Some Updates and Thoughts

Well we had some sort of a capitulation day on Friday and its not over...Probably far from it...I was expecting a bottom to form above 4000 without too much price damage however looking at overall scenario now, it does not look like it...We might see 3600/3400 which was the 2nd alternative I was looking at...Expect lots of panic next few days as noises emerge from different areas..However this is not the end of the world and use the opportunities to pick up the good scrips you like - after a few days - no need for rushing in....Supports will be there at 4000, 3800 and 3600...If we see 3600, blindly start buying...We might see this sometime in July or August...

I was expecting a rally into end of the year..Probably will take more time and more price damage before this happens...We have a bradley turn date in September so it may take till then for all the bottoming action to get over...THE bottom might however form before that....

If A=C, bottom = 3400 area....3600 also likely. Lets see.

Update on my positions: As I posted before I scaled into a 50% long posn in cash last week...Turned out to be too early...However since I am heavily hedged in July Puts, I am not going to lose anything...Probably gain more....Need to trade what I see...At this point, all I can see is there is more pain coming...But it should be viewed as an opportunity.

I will post if I see something significant developing...

Best.

Positive Divergence setting up on Daily!

Comments on chart...And comments welcome from all.

Last time this happened, we rallied 800 pts on Nifty...I did post on some forums that time also since I did not have this blog..Will history repeat? :-) Let us C...

Best to be cautious but remember its also very easy to be bearish..I am also torn apart in confusion even though bullish for now...

The other thing worth of noting is that internals are improving..A/D ratio etc improving..

Dont have charts to put up for this but working on developing something.

Best.

EWI Free Update on Asian Markets - India Included

Heres the link to the EWI FREE update on the asian markets..Including India...

https://www.yousendit.com/transfer.php?action=download&ufid=75BFA3316A4E2616

Now some notes here...They are bullish...they are seeing the 5th wave coming up into the end of this year and seeing new highs coming up..Maybe....I think...My views differ as you can see from previous posts...I think we see an X wave going up to highs later this year but probably not exceeding all time highs...After this X wave, the bear should resume..this is what I think at this point...Let us C... :)

Either way there is a lot of pain left to come in 2009 and 2010..I would recommend positioning yourself for this soon...lets be vigilant and nimble...This is a must in this current environment!

Best

Update - June 17th 2008

So the bounce continues...I scaled into 50% longs in few nifty August 5000 calls(just for speculation) and also all of the stocks mentioned in below post...Since I am still expecting a pullback the extent of which we cannot be sure of at this instant, also took some PUTS to
hedge the stocks for July...So thats how I am positioned now...

Expecting pullback shortly...might try a bit more higher before that...Many folks are planning to short at 4800 area...Well and good...However do not get too trapped in this view...Could be a bear trap...So be quick whatever you do...

I have noted, that operators get public bulled up and screw them...Then get them beared up and again screw them...DONT go with the flow...Stand out from the crowd!!...Be nimble and quick whatever you do...Thats all I have to say.

On a side note:
Heres a good read on the Martin Armstrong Model...Pay attention..This guy is a genius. (note that this is not a model for the market but rather a model on the economic/business cycle..so markets may not follow the timeframes explicitly..however I do see a good relationship between the 2)...The 8(8.6) yr cycle that Vivek Patel favours is clearly visible
here...

http://hubpages.com/hub/Martin_Armstrong_Business_Cycle_Model

My thought is that we are in a 2-3 year bear market...This does not mean that we will NOT have fast and furious rallies in between with the bottom pickers and the short covering...But overall I think we drift down into late 2010 and early 2011...Now these are not numbers I just pulled out of my hat...this is based on the Martin Armstrong economic model(google this to find out more)...And from what I see...I think we will rally(X wave) from around here to maybe september/october timeframe in time for the US elections and turn down very hard from there...into 2009...

Ofcourse this is all speculation only...

Best.

Some more picks!

Some more picks...I am thinking of slowly accumulating these over next 2 weeks...As I said before we are at or very close to an intermediate bottom. Please note this is all for CASH ONLY...No FNO...And timeframe I am thinking till end of this year...For now.

Comments are on the chart...

If you can think of any other good picks, please add in comments on this post.

Best.

Heres a gem that should not be missed!

After the big IPO hype, here is one stock that we havent heard much about...MINDTREE...See how its consolidating nicely after a small and quick run up...Looks like a bullish flag to me...Buy when it breaks out OR start buying in small amounts right now itself...play with stops with a close below channel indicated above...Please note that this is a longer term play...so only cash...no fno.

This one could turn out to be a real GEM in coming days/months...Remember you heard this one here first!

Best.

The Doomsday Channel..Or is it?

Heres the channel of 'doom' that has been playing around for the past few months...This here shows the lines that our market needs to get above to confirm bullishness....Till then chop chop and maybe a good opportunity to pick up some good scrips...

I said yesterday...we can get to 4620 and pull back from there...been there done that...now what next?....Maybe we pull back to 4520 area and try once more 4620...above 4620, we can rush to 4700 area and then again pull back...

Honestly I would love to see 4300/4250 so I can load up on bullish positions...But we might not get it...Maybe we only get 4450/4400...But lets not jump ahead of ourselves and see how it plays out...I see market moves as part of a big puzzle...And one by one the pieces should fit into place...!...Its key to be patient..!

Best.

Market Thoughts - June 16th

Lets face it...Friday was a stalemate b/w the bulls and the bears...Very volatile in a range...Bears continually tried to push down the prices but when there is a such a huge short interest open in the market and majority is bearish, the market will behave like a beachball...No matter how hard you try to push it down, it bounces right back up...!

Coming to this week...As was said last week, the market should try to stage a bounceback to 4620 area first and above that if sustained, we should get to the 4700/4750 area...Well the market held so far...We might be able to see 4600 and 4620 today or some short covering and new buying interest coming into the market. I am not sure if we will sustain above 4620 .. But let us see...From one of these areas, we can open a new wave down...

Earlier I was expecting that we might open a really big 5 down maybe to 4000 or even 3600...But at this point, looking at momentum and other factors, I think max pain might be over or very close to over...Best case for the market right now is for us to touch 4620, sell off from there, and retest the lows. Lets see if this turns out...On the retest, if we hold 4400/4350 or even slightly lower at lets say 4300/4250 area, I think we might be at a very important intermediate bottom. Maybe even the bottom for the year....

In other words, we should look to set up longer term portfolios over next 2-3 weeks is what my gut feel is saying...However I am looking toward market moves over next 2 weeks to confirm my ideas so that I can make a more confident decision.

We are not out of the woods yet but some encouraging signals are there...

Okay here is the hourly chart attached above...You can see what I was talking about in the above writeup...Lets see if it holds...We can set a higher low, double bottom or even a slightly lower low with divergence in indicators - This is what we should watch out for in coming 2 weeks.

Heres the daily now...Same idea even though a very optimistic move is shown here...If the bottom gets confirmed as explained above, expect the above scenario unfolding toward end of the year.

Heres the weekly...Just posting this here to show some caution...See stochastics here...still no indication for a longer term buy...In older posts, I have pointed out how, stochastics and macd crossovers on the weekly generally give very strong long term buy signals...

Nothing yet on this chart...However if stochastics does turn up, we can get a weekly divergence which will be a very strong buy signal for longer term.

Heres the very long term chart...

As posted before...

Of the major bull run that lasted more than 6 years...

Start at 850 Nifty...End at 6350

Nifty.38.2% retracement is 4333

50% is 3667

61.8% is 3002

Now before I said we can go for 3600 as a worst case...However after further analysis this weekend, I think we might not get so far....There is good buying support coming in a lower levels...

And also we have hit very close to the 38.2% retracement...Maybe this is all!

Forever optimistic! ;)

Okay now some speculation here...

Lets say we do set an intermediate term bottom and turn up strongly from here, I do not see the possibility of this being a new bull wave...However it would be just an X wave running maybe till the end of this year..and maybe running very close to all time highs on nifty....After which the next ABC should start target lower lows or maybe even a very long term double bottom...But this is just speculation so lets burn that bridge when we get there ;)

Dont jump in and buy yet...lets wait for some more evidence...Will definitely post here when I buy stocks and which ones am buying...some stocks that look good for me are rpl, reliance, panacea, l&t and some others...Will post a more comprehensive list when I do start buying for longer term....

Have a good trading day!

Best.

Market Update - June 13rd 2008

Friends, been quite busy with work and other stuff...this is why I did not post for a couple of days...The other thing is that I had said on last update that market will try to stage a corrective upmove...And I did not see anything for this view to change...which is why I did not post an update..

Today I am starting with the hourly chart...You can see the important lines here...4620 is important resistance right now...If we go above this, we get to 4720/4750 area...But that is the max I am seeing right now for this corrective upmove..



Next heres the daily...Again same viewpoint...different timeframe..You can see how important 4620 and 4730 areas are important in this chart...Write down these numbers if you havent already.

Heres the weekly..Just wanted to illustrate one point here...i.e the weekly stochastics...Meaning unless it turns back up, I do not think it is safe to start buying for longer term...

Now the very long term chart.

This is what I see...For what its worth...

Obviously it is not going to be a straight line down...

Of the major bull run that lasted more than 6 years...

Start at 850 Nifty...End at 6350

Nifty.38.2% retracement is 4333

50% is 3667

61.8% is 3002

Could end at one of above...

At this point I am also favouring 3600 area since A=C approx if that is what it is...

A started at 6350 till 4450 --> 1900 pts

C started from 5300 ---> 1900 pts means 3400 BINGO...Close enough to 3600 give or take...

So let us C...Please note bouncebacks will happen...I expect lets say around 4620...maybe 4750 after which the LAST BIG downside should resume...

Visit this for a refresher(This was posted a MONTH back):

http://theindianmarketblog.blogspot.com/2008/05/elliot-wave-counts-and-ideas.html

Best...And take care...Let the dust settle...There is no need to rush in...

What Next?

We broke some very important supports yesterday intraday but closed above the most important recent support...So what next?

Looks to me like wave 3 of C might be over...If so, we should have some sidewise moves for some time before the next wave down opens...My thought would be to cover if you have any longs and stay flat or try some shorts if confident enough...We might get some upside in coming day(s) to do this....If we are setting up for the 5th wave down of C, believe me you dont want to be holding longs when this happens...Best case might be to take a month long vacation from the markets and then come back and reevaluate.

VIX is slowly going up again...I will be very interested to see if we can get back to 50s area of panic again...This will be a sure sign to get long and start buying for long term also....

Note that we are at 32 now.

These are treacherous times....Comments and Questions Welcome.

Best.

Market Outlook - Two Possibilities

I think we are at a very significant point in our markets...Its do or die...I am looking at 2 distinct possibilities here..At this point both look equally likely even though my gut feel says its going to be the first one...I also prefer this one since it is going to throw up some significant longer term investment opportunities...

Okay first one below...I have drawn a possible path for this one to take if this is the count playing out...This says the Big C down is running now and we are somewhere in wave 3 of C. This should complete somewhere above 4200 and give a bounceback to 4500/4600....And then the finale till 4000 tgt1 , 3600 tgt2, 3300 tgt3. If we do this and go below 4000, I will say slowly start deploying long term investment funds.

Possibility 2 here...What this is saying is that we have a 4th wave ABCDE going on...Or a triangle consolidation....This says we cannot go below 4400...If it does, this one goes out of the window.
This is obviously the more bullish scenario.

Now both possibilities say short term we are going to bounce back a bit....4400 is key...Watch it.

Some factors are telling me a lot of players are expecting 4440 area to hold....But will the market oblige? Remember - The majority is usually wrong! :)

Best.

The First Two - PANACEA and IFCI

As promised in previous post, I am looking at 2 stocks here...Not yet advocating a buy...except MAYBE in small amounts...I am in wait and watch mode for now...As I said for next couple of weeks.


First one Panacea Biotech...I have covered this stock once before over here...I think this looks good because even with the general weakness in the market over past few days, this looks relatively strong..Volume also picking up showing strong hands might be picking the stock. Fundamentally also I believe this is a good stock but I am hoping others can comment on this.

The other thing here is the falling channel-long term, that looks like it can be broken to the upside soon...This is a good stock to buy and hold for long term in the next correction...


Next one...IFCI...Now this stock is no stranger to anyone...Why it looks interesting to me even though its a highly speculative stock is because of how it has held up the 60 price range even over past few days. And volumes are huge...Is someone big accumulating in anticipation of some inside news? Looks possible to me...Also an Inverse HnS looks to be setting up even though its not very clear here...

So thats my first 2 picks...I will look at some more over next few days...As I said before, now might be a good time to pick some good scrips for longer term...Big money is made by buying and holding over longer periods of time...Not trading intraday. You can see how panacea went from 40 rs or so up to 360 odd now...Thats the power of long term. Judge for yourself from the charts.

Now one thing I need some help from readers of this post is do you know anything about the fundamentals or news about these 2 companies? If you do, please add this into the comments section of this post...I would appreciate it...

Best.

Market Update - June06 2008

Make it stoppppp....PLEEASEEE!!!! This would have been the reaction over the past few days for most traders and investors alike... :-)

Jokes aside...It was quite serious - this decline...And there was really no sign of relief...Yesterday market bounced back however I do not think we are out of the woods...I think a lot of traders seeing yesterdays action, might have gone long thinking its over...But I am not so sure...To tell the truth I am confused however I will give the benefit of the doubt to the bearish case until I see more convincing evidence.

Okay coming to the weekly chart first...I have added my comments in the chart. You can see how the stochastics is acting now...I would wait for it to first turn up before jumping in again
with my longer term investments.


Next the daily...Now the bounceback should continue for a few days I think...The lows of March and Jan are quite important...The 4440-4460 area. If this breaks, we should quickly crash to 4000 area. And maybe even more. But before jumping to any conclusions, I remain flat for next 1-2 weeks before making a decision on next steps.

Next the hourly chart. Again its clear...Supports are marked...Break this and we crash. Its simple. I am sure that a lot of traders have gone long or covered shorts in anticipation of this holding? But will it hold?...The Million dollar question!

If I were to guess, I would say bounceback and then come back to break the lows...We can surely expect a retest and how it reacts there will determine the market's trend for this year itself!

For a refresh, read this post again...I posted this some time back...Ultimate bottom can be much lower: http://theindianmarketblog.blogspot.com/2008/05/elliot-wave-counts-and-ideas.html

Okay now that the charts are covered. I just wanted to say some stuff...For some time I have been trying different strategies in FNO and eventually come to the conclusion that it is not worth for me to continue in the same. Believe me, I have made money...good money in normal cash trading in stocks...Or stock picking...But FNO is a different story...Simply not worth for me..Time or effort...So I am returning back to stock picking for a slightly longer timeframe...Means 2-6 months timeframe...Maybe more depending on the market conditions.

I think the main problem that I have with FNO is more phsychological that anything else. Leverage just does not work for me...The main reason ppl get into FNO is to make a quick buck and often end up loosing their shirt in the process...For me since I was hedged most of the time, I did not get off too bad...But still overall I can safely say its not worth the time for me anyone...So moving back to stock picking...And I think we are getting close to a very good buy point....I would wait for 2 more weeks before making a decision...

Fundamentally things are not good...If inflation is 8%(actual much more) and GDP is 8%, this means, real growth is negative...BUT still I think picking out some good stocks will really work out in the longer run.

As a start, I will post 2 interesting stocks in the next post.

Best.

Market Update - June4th 2008

Same chart that I posted yesterday now with updated data...You can see how we hit the exact support I had marked as important and bounced up from there...I tried a small long there and still holding...Looks like we will continue the bounce today for sometime but how long will it continue? Will it hold? Lets see...My thoughts would be that atleast a retest of the lows are coming very soon...Looking to close the longs sometime today maybe at 4760/4780 and wait and watch...I might try a short also today around there based on what I see....

Overall market is very far from strong..Right now the configuration has changed to short the bounces....Market needs to go above 4800 first to indicate some strength...Till then we have to give the benefit of the doubt to the bearish case. Today for the bulls, a positive close is very important. Yesterday we formed what could be a bullish hammer - But needs a good closing today to be valid...Else it was just weak shorts covering.

Have a good trading day.

Best.

Some stuff and lines

Just the intra chart of nifty with some lines and supports I think might be important in coming days...Not giving any recos here but can try maybe going long with tight stops at these line...Be cautious whichever way...This is a confusing market.

Best.

Ouch!

Stopped out at 4800 - The number that I was saying is very very important in short term...Well we just sliced thru it so easily that one wonders what is the point of supports?....Its scary to be long now...I think better to sit out for some time...When in doubt stay out - This is probably the best advice any trader ever got but still we always want to be in the market.

Looks like we are heading to 4600 first stop...Then who knows?

Best.

Market Update - June01 2008

Not much of an update today...Still expecting a bounce..Configuration on charts remains the same...Not uploading charts today coz theres not much change from last week..We are at the lower end of the channel...Still expecting a bounce...One thing here I will say...Many ppl I know are expecting a bounce to 5000 area....Rarely does the market satisfy everyone...I see a couple of possibilities...

1. Market does not get to 5040 area at all...Instead stalls at around 4960-4980 area and goes back down.

2. Market goes above 5040 and screws all the bears...

Kinda favouring 1st scenario for now...We might even get to 5040 which was my initial target..lets see...

I am also preparing my shopping list for longer term stock picks...Will post thoughts about this later...My idea is to pick them on the next decline which should come soon...

Have a good trading day.

Best.

ABC Correction

Lets take a look at the hourly charts over here....Its pretty much defined with the trendlines, a possible wedge setup...Or maybe just a channel which also says we have to bounce UP from here. IF this is a normal correction, we have completed A, B and C got over yesterday suggesting we bounce today to the upper level of the range which comes to around 5040 which was the target I was looking for when I took my longs....Still seems reasonable to expect this short term. Medium term 5050 is important - Needs to trade above to confirm correction is over.

Else we will see lower levels from somewhere down from the 5000/5040 area.

Trade safe. I will post updates to positions if any during the course of today.

Best.

Market Update - May29th 2008

Hello Friends,
I am back from vacation playing on all the slot machines in Las Vegas....Had a fun time...Was tough for me to even trade let alone post updates here...But will try to post more regularly from now on...Daily chart below.

Earlier I posted I was looking for a bounce...We got the bounce but it was a weak one that was quickly sold...What is worrying to me now is the huge figures FIIs are selling off nowadays...Not sure what is going on but situation looks quite dicey. I think we might be setting up for a big drop but this drop might not go below earlier lows of 4400 area. However we will see that when we get there...

Right now I am still long...I am looking to exit this on any bounce I get...I am not sure what yesterdays action was...It was quite scary to say the least....I am wondering if this was the usual expiry shenanigans or something more serious? No easy answer but next couple of trading sessions should tell us.

4800 is of utmost important. Break this, and a mini-crash is even possible.

Trade Safe. If you are not sure, stay out.

4920 on upside is strong resistance. Above this, 4950 area.

If we sustain above 5050 for sometime, I will say that correction is over as the falling channel would have broken to the upside....If not, lows await us.

I am looking to close longs soon and get flat...Or build some shorts...However I am not confident of this market so best thing might be to just stay out for some time.

I apologize if I sound bearish but situation is not clear at this point. I will wait for 2 more days before sounding more confident in either direction...I have indicators showing conflicting viewpoints..Better stay out when not sure.

Bottomline is that 4800 area should hold for the bullish case to remain alive - Short Term.

Best.

Quick Update - May 27th

Hello Friends,
Quick Update...Dont have time to post charts but I think we are setting up for a small bounce upward...Atleast a small bounce...We will reevaluate later....For now I think 5040-5100 area we will get sometime next week...Rolling over longs to June and adding some more to the very small position I had before..Please note market still very weak but ALSO very oversold...To expect a bounce is reasonable...But this is a risky play...I am hedged with puts.

4800 area should hold - Very Important!

CURRENT POSN: LONG NF 4831. (My avg price for June - I have a loss of around 40 pts for May..Just for the record)

Best.