Trade Updates

Closed short from 2963 at 2704

Close Hedge from 102 at 31

Opened Long at 2706

Opened Hedge at 102

All positions updated in sheet above.

This 'long' trade is a short term trade. Please avoid if risk averse!

Edit: The reason being I am not very confident on this trade since daily trend is firmly down.

Cheers.

Market Updates

Well got the bounce...On quite weak volumes...But globals are in deep red now...So looks like we can retest the lows and maybe slightly lower. If so, I will likely take profits on short positions and go flat. And look to reshort higher. Will update positions if I do this.

Chart and comments below.

Dont miss the couple of posts below this explaining the new position update feature on the blog.

Best.

Trade Methodology

Got some questions on the trades so thought I will outline some stuff here...

First of all the PE option mentioned above was actually CE being a hedge. I have fixed that - It was my mistake. I have also updated all the figures with latest values. I will do this every end of day or if I do take a new position.

Now about the positions - I am not the kind of trader who trades daily. Only positional. Now I might 'manage' the position and the hedges some days but mostly will let them be. Coming to above positions, it was a double short position before but I covered half of it at 2740 which is what you can see above the open trades - did this since I was expecting a nice bounce which we did get. The other half is still running - I will decide when to close this based on market moves. Whenever I do this, I will update the sheet and also post a blog entry mentioning the exit. Once this is done, overall profit figure will be updated and the trade will move to closed trades.

Then regarding the hedge, why do I have double the futures position? Well most of the time, I try to make it delta neutral especially if I am not fully confident and then I will manage the hedge positions depending on my assessment of the risk in the trade. See the simple idea is that futures will move much faster than options...So if I profit, I am cutting down on profit with the hedge but it will be a profit...On the other hand, if position moves against me, I have protection against account blowup. I have written a good deal on this a few posts below this one - And why exactly I follow this method of risk management vs. hard stops.

Now coming to following these trades. Since these are already open, I would not recommend trading them. If I do new ones, you can try but remember its totally your decision and your risk..In fact, I would feel much more comfortable if people inclined to trade this first paper trade and then follow if at all you need to...Best always is to trade using your own analysis and use mine for confirmation!

I will post market thoughts and updates a little later today.

Best.

Some Updates

Well faithful readers on this blog....You would have noticed that I have added a spreadsheet on top which essentially shows my trade performance since the beginning of this year...

Some notes: 

- The detail on the left shows details on the actual trades I have taken. I think the tabs are self explanatory.

- On the right hand side, you can see the details of the profits/losses which I booked so far and the positions still open and unrealized P&L. It also shows the performance record till date since beginning of year.

Some thoughts here:

- Why am I doing this? - 2 reasons. One is to act as a trading journal for me. I was already doing this - Now its public for all to see...Thats all.

2nd reason...Well this one is a bit more entrepreneurial in nature in that I want my performance to be recorded in case I ever become a money manager...Now I must confess..This is one of my ambitions...Well whether it comes true or not...I want to do this...

Okay...So how can you use this?...Well whenever I trade, I have already made clear before, I take hedges to protect myself...You can see this for yourself in above trades. Be very careful IF you try to follow my trades...usual disclaimers apply.

I would like to hear comments on my new venture and ideas..So dont be shy...let the comments flow...I am willing to consider any changes if valid and needed.

And also, if any one of you have ideas on what it will take to be a money/fund manager, please let me know or get in contact with me at my email id. 

EDIT:

Now you can see all the details on the sheet..I have adjusted a bit..Please do note that options are just a hedge for my main position... Also dont take any positions until I take new positions..I will update when I do this and also do a blog update.

If you want to, you can click on the right hand side icon of the spreadsheet to open in a new window and see everything in detail.

Again I stress..Do not take positions based off this just like that. Follow strict money management rules as I do...And as always disclaimers apply.

Best.

Position Update

No charts. Just a quick update on trades and the market. 

Some bounce is possible to relieve the oversold levels...So I took off some more of my short positions but still holding core position with hedges. If market rallies to 2900-2950 area, I will add back to shorts and also close my hedges - we will see when we get there. The caveat is that the daily trend is now firmly down...So any rallies might be weak...Which is exactly why I am not playing this long but keeping core short position. 

As always its a game of odds. Trade Safe.

Best.

Update - Some charts and quick thoughts

Charts on top...Some market thoughts and comments below all charts. Also comments added in each chart.

SENSEX WEEKLY WITH COMMENTS

NIFTY WEEKLY WITH COMMENTS
NIFTY DAILY WITH COMMENTS
NIFTY FRACTAL UPDATE

Some things here...When you trade, what determines your success above all is some sort of money and risk management. This you will need to develop on your own...I have explained my method already above...It can be stops, it can be hedges..can be a combination of this and position sizing management...

This past trade I am in now was in my opinion a very bad trade because of the area I started adding shorts from...The only reason my account did not blow up was due to proper risk management. 

Trade Update...I covered 30% of my shorts yesterday at 2800-2830 area and holding the rest. I also hedged the shorts at 2840 with 2900 calls...If market bounces next week/or crashes below 2800, I will likely close them off. But need to reevaluate that. Either way my thoughts and preferred paths are outlined in charts and posts above.

Probably no update for some time until I see some change in the scenario.

Have a good weekend all! Cheers :)

Best.

India's Enron

Thats what CNBC is calling this whole debacle and a very apt name too. Well not much of a surprise to me and I stand vindicated on my positions in the market. Not to thump my chest or anything like that...And I truly feel sad and sorry that this is what the corporate world has become. But it was only a matter of time in my opinion.

First we will look at charts and then I will write some other thoughts mostly in answer to some of the questions in earlier comments. I admit this was one of the toughest trading positions I have held getting whipsawed in different directions...But still held on and it paid off...I will touch on some of my thoughts and ideas after we go through the charts.

First the sensex setup chart I have been posting in the past few posts...You can see my comments on the chart. Setup still very much valid.

Next the Nifty daily...Comments on the chart. Nothing more to say except it looks to me we are going to new lows...within 5-7 weeks....Below or around 2000 and I will start looking at longer term cash positions again - IF we do get there.

This was the post I made a while back calling for a fractal move...It would be a good idea to go through this again and refresh :)

http://theindianmarketblog.blogspot.com/2008/12/range-and-some-very-interesting-charts.html

The Nifty weekly...Again comments on chart.

Now coming to actual trading. I understand and agree that this was one of the toughest trades ever if anyone did stay through. I am very sure all the weak hands in the market were first wiped out by the end of day short covering rallies...And once all the shorts are out, the market goes down...

I got questions on how to avoid this...Or how to even trade this...Well there is no easy answer but I feel there are 2 rough ways to actually trade this...For example the recent move up....we know 3080 was the ideal postion to cover shorts...or should have been a good stop loss for any short positions. So once price went above this, we should have covered and then shorted again when price broke 3080 again yesterday. I think looking at yesterdays price action, it was not too difficult to actually do this...Why was 3080 important? Well see the nifty daily chart above and you can see why. Charts are the only way to trade like this...Identify support and resistance points and trade accordingly...Now the caveat here is that to trade like this, you need to be IN the market...closely monitoring all the time....In other words it should be your full time job...If not, forget about it....

The 2nd way...What I do...This is probably not as efficient but I do this because I cannot be IN the market all the time....I am hardly there for 3 hrs of actual market time and that too sacrificing on some of my sleep...So what I do is enter a position and take a hedge in the opposite direction...What this does is I never blow up my account...And also sleep fine :)

Some experience in needed in this also to determine how much to hedge...Which strike to use...etc  etc...For example...Short Nifty 3000...And Long Nifty Calls strike 3100...Now the ratio of the call options should be higher compared to the futures...Then only will it be efficient...As options will not move like futures...

The advantage of this kind of trading is...It give more leeway to me...And I can use my exit plans and I can trade over a larger timeframe...Which brings us to another important point...Timeframe...What is the timeframe you trade?...Decide that...A day trader cannot trade off the weekly charts...I use the weekly to trade...And dailys to fine tune and the hourlies to do even more finer tuning....So I trade positions on a weekly scale...bigger stops...bigger targets and much more leeway...Also it suits my style and the amount of time I can spend in the markets..

Trading is a tough business...Agreed...Experience is the most important thing that we should build in the market...Dont feel bad if you missed out on a move...More moves will come...Markets will still be around...Protection of capital should be the focus of any trader. Profits will follow.

One site you can look at for good support and resistance levels is Ilango's blog :

http://tradeinniftyonly.blogspot.com/

Also I would recommend reading this again - A post I made early last year on my thoughts on TA and trading and what is actually important to a trader. A good read for all traders...Dont miss it.

http://theindianmarketblog.blogspot.com/2008/05/how-important-is-ta-in-your-trading-or.html

Next Possible Moves & Trade Setup

Coming to the market and the next trade setup...I think we will continue down for some more time...And a bounce should hopefully materialize from 2800-2850 area....If we get this bounce from here into 2920-2960-3000, then a good short trade can be done with stop as earlier high...Again watch the lines in the nifty daily and enter accordingly. 

Best.

The Setup - Followup

Main setup I am watching now...Chart is same as posted before...Watch next 2 days closely...Short with tight stops or hedged with calls looks like a good risk-reward play..

Market did not go down as far as 2650 but still the direction of this fractal remains the same as outlined in earlier posts...But we are very close to invalidating this...So a close watch looks to be prudent.

Best.

2008 - What A Year!

Its the end of the year and looking back on this year, I am sure that no one would have expected what played out. Not to this extent. I expected some kind of top at 5800 and sold out on all my long positions and went flat....Market continued upward without me but I was content since we can never expect to catch the last 10% of any big move...Not unless you are very nimble. 

The end of the bull run was marked by the famous Reliance Power IPO...Retail went crazy at the time this one came out and even though I warned all my friends not to put any money in this they still went ahead...loosing most of their money in the process. The day the IPO came out marked the bull market top and never looked back. Has retail learned their lesson? I think not. They still listen to the CNBC clowns - even now. Folks its not a bottom. Their is no such thing as a V bottom. It will take time.

So what do I expect 2009 to bring? It will be bittersweet for sure. The first half is bound to be bad..I expect we shall see new lows...Then after this one super bear market rally. Again pundits will come out calling a new bull market....Will it be? Maybe...But lets take it one step at a time...We will surely go through a basing process over the next 12-18 months...Ups and downs...But there will be super rallies to play...Lets be a trader for some more time and try to catch these big moves before turning on our investment mentality again. 2010-2011 may be the time another bull market starts. Now this is all speculation...But this is my expectation.

Okay enough of raving...Lets go the charts and more closer stuff...Chart with comments attached below. In the post below this one, I mentioned it was good to short at those levels since we were close to the upper area of the channel. Its in good profits right now...What next? My expectations and comments are on the chart. Enjoy.

Once we set this important low in Feb-Mar 2009 timeframe, I expect we shall get a huge rally from the lows...which may be around 1800-2000 on Nifty...this rally should happen into late 2009...maybe a 100% rally also...But let us see that when we get there.

Best and Wish you all a very Happy and Prosperous New Year!

Range and some very interesting charts

Well folks...I got some free time now...so did some analysis and am putting up some charts here with comments...This is very interesting stuff...Dont miss to go through the comments and the studies...If this call plays out, it will be quite an amazing move...!

First the sensex chart I posted in earlier post updated now.

Nifty log...Is this a wedge? Not clear enough to call.

Now the main chart...All comments here...Study closely and leave comments if you like it! :)

Cheers and All the Best!

Merry Christmas!

Well guys this bear market rally has continued much more than I expected and I feel quite drained..I am however still medium term bearish...Even though tired and exhausted with this market...Being year end and Christmas, I am taking a few days break from the markets..I am leaving some short positions still on but not trading around them anymore...I leave you with some good long term charts for your study...I have not added much comments but you can check them out...see the important t-lines and price areas of importance I have marked on the charts..Anyone with basic TA knowledge can make out what I am trying to say here :-) 

Enjoy...

First Chart - Monthly Sensex Very Long Term....Still in a nice bullish channel. Will we test the bottom area of the channel in 2009?

A closer look of same chart but on a weekly scale. 

An even more closer look. Notice the area of importance price is now approaching. Good short point with appropriate stops.

Stay safe out there and Wish you all a Merry Christmas and A Happy New Year!

Best.

When sudden realization sets in....

When the music stops, who will be left holding the bag? 

To me the past few days look like distribution than anything else. Optimism is back. The public is being trained to buy the dips. 

FIIs are buying again...So it seems. Hasnt anything changed fundamentally? Has it become better?

I think IT is showing whats in store for the broader market....very soon...

Chart of Infy first -

Same charts of nifty as I posted before...but updated..and latest comments...Has anything changed?

Log chart...Same story here also.

Best,

A very bearish Lee.

Resolution Time?

Sorry guys..I know long time since a post...Well to tell the truth I have been busy..very busy past few days...Its that time of the year when all projects start rolling out...And well the markets to tell the truth, I have been frustrated by the moves..I did not get any good entries for my shorts...Some of them I have are under water...I did short a ton of 2900 Nifty calls and so some sort of pay back in them...

But I hope some of you stayed sane and out of trouble coz of my last post where I clearly mentioned thats its not wise to be long in this market..We are not at a bottom..Yet.

And still I was apalled again at some bloggers and gurus still calling for bullishness...The market obliged and created a bull trap by breaking above 2860...And then gapping below it today...

So what next...2860 remains the pivot...Longs should not exist below this level. Above this also, try shorting with stops...I remain bearish until I see signs of real capitulation.

Charts for your review - (As SS(Mr Timamo) adviced, I am adding charts with a closer look)

More to follow later. Stay safe out there. 

Best.

Whipsaw City

Covered all shorts today and went flat...Pretty decent profits and I do not want to let it go..I might be early but the market is displaying some strength by holding onto support levels. Will reshort at higher levels if a good bounce comes in else remaining flat...Not going long at all for now. As I said before, I dont like this market. Its whipsaw city and I'm not so sure anymore on direction!  :(

Charts to follow later.

Stay Nimble!

Best.

More to come

As I said last week, market was looking very dangerous. I was apalled at some bullish views coming in from various forums and blogs I frequent. To me it was clear that something dangerous was brewing and lot of small players will get caught on the wrong foot again. I sincerely hope that some of my readers took precautions with what they read here and did not go long yet.

Well as mentioned in my earlier update, I was looking for possible reversal points. I kept adding shorts as we went higher because it was clear that there was a buyers strike and bad things would come soon. Yesterday the market confirmed that with a strong rejection at the 2830 resistance/pivot area. Now back at support...2630 should break today giving way to the 2520 support area. I think this also will break sooner than later and we should go on to test earlier lows and new lows. Dec mid timeframe is where I will be looking for some sort of turn - This is also a bradley turn date. We will see when we get there. Till then enjoy the fall and these charts with comments on them.

Also my sincere wishes and prayers are with all involved in the nasty incident in Mumbai. I dont want to say anything more here but that I am really saddened by several things...The violence, the ineptness of our security forces and above all our politicians and media. Sickening to say the least. I will continue to hope for better times for India as a whole...Will it ever come?

Best.

Possible Reversal Points

Well 2520 turned out to be strong support and market bounced back from that area. I am totally flat now and looking to see if I can short at higher areas. Its risky business as market has some momentum now as is clearly evident from US markets today...BUT I still dont trust this upmove. Not yet. I want to see one more bottom...If its a higher bottom, it kinda seals the deal.

Chart below showing some possible paths and where I am going to be looking to short at. 

Its self explanatory...Short at your own risk however...!..Market has momentum now!  :)

Best.

Some Charts and EWT counts

Been a while since I posted some charts...But I have been mentioning here that I am more bearish than bullish and what I think would happen. Posting some charts here to substantiate this view and also show what I was seeing and why I became bearish. 

Below are 2 charts which show 2 different ewt counts and what is happening now. Either way we go down to test the lows and maybe more. But lets see how market negotiates 2520 and then 2250. 

EWT Count1

EWT Count2

Next here is the weekly chart. Comments on it. Overall things dont look good. I hope some people benefitted from my caution messages over the past few days. A reversal will happen but from which level? Its anyones guess. For me the market looks sick...And there is a buyers strike out there. Sentiment needs to turn before we can start some sort of rally.

Best.

Exit Longs and Going Short for next few days

Yesterday I exited all longs and went short around 2760 Nifty....I am hedged so will continue to hold even if we go higher.

Best.

Quick Update

Buying weakness yesterday worked but I am not so sure anymore. Today I will get rid of my longs and my hedge positions and go into cash for a few weeks..I think its a good idea to be out of the market next few weeks since moves either side are dangerous and can kill a positional trader. Day traders...well enjoy the volatility while it lasts.

Best.

Buying Opportunity

This week could be a good time to start slowly buying into the market...I will start buying back in small amounts daily...Essentially buying back what I sold at around 3200. These are tough markets to time and trade but I think we are close to some kind of value levels...Market even though going down, is not really crashing now. I say lets evaluate the moves today and buy for a good swing up. We are now holding inbetween the 61.8%-50% retracement levels. If market breaks the 2730 area, we can go down to 2640. This area should offer some excellent support going forward.

Will post again after a few days.

Cheers.