleast I know a few Hurst Technicians doing a an awesome job out there consistently..It amazes me how they do that..

The difference b/w elliot and this is great..Elliot is too subjective..This is also subjective but there are some good guidelines to help us be on right side of trade..

I will try to post regularly on Hurst here..I hope it benefits folks.

I use this with some common sense, other market TA and its giving benefits..

Gera, you are right..Its very very useful for investor types..For traders, as you become experienced, you will be able to trade smaller cycles..And this is what a trader needs..However smaller cycles become tougher always..I find the 80, 40 and 20 week cycle best for trading or investing..Sometimes the 10 week and 5 week also work out..But need to be very careful when using these..

Lets try to figure this out together with live cases in real-time.

Now coming to the book, yes this is the first book that JM Hurst wrote..BUT I would caution against reading this because this was his initial work and later after long long years of research, he did a complete course for Hurst students..This is what I have bought and am studying now..This is what I said is expensive..comes to around 500$..

Link - http://www.traderspress.com/detail.php?PKey=99

Some history around JMH can be read there..

Hurst experts advised me not to read the first book but get the course and study that..So I will say the same also..But you cannot get the course online for 'free' anywhere..have to buy..it includes 10 audio cds and 2 extensive manuals..Once I study this fully, if anyone is really really interested, I can pass it on..but this takes time..Dont go for it unless you really are ready to spend some real effort.

One thing I'll say..this is one of the best market methods out there I have seen..But its difficult so most people give up on it..Here in US also there are very very few who use it successfully. I dont know of anyone in India who does..

I had thought of putting up a shorter term market cycles post today before market opens but its almost open..so later..let me focus on my open positions..I want to close all shorts today..I know my projected lows can still be a few days into future but there are few uncertainties here and I want to take my profits.

Later.

Best,
Lee


Posted by: princely.k.mathew on 09-AUG-2011 (09:32:43) [IP address: 197:253:94:----]
Well it looks like I was early in covering my shorts..hehe..but in a ultra fast market as this, I think I should be happy with the profits even though missed some..

And today's initial morning strength is surprising..I think we are seeing the initial signs of a cycle low forming..I am still confused about the degree..I thought it might be a 10 week one but I feel that is unlikely now..So that leaves the possibility that its a 5 week low..We will need more data to confirm what it is..Meaning few more trading days...Whatever it is,looks like it might give a decent bounce.

Trading this wont be easy..But keeping your size small and stops very close, you should do fine..

So if the low is coming in today or tomorrow, we should see a rally for the next 2 weeks or so..August last week/Sept first week next top?

Let me stress again - We are seeing unprecendented conditions in the market now;;; Take my comments with some salt;;; Do your on research before doing anything.

Bala, Nikhil, will definitely try to do more work on this here..Feel free to ask questions in the meantime..

Btw GANN is too much for me..I have only seen one person use GANN to some success and that he used to combine with HURST as well..SO..

I will try to come back with a chart later..maybe tomorrow when things clear up a bit more.

Best,
Lee

Posted by: princely.k.mathew on 10-AUG-2011 (21:18:23) [IP address: 10:219:161:----]
Ok so far, so good..we did get the low..what next? Well, most likely we are right now in a wave 4 from the top with wave 5 still pending..so what we are seeing right now and over the next few days/weeks will be multiswing action and very fast markets..better to stay out if you arent nimble enough..I went long the day we had the huge gapdown, covered yesterday and even started few shorts..After a retrace, we should have one more pop high lasting few more days..maybe more to complete this wave 4 after which wave 5 down should start..This will likely be a longer affair going down into the 20, 40 and 80 week lows I had mentioned before coming in toward Oct end to Nov mid timeframe..It can extend into December also so we will fine tune as we go along...

Best,
Lee


Posted by: princely.k.mathew on 12-AUG-2011 (09:58:18) [IP address: 197:253:94:----]

I was holding some longs awaiting one more burst higher but I am not happy with what I am seeing so I am dumping the longs and going small short..5230-5250 range has to be cleared for next upmove else downward pressure will be on..

Too tired to respond to other posts or to post chart..so seeya all on the weekend!

Best,
Lee

Posted by: princely.k.mathew on 13-AUG-2011 (00:16:36) [IP address: 10:219:161:----]

So short was the correct move after all.I should have added prices in above post to make sense..but never mind..Short from around 5160 for now..wait and watch what next week brings. My gut still thinks that there is one more small upmove left but the market seems to think otherwise so I will go with the market :)

Bala, not surprised with the correlation. The 80week or 1.5 year cycle is an important one..I will try to describe more below.

Ranga sir, thanks..I dont like to read much into so called experts views..And I mean those who come on TV and those who send out emails..Not unless I know who those folks are.

Anyhow..

So I have some time right now..Thought I will explain a bit more around cycles and how it works. Might be a little deep, so anyone not interested to understand more around how this works, please excuse.

First of all..around cycles - I have taken some excerpts from online to write this up..So..

Cycles are extremely important because they help us frame the market within the dimension of time.

The first thing we should do is ask what cycles are - cycles are the observable tendency of prices from go from top to bottom to top to bottom at regular intervals. The price index will move upward from one trough until it reaches a crest (top), then the price index arcs downward into the next trough, or cycle low, as we sometimes refer to it. We can see the evenly spaced bottoms on the price chart that give evidence of the existence of cycles, but what causes this to happen? What is the cyclical force behind the price movement?

A stock market chart is a picture of human emotions expressed in the form of price movement. Fundamental events don't directly move stock prices, it is the emotional reaction to those events that moves prices. In a much broader context there are recurring events in nature and in the business cycle that affect human emotions. In other words, natural and fundamental events do affect the market, but only through the filter of human emotions. This is why it is so difficult to design economic or market forecasting models based on fundamentals -- humans can react quite differently to the same fundamental circumstances at different times.




There are two 10-Week Cycles within one 20-Week Cycle, two 20-Week Cycles within one 9-Month(40week) Cycle, and 2 40 week cycles within and 80 week cycle(18 month cycle) and so on. Where cycles of different lengths make their lows at the same time, they are said to be "nesting". This is a very important concept..Because higher cycles tend to make the lows at the same time together, its called nesting..This is why LOWS are very important and easier to identify..But tops tend to be spread out - called topping formation. This is also the reason why if you are bearish on the market, shorting is very difficult and you need to be very nimble. See the attached diagram too see what I explained above about cycles..Also my earlier charts should help illustrate what I am explaining here.

The most compelling thing about this picture is the impression of power associated with major nesting points -- where all cycles are making lows at the same time at the 10-Week, 20-Week, 9-Month, 18-Month, and 4.5 Year Cycle lows. Visually we can sense that price declines into these major lows will be quite severe, while rallies off those lows will be explosive and powerful. Conversely, there other areas in the cycle structure where the cycle forces are mixed, with some cycles moving up while others are moving down, and it is hard to get a sense of exactly which direction a composite of these cycles would be pushing the market.

You will often hear reference to a cycle's "translation". This refers to the fact that cycles rarely crest in the exact center between troughs. More often they will crest to the right of center, called a "right translation" cycle, or to the left of center, called a "left translation" cycle.

In a bull market the market spends more time going up than down, so we will normally expect major cycles to crest toward the end of the cycle, with the crest being followed by the down phase of the cycle -- a right translation. (this is what we saw after March of 2009)

In a bear market we would expect to see left translation cycles with cycle patterns exactly the opposite of those in a bull market. (this is what we are seeing now)

Check the earlier uploaded charts for a more visual feel of what I have explained so far. Read read and read this again...These are fundamental concepts in cyclic analysis.

I will explain more later..this is just basics! :)

I will post charts with latest views either later today or early tomorrow.

Questions and comments are welcome.

Best,
Lee

Quick Update

Update - March 31st

Been meaning to post some charts for some time..Here are a couple with comments which show what I am seeing and my thought process here.






Careful out there!

Lee

30th March

I wanted to post some charts here..but dont have time to..

So..Bottom line is..yes very bullish..but I think trend is turning or might soon.

Book profits on longs and wait to see what will happen.

The TURN is coming...

OR else we go all DAMN bullish very soon.

Will post charts tomorrow.

Best.

Confusion

Will be very frank here..

Confusion reigns supreme.

Its anyones guess here what will happen.

5800 is the bull bear line as I said before.

I got out of longs today with decent gains.

Shorts..I am going to start building them today with stop of 5820.

Be cautious. If you are confused or not confident, pls dont do anything.

I will post some charts tomorrow which might clear some stuff...some more
views..more thoughts etc etc

Best

Week Ahead - 28/03/2011

In last update I mentioned above 5540 we can see a good rally and we did that above and beyond what I thought might happen.

There is no doubt - things are looking quite bullish now. I have tried to give some views in the charts below on possibilities. This week after an initial pop, we should see some pullback - Use that to exit shorts and try some longs. I got out of all shorts on Monday and took a bucketload of calls to cover the loss - I will close those today and wait to get some good long entries.

Longer term chart looks still bearish however I see potential of a change coming up.
Chart gives more idea. I will be moving focus to stocks going forward and wait to see what Nifty does.



Another look at the chart from far



Best of luck and trade safe. Do your own due diligence and do not follow anything written in this blog blindly.

Cheers.

Market - 25/03/2011

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

More detailed analysis and charts over the weekend.

Best.

Market - 23/03/2011

Intra Thoughts

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

My current positions -

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

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

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

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

Best.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thanks Bee..Read your mail also.

Thanks Prashant..

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

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

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

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

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

Lets continue this discussion.

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



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



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

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

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

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

We will focus on EW counts next post.

Later.

More later.

Back Again

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

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

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

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

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

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

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

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



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

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

More later.

Amazing!

Well the bulls continue to amaze. Every little pullback is being bought..and yesterday it looked like some big money really came in..I only wonder why they are this late to the game but who am I to judge. Anyhow, on the log scale on the daily, Nifty looks to have broken out and next logical target is 3800 area. But keep in mind, market defies logic...Lets see how far this goes. I tried some shorts yesterday..monster moves stopped me out ofcourse..so nothing doing now...wait and watch...

Been thinking again about this blog for a while..And due to various reasons, personal and otherwise, I am taking a rather longish break from blogging..Not sure how long.
I have lots of personal changes coming up...will be moving to India in while and so on so I wouldnt have much time to continue this blog at the same level that I am doing now...Besides I am finding the whole thing stressful at the moment.

So I am going to step back a bit from blogging..And see how I can manage it..If I feel comfortable, I will be back with weekly or bi-weekly updates...For now, bye, take it easy in trading and always keep a watch out for the unexpected.

Best.

Da Wedge

Looks like we broke down from the wedge pattern and now backtesting it..Shorting with a tight stop has good risk-reward here.



Best.

The Week Ahead

EDIT: Intraday at 12:15PM - Interesting action on intraday charts...Here 15min..Looks like a break. I shorted the break..small size only. I missed shorting the open even though my gut told me to..Nevertheless shorted at the break shown in the chart.



Lets see.

====================================================================================
Another shortened week ahead..I have found that these kind of weeks throw me off a bit..I mean timing wise it can make things a bit 'OFF' but well we got to live with it I guess.

Market this week - I am again expecting we see a pullback. It could be very fast and could also be a sidewise shallow correction. Buying the pullback could be profitable..I think for this time. But dont be in a hurry to buy - In my very humble opinion. Lets look at some levels on the charts.

NIFTY HOURLY



NIFTY DAILY



NIFTY WEEKLY



TWO POSSIBLE COUNTS IN RED AND BLUE



As you know I am totally flat right now..I am not sure what I will do next. In 2 minds..I.E to let the market settle down a bit before going long again..OR try a quick and small short for 2 days? Tough call. We will see as it goes. Will update if I see something interesting or do take a position today.

Best.

OUT

Out of longs...from 3166 to 3374 odd..

Not doing anything now..

200+ pts..I will take that.

I will post some charts and thoughts later if I can.

Best.

Some Mumbo Jumbo

Some more mumbo jumbo from my side..more of an extension to the post below this..

Often I've wondered why we go through good patches and then bad patches..Is it luck or is it all in our head? I think its the latter..Even a gambler has good streaks...but again is it chance? is it luck? Or is it something else?

I have had some stupendous periods of gains and good trades .. I have wondered what made me do that..What created that? And why does it not continue ad infinitum? I believe its all about being in the 'zone' .. Now what is being in the zone..simple..I am sure we all would have played some kind of sport in our life and during some point of time, we would have been playing at the top of our game in a particular game..and NOTHING you do...NO MATTER what you do, it always goes right..Thats the ZONE.

Now traders also have this zone...I have found myself somehow stumbling into this ZONE sometimes..Its mostly by accident but sometimes by design as well..And once we are there, usually something stops the streak and reality snaps back..I think a lot of it depends on having the right amount of confidence and also the right amount of common sense...Most expert traders remain in the ZONE permanently and trading for them is like a second nature..Traders like me..well not quite there even though we'd like to be there...Its a tough game this trading..No matter what you do in life..what all you do successfully, nothing can prepare you for trading successfully except for trading itself.

Its a tough road..Most give up..

But heres to sticking on the road..And getting into that permanent 'ZONE'!

Thoughts on the market later.

Best.

WOW

..I mean just wow...Been a long time since I've seen something like this...Market digested the big gap down and just powered ahead like its a new bull market..My decision to cover and go long in the morning paid off nicely..Position size was not as big as I would have liked but lol, I'll take it...Beer money :)

The markets are getting a bit ridiculous now..I still have a bad feeling this wont end well..but well thats just me..We shall go by what the market does...200pts in one day from low to high!!...well I wont complain as I caught all of this move...Still its amazing how this is going now...Looks like no one wants to miss the bull bus.

As you might have observed(lol, right), I havent been in good form lately and whenever this happens, it pays to step back a little and regroup before trading again...Bad streaks good streaks call it what you will but I believe its all in the mind...I guess I might be finding my groove again..Keeping fingers crossed.

Trading in the Zone is a good book by Mark Douglas on psychology in trading...I recommend this to everyone..More than often the enemy is within us..I want to also sincerely thank SS(Timamo) for encouraging and helping me during this time. Thanks!!! :)

Footnote: I would be very careful in the market now..Its close to euphoria now..You know what comes next..It can run some more but the last 5-10% of the rally is dangerous to catch - use extreme caution folks.

More later.

Best.

Getting Interesting...

Back into the grooove... :)

Getting interesting in here...down to first support..taking a stab at some small longs...Not sure of timeframe yet.



PS: Dont get into this trade unless you have balls of steel! :)

Best.

Pullback and then...

So we are going to get the pullback..And what next? Dont know..lets look at the charts.

HOURLY


DAILY


Looks like after this pullback, we might make one more attempt at the highs..Maybe a bit higher as well before a more serious pullback..As of now, the megabearish scenario is on hold...After a rally with this much momentum, we need to look to buy the dips..For NOW...Not to say this cannot change quickly as well...

For NOW, the hourly is on an uptrend and the 20hr swing is on a buy..until this changes, it pays to buy the dips...Overall(1month-2months), I believe we shall top out and have a downmove but its not possible now to say how far this goes, so lets not try to predict and instead play the hourlies.

I might look to go long today on the pullback..small amounts only..As you might know, Lee needs to get his GROOVE back :)

In other news - Cramer calls the bottom again :D

Visit msnbc.com for Breaking News, World News, and News about the Economy

LAST TIME WHAT HAPPENED -


Best.

Pullback due this week....

Lots of discussion regarding following the trend..I agree that we need to follow the trend..But tell me? - How do you define the trend? Hourly? Daily? Weekly? What I mean to say is where do you decide that the trend changed?

The market over the past several months have been rangebound...A large range but still rangebound...Anyone trying to trend trade on the daily would have been burnt...Maybe it is changing now..Do not know..Since the daily was burning me, I decided to move to the hourly. Since then the market has not given a meaningful pullback..just surging ahead on top of gap ups and new found optimism.

I am open to a new mini bull starting but this action is not healthy in my very humble opinion..Up on gaps..Same can happen in reverse.

We should see some sort of pullback atleast..this week and then maybe power up higher..The 3240-3260 area is of obvious importance as I have pointed out in previous charts. We are this close to taking it out...So lets watch that...If long and market goes above that, setting stop a little under that might be prudent.

For shorts, I am still waiting for the hourly to set up a sell so that I can go in short in bigger size. Unfortunately its not happening...Maybe that is the plan..Power ahead like this till 6300 without any pullbacks? :)

Best.

NUTS

This thing is just too strong...

What a rally...feel disappointed to have missed out..The hourly buy alone would have netted 600 points so far..damn!

The worst part was..no substantial retrace and most of the gains came on gap ups..

Frustrating to say the least...

I really dont have substantial positions in the markets now...Some shorts only as I said before. I will likely get out next week sometime...

And then, will just wait and watch...And will post if I get a signal on the hourly.
Trading that and ignoring everything else seems best.

Lot of news, the G20 etc next few days..Our market is on long holiday..Will be interesting to see what comes out of all of this...

Have a good weekend all - and take your mind off of the markets :)

Best.

Bull Over or Just a Retrace?

@ 11:09AM - HEADS UP: Market is just chopping around..But 20hr swing is now at 2962.75. Below this and we have an hourly sell. I would respect this signal just looking at the earlier track record. Chart below -

Also see the red line I have drawn below. Below this, we can see a strong selloff.



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

Bull Over or Just a Retrace?
===========================
Ah the billion dollar question..No I dont have an answer now but just some clues...

I was not able to post yesterday as I was moving house..Been damn busy over the weekend...Hopefully things can get back to normal soon :)

The market..All the baby bulls got their heads handed to them...Had some idea this might happen but did not expect it to be so dramatic. Well now the big question is are we starting a new bear move or it this just a retracement in this so called 'new bull market'? I dont know...

I mentioned a few days back that I had some interesting stuff to share. Chart with comments below. Now note this is just a scenario. I dont trade based off of this..Just looking at the bigger picture.



AGAIN just want to stress..Dont pay too much attention to above..Using EWT for trading can be fatal for those who take it at face value..Just use it as a guide.

Looking at the hourly...My main trading system for now.



All in all a bit of a confusing picture...But we should get more clarity in coming days.

Personally, I do think the bears are back though. If I do get another rally, I will use it to reposition myself better.

Will post intraday updates if something interesting comes up.

Best.

Keeping things small..

Sorry folks for the late update...not much to say...the bull juggernaut continues...Just watching how long it goes..

I am short but in smaller size..and hedged..so not going to worry about all these silly upmoves...Its too late to go long so definitely not doing that..

If we do get some kind of pullback soon, we shall see then.

For now, short and watching...I will take off the hedge if I get an hourly sell..till then maintaining status quo.

Charts later..Bit busy today. I have some interesting thoughts to share but not now.

Best.

What am I doing?

PS: DONT IGNORE this one either...



=====================================================================================
12:00 NOON UPDATE: Could this be a flag? If so, breakout above will make market run up quick. Not sure for now..But if it does, its good for an intraday trade.


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

Okay guys...You saw I shorted a bit yesterday...I added some more today...And I hedged this with 3000 April calls. I am not sure at this juncture what we are going to do next...I see at minimum a pullback and then a move higher...It is actually too late to go long which is why I am not doing this...

For the bullish case, we need to have some sort of pullback here..else I am sorry to say, we are going into bubble mode and we will have a fast crash-like move...I am not raving bearish anymore..more like neutral..so remember my positions reflect that...

I mentioned earlier that I am looking more at swing signals(thanks to kpl) for trading signals going forward..So that I keep out of trouble going forward.

See the 20hr swing below.



Coming to sentiment...Its turned very bullish now..I would be cautious on longs..If we get a decent pullback I shall look to go long..Ofcourse will reevaluate at that point...Frankly this is a very confusing juncture..tough trading.

EW structures...I have some interesting ideas..One bullish(the obvious one) and the bearish one...Now since the obvious is more often incorrect, I would be cautious. I am thinking STILL along the bearish lines...For those familiar with the EW lingo, I think its a bearish wave4 flat or a wave4 triangle still..with w5 down still to come..However we need to respect momentum here and wait for some confirmation on downside...tough to say right now...But I will post these scenarios with charts later..maybe tomorrow....If anyone else has thoughts on this, please comment.

Intraday setups - I dont have anything at the moment but I shall post if I do see something interesting...note that these setups and patterns dont come often but when they do, we can bank some good coin and low risk.

Best.

Trying a small short...

...not going nuts on this short...very small compared to my normal short...And I have a hard stop at yesterdays highs...above that and I'm out...else I am playing for a pullback to 2860 odd...maybe a bit lower also...but let us see...

I will share some charts in a little while.

Best.

Just a small break

Read all the comments...Just wanted to say some stuff..which I also posted in the comments section of previous post -

Everyone..really...No defeat and all...I will come back with more analysis..And will come back stronger...

Why did I say I am taking a break?

Just regrouping..rethinking..evaluating what went wrong and so on..

When a big loser happens, we need to do that, else emotional trades will happen.

For the record -

My last short trade - From 2600 odd till 2800 I shorted...My AVG price was around 2720...I had several signals to cut and run in between which I ignored...This was my first mistake. Adding a lot to a losing position was the second...

However breakout above 2840 was my last point as I must have mentioned several times in previous posts..Market gapped up above and never looked back...

To be totally clear...From 2720 to 2860 around 140 pts loss...If you take all the earlier gains, this is not so BAD....BUT thats a traders folly and false justification..For me this was the biggest loser trade so far..So I needed to step back and see what went wrong..For me it was more of mindset that anything else...I need to clear that and come back fresh..

I will do so soon.

Best and Thanks to everyone for their comments..I know a lot of bears lost money...You can see how much I lost above...

Dont worry too much..Its all part and parcel of the game.

I WILL BE BACK LATER WITH MY CHARTS AND MORE ON OUTLOOK.

I am trying some new stuff..i.e using the 20period swing system on different timescales to see which one is better. I might post some trial entries later today with this..The only thing confusing me for now is which timeframe to use...1hour or 30 min swing...Trying to evaluate which is better.

Regd outlook - This rally has gone too far..We should get some kind of pullback and consolidation after which we will make an attempt to take out the highs...So it looks like we have to put bearishness on the back burner and try to trade on the longer side and buy dips...

But this will come later...I dont think the pullback is done yet..I will use the swing indicators to show where to go long or where to go short.

More later.

Best.

Intraday Thoughts

EDIT: Just wanted to make things clear..I am totally flat now..Not trading for a little while..Generally after some losers, its better to regroup and come back..So thats what I will do..Frankly I am surprised all the bullishness..But generally market defies logic...So maybe a new bull is starting..Who knows...More thoughts later...trade safe out there...And dont trust anything..bye.

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EDIT: Dont know..Dont know..I am capitulating fully and going flat..Will decide on future positions later...Now just going to chill a bit...Better to let things sink in and not trade emotionally...Things look very bullish for now...Atleast for today.

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Okay guys...The US market futures has done bears in...I am capitulating a bit over here...Covering all option position shorts in loss...Also rolling the future shorts to April...Also hedging ALL of them with 2900 calls. Dont know how this turns out...But I cannot see any reason to be bullish now..Maybe I am wrong and will be bankrupt soon...Feel FREE to fade me.. :)

Below is what I wrote few hours back...I still feel the same...But US futs gapping up has obviously thrown a spanner in all bears works...Let us see how this works out..
Tough trading..

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Past several hours, I've been reviewing market data and charts..I've also been reading several blogs and forums...And overall, what I read is scaring me and making me question my earlier views in past few posts where I was toning down on my bearishness...

I see that everywhere, the bulls have started hoping against hope again...And on
what basis? That things cannot be TOO bad...HOW did they reach such a conclusion?
Price has done absolutely NOTHING on a medium term basis...So WHY bullish? I am pretty surprised...At best I expected some neutral sentiment..Price has not moved anywhere over past 3-4 months..So because of this one would expect more neutral sentiment...The bulls are back though...Last week pushed sentiment to the more bullish side...Maybe they will be right and we will push higher up...I continue to be skeptical But lets play point to point...

Best.