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.

BOOM!

Well got the big selloff...Morning started with a 1-1.5% down and I used this area to get rid of almost all my longs and also shorted 3100 Nifty. 

6.66% down...When I got up today and saw this on the screen, I thought to myself...Man thats not a good omen!...Hmmnn...let us see...

So what next? Some bouncing about in a range is possible before we head a bit lower. But remember this is all part of the bottoming process and I also think we are finishing the last 5th wave of C. Today 2860-2850 needs to hold for some kind of rally to develop. If not, well God help the bulls. I will probably cover shorts today and just wait it out....Not going long here because of the uncertainty...Will again try to go short higher...But lets see that as we go along.

See this post I made some time back -

http://theindianmarketblog.blogspot.com/2008/11/rapidly-approaching-strong-confluence.html

We are still playing out this scenario...I am looking for one more major low in the next few weeks. Maybe December.

Updated Daily Chart for your study.

Best.

Are we done?

Is the rally over? Or close to over? For some time I am having this nagging thought in the back of my mind. The earlier decline held to the 38.2% retrace at 2860 and bounced back nicely. But now it could face very strong resistance to the upmove at around this 3180-3250 area. If it breaks out of this, there could be another quick 200 point upmove. But somehow I dont think we will break out above 3250 also very easily. 

Now, even though I said what I have said above, we still can have more rallies and I am open to that possibility. But let it be. We can afford miss out on the last 10% of the rally as long we get out safely...Retest of the lows is quite possible from here...There are some other important things here but I will talk more about that in next post. 

So, I am going to sell my cash longs today on any rally pops and maybe build some small shorts. Its not a good day to do this because there might not be a big rally today but I will see what rallies I can get so I can sell into it...

Charts to follow later.

Best.

Bingo!

Well I got the selloff I was looking for...Should continue for ATLEAST some part today too. I hope you also noted that Reliance cratered and took the market along with it...Dont I deserve a star? LOL!!

Give SS one too...That was an amazing chart and call idea from him - check timamo.blogspot.com

Well anyways joke apart, I am not sure now if this is a sharp corrective selloff with more recovery highs to follow or if it is part of an initiation move that should go on to test the market lows at 2250 and probably lower at 2000 odd. Any thoughts? I am not sure.

I will most probably cover some of my shorts today...Hedge puts against cash longs will remain.

Comments, ideas, thoughts etc welcome. The forum I used to post for ideas VFM has become a noisy and useless place due to some new elements posting and spamming there now. Comments can be posted here also...Will be welcome..And hopefully some kind of healthy debate can emerge.

Best.

And the Beat goes on!

Well today was quite bullish...More than my expectations...Looks to me like some short covering and some panic buying by those who missed the bottom. Well, I am still seeing a decent pullback over next few days.

Some things I saw today and yesterday....Reliance was weak...Visit SS's site - timamo - for more on this...While Nifty continued to rally...If we take this as a sign of things to come, Nifty can get weaker over the next few days after the late to the party retail crowd gets bullish. One other thing I noted today is that all the so called financial advisors on TV have turned bullish. Where the hell were they when we were at 2250?

Well pullback is coming for sure...From where I do not know..But lets watch 3160 and 3250 areas closely for more clues. It might not be a big selloff and I think this one should be bought. I started some small shorts yesterday...Its underwater...And I am hedged. Will look to add some more today. I am not looking for a big selloff and I will also look to buy the dips ofcourse after seeing the character of the same.

Best.

Rapidly Approaching Strong Confluence of Resistance

From the title of this post, you might have guessed, I am looking for some weakness going forward..Some kind of pullback only because we have run up too much too fast and we have also kind of reverted to the mean after all the recent market mayhem. Some pullback is possible..And will also be good for the market.

After this pullback, can we rally again? Definitely. We need to see the nature of the pullback first ofcourse. I believe the market will build an important low and base in the market over the next few months. Dont be surprised if we do not go anywhere in next few months. We can go down some, then go up some and then one final low around 2100-2000 area which should give up a multimonth rally...I am still long but I have some hedges in place and will also look at building some very short term shorts in Futures today. Longs are in cash stocks.

Some charts for your study below.

Comments welcome and urged...Confusing times. Trade Safe.

Best.

Thoughts for the Weekend

Well guys first I must say thanks to all who came forward to offer me support as I was having second thoughts about continuing with the blog...I have added more on this in the comments in the post below this. Reading all the comments in the post and on the shoutbox, I cannot bring myself to close the blog...So I will not. I will however outline some concerns I have and why I thought about closing the blog...

THE WHY?

- Trading is tough...Mentally exhausting...Emotionally draining....Reasearch and Analysis also takes a lot of time....In addition to that blogging takes even more out of you...Putting your own ideas out in public for everyone to see them and act on them...And probably even go wrong more than often puts a lot of pressure on you in case the readers of this blog did not know...

- Ideas are out here. Trades are not. Does anyone know how I trade? Do I go long without any cover? Do I hedge? Where do I hedge? What do I use to hedge? If its puts, what is the ratio to longs that should be maintained, whats the strike so that the portfolio is delta neutral? Am I making sense? What I am trying to say is I am NOT a financial advisor...This blog presents ideas..Unless someone understands the risk vs. reward, do not enter a trade. I get sad seeing suckers everywhere looking for 'calls'. I have said this before and will say it again - Do your due diligence...I read 100s of blogs and ideas from other...Why do I do it? To get ideas..Not trades..I will collate this information and try to see how I can use it in my analysis. Sometimes I find useful stuff...Sometimes not...But in the end my own ideas and chart reads will come through...So my sincere advice to all...Use this blog for ideas NOT for calls or trades...I dont want that on my concience. And also understand basic ideas of risk and money management. This is what will make you successful in the long run.

- Few days back a sucker commented in one of the posts below that I am consistently wrong and that Nifty is going to 1800...Remember he posted when it was at 2250...I knew we had a bottom in place there...That comment is still there for those interested to check it out...It was an anonymous comment but I wonder if that loser is still short 700 nifty points above. While I was not much bothered about his comment because I knew he was wrong about short term..Medium term still can go lower but then its all about playing odds...Right now its buy the dips vs. sell the rallies...And so keep buying the dips.

We also had another sucker on VFM saying that India and China is going to war he had RAW intelligence...And so on...Another sure indication of the bottom... :) Read that in case you missed it...It was one of the most hilarious posts on VFM. When nifty goes back down to test the lows, I am sure he will post again...Buy blindly then...lol.

Coming to markets...Charts and more detailed analysis will follow later but in short what I think is the current configuration is still buy the dips but something is still nagging in the back on my mind that we need 1 more low....Till then we might just chop chop. This low can be a higher low also but we need to see that when we get there...I cannot count the waves properly..It looks like one more 5th wave low is needed and we might remain in a complex 4th wave for some time. At the moment I am confused at how long this uptrend will last and if we will even get much of a selloff later. I will analyse some more in the next post.

Cheers.

Lee

Important Update and Analysis

I just realized we've completed a very powerful chart formation here, i think its called the "funny blue lizard guy loses his lunch" pattern. I just forget how you're supposed to play this one.

Sorry guys...In case you did not realize till now...this was a weekend FUN post..lol...hope I gave you some laughs...

On a more serious note...I am seriously considering shutting down this blog...Why? You might ask..Well several reasons...Dont want to elucidate them here...But I will consider any comments any one has before making a decision.

Best.

Market Thoughts and Ideas

Well folks, the decline/crash run much more in price levels than what I had been expecting. I will be honest - 2600 in Nifty was the worst possible level I was looking for...Market is a great humbler is it not? Broke 2600 with ease and went down to test 2250 area. Could be testing the multiyear flag breakout here - Chart below.

Let me be clear here...I am down on my cash holdings but I will keep adding on dips...I expect I will be much better off a few months from now...I booked a good deal of my puts yesterday...Thank God for Puts...Was able to recover much of my losses from the cash holdings...

My view going forward - Keep buying em big drops in the market..

See below charts also. First the long term chart I posted some time back. I admit we went much more than I thought we would but we are at an important area. Looks like we are testing the multiyear flag breakout area. If we fail this area, we can go to around 1950 on Nifty...Maybe around 6000 area on Sensex...BUT pls note this is the worst case..We need to be brave here and keep buying all the dips...No one can catch the exact bottom...But we can get close as possible.

Now the Nifty weekly chart...Comments on the chart.

Regd EW counts not going to make any statements out there...But sentiment is supportive of a major major bottom forming right here. But I am not going to worry about that. There is huge huge value out there...Dig for em and buy em...Dont be too nervous. A good example of a good stock is INFOSYS...Market down 25% from where I bought but INFY is UP 3% from my buy point...Thats just amazing and also a screaming BUY. Others I like right here are Educomp, KSOIL and NTPC..As always usual disclaimers apply and please do due diligence before following advice here...

Please note I had to say that since I hate to be the cause for ppl losing money if any....But having said that, I am confident on whats stated above. :) BUT expect retests of the bottom and maybe slightly lower going forward....Will be good areas to add aggressively to longs.

I remember at 6000 Nifty, ppl were calling and asking me about shares, demat accounts, IPOs and what not...I told them now is not the time...Now if I ask them to buy, they will look at me as if I am totally nuts...Thats sentiment guys...Be brave and buy now...As my friend Rajan sir says, Fortune does favour the brave! ;)

Comments welcome.

Best.

VLT charts- Sensex

Very long term sensex charts with comments..Looks to be an important area. Tested today morning for one...

Bottoming is a process...Expecting retests of this area again...Maybe today itself before 

a lasting rally..

Best.

The Search for the Elusive Bottom

Well folks we are in search for a bottom...This week initially should be bearish and a recovery later which should also coincide with a longer term bottom. This is what I am thinking now however we are in unprecendented times so be cautious. I am adding stocks in cash in all dips...Lets rock...! 2600 is the final bottom I see...Before that we have 2900 area and then 2750 area as possible supports. I dont see us going below 2600. 

I will look at covering my futures short positions today and take some crash puts to hedge my cash portfolio. Also adding to cash postions in a few days...

Below are some charts with comments. Dont miss them.

Best. 

Updates...

A quick update here...

As I said before, I am bit confused on what next but some ideas here on what can happen...

Today should be up huge...Monday also might be up...good probability for it....we can get to somewhere like 3500...even 3600...more than that for this round might not be possible...after that again, i expect a downmove to an important low sometime mid to end next week....this will be the final low....and should be bought very aggressively...

Now the problem here is I do not know how low that low will be?....Can be a lower low....Can be something very close to 3000 also...

BUT there is also a possibility it goes lower to somewhere in the 2700-2900 range...
So best keep above in mind...

What can be done is keep buying in cash but also hedge positions with equal number of PUTs...Atleast our risk is managed for this month..The idea being that we build a long term portfolio for the next big rally...

What we are seeing now in the markets and economy is truly unprecendented....Something I have never seen...Bottom picking is never easy and can never never be 100% accurate...But the aim is to get as close as possible...And maximize reward with respect to risk...

All the best folks.

What Next?

It turned out to be a very good idea to get out of leveraged positions on the big upmove we had before...As I had adviced here...What next?

I am confused but I think we shall try to go a bit more higher and then come back down again to retest the lows and slightly lower...So what to do? Sitting out a bit until some sanity returns is a good idea...In cash, its a good idea to keep buying the dips...I am still longer term quite bullish...Only thing I am not very sure about is how the lows retest will happen...

From 3300 up to 3600/3700 again...And then back down to 3150/2900 range? Something like this I am thinking about now...And that low should be the major low...5th wave low that is.

Its all speculation...So better to avoid leveraged positions...In cash as I said...Keep buying the dips...I think anything around 3200-2900 is an excellent buy.

Best.

Yeaaahaa!! :)

See the US markets today...This is one for the record books. The fractal and yours truly nailed the bottom here in real time and fully boarded the bull bus...Hope some of the readers of this blog are aboard with me :)

Ready for a 10% up day or close?  :-)

I will probably exit a good chunk of my leveraged positions today..Cash I am planning to hold for some time...

I believe you aint seen nuthin yet! Still lot of gloom and doom and bears around...This ofcourse will continue to provide fuel for the ongoing rally.

A couple of charts for your review below. Comments on the charts. 

The other important chart I am looking at is the weekly nifty with stochastics...Still not turned up but close...

As I said before...You aint seen nuthin yet!...Enjoy the charts.

Best.

Market Thoughts for the Week

Well I posted to buy on Friday...I dont know how many bought in that panic with me...I see a very good possibility of an intense rally. I do not know if this is THE bottom - In answer to some of the comments and emails I got - BUT odds are we get a very strong rally maybe to 4140 area....Above 4140 and the bears will die big time...But one step at a time...The roadmap should be 3600 first...Evaluate there...Then 3800...Again evaluate...Then 4000-4100...Again reevaluate...Above 4140, and then we have something big on our hands...But as I said, one step at a time...I think we have had a washout...Capitulation...Still I see people calling for 2600, 2000, 1800, ZERO...lol...Well maybe we will get 2960 on this round but it looks unlikely to me...If we do get it, I will still be buying in cash...These opportunities do not come often...I will compare this crash we have just had to what happened when the commies came to power with the  Manmohan Singh government...God I wish I had the guts to buy at that time....Instead I sold...Everything I had...Now with the experience I have..And all the bearishness I see around, I think this is the time to buy. Maybe its just 3-4 months of rally...But still its a rally...Buy the dips is my advice...If you are risk averse throw in some PUTs to hedge your risk.

On the charts, I see that weekly stochastics is way down...An up week will probably turn it up and if so we will be on a longer term buy...

On EWI scale, we may have completed a BIG wave A down with a monster B wave rally to follow into the mid of next year before we have another major decline...

But now is the time to buy...I expect we will have a retest of the lows - But its not a big probability...I am lessening my futures trades and accumulating in cash...I bought heavily on Friday and today we will have a big gap up and then an attempt to fill the gap...I will watch this and probably buy the dip today afternoon...

All the best. These opportunities come once in a lifetime. I dont profess to be a trading god or anything..Others are there here like that...But I can recognize good odds when I see it.

Some good stocks - Infosys, Bhel, NTPC, SBI, Mosar Baer, KSOIL, LnT. Other welcome to add to the list..I am still digging for gems amongst the carnage.

Charts will follow later.

Trade Safe.

Best.

Fractal Complete - Or close enough for goverment work! :)

Hello Friends and Faithful followers of this Blog,

Almost a month back I posted this message here -

http://theindianmarketblog.blogspot.com/2008/09/fractal-theory-building-case-for-next.html

and here - http://www.vfmdirect.com/forums/show.cgi?topicid=1221160847

Please review above messages/posts before you read this below.

The message said that based on fractals that we were going to have the next leg hard down. Nifty was at around 4300 at the time...Now at 3200...

Booked all shorts b/w 3500 and 3200...Some early...Some late...Overall a fantastic trade - The best I have ever done...Even I was amazed at how the whole thing played to the dot.

Now see the latest chart posted above. Nifty log. 
I have also added some comments on the chart.

To me it looks like the risk-reward has shifted to the long side and we should buy the dips going forward...We might get a retest of the lows in order to complete the wave structure but its not necessary. 

I bought heavily yesterday at around 3200...If you did not buy, dont worry, good chance we will retest the lows again...Else just buy the dips...The move up could be fast and furious..but should be profitable nevertheless...

One thing to note here - something I have always said...Dont use insane leverage...You will be wiped out...Trade safe..

Now wave structure I am not sure...If we have completed the BIG wave A down and the corrective multimonth B wave rally is going to start? OR if we have one more downleg in a month or so to complete the big A wave...

Maybe in a later post, if all are interested, I will post a couple of EW possibilities with charts. This fractal call turned out to be pure GOLD for me...And hope some others also benefitted...The whole time this was running, you just had to look at the charts I had posted earlier and note the pure symmetry of the both the waves...Its really a thing of great beauty :)

Trade Safe.

Best.