Oct 20th

So looking at the market action, I think maybe the 2.5 week low came in on Tuesday Oct 18th..Early..but still valid..And now we are in the bounce from there. And likely this will also top soon or has topped yesterday. From here we should have atleast a few down days into Oct end/Nov 4th. Lets see how it plays out.

Another thing I just wanted to show. See this below chart. This is a slightly modified model(expert model in the software) I am using. This one actually says the 80week low is already in. I dont like the 'look' of this due to various reasons..So not favoring it at the moment. But it is however a very good possibility considering the strength over past several days.



Lets see how far the next low comes - depending on that we can confirm. Remember shorter term this doesnt make any difference - 2.5, 5 week cycles are all operating fine.

I have been building into stocks whenever we have been having big bad down days..Its been going good so far. Around 30% into cash stocks right now. Rest I will be building in whenever we get big down days.

I am including a snapshot of what I hold right now..Entry price and current price along with current profit percentage. For obvious reasons I am not including quantity/size here. But I am 30% invested now - will add more on declines. The way I operate is very simple - I will monitor this basket every few days and whatever is outperforming on looks good on the charts - I will add more to them. Whatever looks bad, I will either give it a few more days or cut the position. I will post this snapshot every week maybe Friday going forward. This is to monitor a pure cash portfolio performance using Hurst cycles.



EDITS:
11 AM: Should have updated before..Todays move kind of shows the downpressure. Unless we take some support around here, we will go down to test 4950-4920 range again. I have been adding shorts from 5090 NF since the morning. Looking good so far. Regd the stocks portfolio, like I said, days like these are an opportunity to cherry pick. The key is not to get over excited and do everything in one day. We have till Nov 1st week.

11:45AM: May be overdone for today. Exiting shorts at 5040 and going flat. GN!



Best,
Lee

2.5 week low is close...

3 charts posted below. Most of my comments are in there. 2.5 week low seems to be coming in...Maybe today or by tomorrow..From where we should have another bounce before declining into our expected nest of lows toward Oct end-Nov4th timeframe.









If you missed it, check out my last post where I have explained how the Hurst software works. And also given more details on its benefits. Also check the comments section.

LINK TO SENTIENT TRADER

Best,
Lee

Some thoughts..

Charts are there in previous posts. Still relevant for today. Just thought I would add some words to it for today :)

Looks like the 2.5 and probably the 5 week cycles have topped and we are now moving toward the 2.5week low expected this Friday(+or-1day). From there we are likely to have a bounce which can be again reshorted for a downmove into the 80week cycle nest of lows expected in Nov 1st week.

Now there has been a lot of good debate on the extent of the next downmove - some of this can be read in the earlier post comments. We are clear about the direction but its the magnitude that is doubtful at this point to me. Why? Because the upmove we saw from the last 5 week low was pretty awesome. And its not something one might expect from the last 5 week low in this 80 week cycle. So for this reason, the downmove also might not be as big as was initially expected. Now remember this is all speculation - we are sure of direction..so let us play that for now. Let the market go where it wants to go - we will profit from it as we know the time cycles.

Now why do I think this downmove wont be as big as initially expected? Market Internals are the major reason. Sunil over at TIMAMO has given some good studies on it. This is just one thing. Breadth is important - its like looking under the hood at a car's engine - on the surface things can look great or ugly..its only when you lift up the hood and look at the internals that you begin to see things that werent very obvious before. Sunil does some pretty good studies on this.
Apart from this, I track internals of the US market very closely..Better tools are available for this. And things are slowly becoming bullish.

All these reasons are telling me we might get at best a higher low. And for this reason, I do not think we will break 4700 this year. But I still reserve the right to change my views at any point :) I have been wrong many many times before! :D

But remember as I said above - Trading has got nothing to do with these so called forecasts. We trade for money and NOT to be RIGHT - Want to stress this point.

Many times I end up being wrong - but still manage to make some money out out it. As traders this should be our aim. Ego can be costly to any trader.

Now coming to cycles - I have some ideas as to why we might be turning bullish earlier than expected - Its because of sectors. Meaning there are many sectors out there..Oil and Gas, IT, FMCG etc..some of these sectors might have already bottomed out with their 80 week cycles..And so they might be lending upward pressure even though the broader 80 week lows have not yet come in. So...what I would say is be careful either way out there..The fag ends of cycles can be brutal if we have fixed mindsets - So I just say be flexible in your thoughts and positions.

Position Updates - I am short from yesterday open. Will try to cover at the 2.5 week low and reshort on a bounce into the 80 week low. This is the plan. I will also be looking to buy into good stocks for delivery as we go into the expected low. I am starting some pilot positions already just to track them. Let the market decide how far it wants to go in this downmove.

I hope with above post and explanation, my stand on this is a little bit more clear.
I dont really care how far down we might go.


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Ok, so thats my thoughts on the market. Next, several folks asked me about the Hurst software that I use and they wanted to get some more idea around it. I am going to do a write up here..show some examples of how the S/W works. The trades it generates, projections etc.

The software is called Sentient Trader. I have given a link on the top of this page which will direct you to the home page of Sentient Trader.

About the S/W - It is a great package out there in the market today which sticks to Hurst Cyclic principles to generate cyclic projection both time and price based. So it will give you projections in time and for price as well. And you can use this to analyse any market out there provided you have the data for it. Overall the software package is pretty awesome. It is expensive but worth every cent. I was very skeptical before buying it but have to say was pleasantly surprised by how much it has improved my trading. And whatever it cost me, I easily made that back and more within few weeks. It aids me a lot in all of my trading decisions and views nowadays. Readers on this blog would have seen the calls I made over time and you can judge for yourselves. Sure there have been duds - but that what makes the market. Cannot expect to hit home runs all the time. But on balance the software is an excellent aid to any serious trader out there in the market - Any market. We as Indians are always stingy when it comes to buying software - I know - But believe me this is worth every single cent.

CLICK HERE FOR THE SENTIENT TRADER HOMEPAGE

A chart that shows better what the software does -
(see also the charts from previous post: I think they are very clear)



There are many many other features also in the package. FLD lines which generate price targets..VTLs which will show if a low has passed on not and so on..Too much for me to go into in one post..But I will try to in later posts.

Feel free to ask me questions. I will be happy to answer.

Bests,
Lee

Status Quo

Best,
Lee

Crucial Juncture

No other way to describe it. It is a crucial point right now for the bull/bear case. I am not talking about short term here but little bit longer term.

Earlier I was looking for the 80 week low to be a good low..I mean a serious long term low below 4700 maybe closer to 4000 which would give lot of confidence for going long for a longer period of time. However, past couple of weeks action has had me rethinking on this. Now this might just be a way of conditioning by the market where after the weak shorts are weeded out, we just continue the decline in earnest and break all previous supports and lows. Remember this is still a possible scenario. However seeing the strength so far..the strength in internals and so on..Its making me think..that we might not go below 4700 this year. Maybe not even close. I still expect some basing and downward moves till end of this month to set the 80 week low..But am thinking it JUST MIGHT be a HIGHER low. Now this is just speculation at this point. But I am getting ready my 'BUY LIST' of stocks. To buy after this 80 week low..or during it scaling in.

I know market is supreme..prices are king..this is the reason why I have to tone down my bearish expectations at this point. Frankly speaking, it would have just been much better for the market to go lower than 4000 now itself and make a long lasting low. But it looks like that is not meant to be and we might not get much better than 4700 to buy here. So bottom line is expect weakness till end of month but it might be nothing more than a consolidation before the next big move up.

If this is what the market decides to do..I do not think it will be a long lasting low but just a low for this current cycle and the REAL long term lows will only come sometime next year...Preferably after the March-April timeframe - that will be when the next 40 week cycle tops out...And then bottom toward June-July timeframe. So again bottom line is, we seem to be creating some type of bottom here with backing and filling and it will be a good enough bottom until March-April of next year when we might go back to BEAR MODE.

All speculation at this point of time. But I think this is what is happening. So time might be close to buy for a few months to take advantage of those gains. I am not talking about FNO here..But cash..I will post when I start buying but I already started looking for good stocks with potential..Still refining the list. I will post here when I am ready.

Chart -


I think whatever I said till now shows up in this chart. For now indecision and probably and consolidation kind of move lower until the overbrought situation is resolved after which we can move above 5235 and higher. Frankly I dont like it..I wish it worked out differently but the market is what it is..And fighting the market will quickly bankrupt us. Our aim should always be to get on right side of market. Now its indecisive but I think market will show its hand in next couple of weeks. Till then hit and run trades will be optimum. If you know how to trade intraday, do that..else do nothing at all..Covering the few shorts I have today will my aim..I might just change it to puts to reduce my risk..And also I am looking at longer term stock holds toward end of month - I mean buying into stuff. I will post on that when I do..with prices..so that we can track it in a spreadsheet. I used to do this for FNO but it became such a hassle that I stopped. I think I can do it for stocks..So I will be doing the same very soon.

Chart shows last 5 week low came in Oct 4th..so now in last 5 week cycle. So like I said its downward right now..But as of now it looks so far like its not a new bear move but a consolidation before another move upward. Now this is just speculation on my part..Market will show its hand soon. Need to see where this might stop...Important points are 5000 and 4900 areas. Breaking 5000, can get us to 4925 area quickly. Breaking 4900, will get us to 4800 area. More than this at this point I see as doubtful - looking at the strength shown by market so far. I know all this can change in one day..This is why I am waiting till end of October before making any longer term decision. Till then hit and run only. Protection of capital is supreme.

I know someone asked me about INFY cycles..I tried so much couldnt get clean data for it..so many splits and bonuses that prices are skewed. If anyone has clean data, please feel free to share with me..CNXIT data is preferred rather than INFY..I will post an analysis after that.

EDITS: Market open: Covered all shorts. I am just going to trade intraday from now on. Atleast until some more clarity emerges. Did some longs..now covered and doing some shorts..Will keep doing this for some time

10:00 AM: Interesting..Looks like intra resistances are starting to kick in..Back in short like I mentioned..But I am doing intra for now..So I wont be posting updates on trades from now. But my broader view is posted above.

Best,
Lee

Oct 12th/13th

Well after I well and slept yesterday, the market just took off and looks very strong right now. Even I have started questioning my earlier views - have to say looks damn bullish. I am still holding the shorts with the hedges. Today I will roll the hedges upward. Oct 12/13th - this is the timeframe I mentioned for a top. We are there. Now who has the guts to short? lol :)

I will be back a little later with more thoughts. Today we have to see how the market deals with 5150-5200. Above this and I think game changes.

Best,
Lee

INFY..

..Thats what will drive things today. And well the IIP number also although to a much lesser extent. We can speculate a lot about the results - IF it will be good or bad..But ultimately its the markets's REACTION to the results that will matter.

I dont have much more to add to yesterday's post. Except I am beginning to see a lot of bullish signs but my timing model is still saying low at end of October. So I will respect my system. Will continue to try and short but I will be reducing my aggressiveness on this for the time being. Its better to live and fight another day. Things are murky right now. Hit and Run trades seem to be the best option for now.

EDIT- 11:15AM IST: Well 2 big new items are out. Not so impressed with action so far. My earlier call was for a top today or tomorrow(Oct 12th/13th timeframe). So far it is looking quite possible. Reshorted today back at higher levels. I have hedged with 5100 calls. Now will wait and watch. We need to get below 4900 area to start feeling comfy on bearish positions.

Best,
Lee

Dicey here...

...Have to admit yesterday's rally was a good one..I dont care much for rallies that show a big gap up and then do nothing for the full day. Yesterday's was good..Went and tested support at which I covered a big amount and then tried to reshort as we went higher. I say it is good because this is how a strong rally is built. Test support and then try to make a move higher.

Not that it makes much of difference. Today also looks like a gap up. So now I am uncertain how to deal with this. Do I cover? Do I hold and watch? Do I add to shorts? Dont know. Dangerous here either position. As I mentioned before, the Oct 12/13th date was when I was expecting a top to come. So still on target but price wise this is going much above what I expected. Today if it clears 5030 and stays above, it opens up the 5150-5200 range again. So lot of pain to take if you are short. So I am confused :) Whats new. If we go above 5200 without much of correction, then have to admit we might be going much higher. However I still think we have one more downmove lurking in the shadows which will come once majority is once again bullish. Too many unknowns out there..Infy results is another one..I have posted some thoughts on this in earlier post's comments section.

However, for today, will wait for clues after opening and act accordingly. Will post updates. I am holding some shorts so its a toss up as to what to do at this point. Will watch price action and make a decision.

EDITS:
1. Looks like going up..Covered almost all shorts..Will look to readd back later. Intraday scalping till then

2. Very uncertain here..Shorting back in slowly. They never make it easy do they?

3. Part booking and reshorting higher might be a good plan of action here. Will add back later. INFY results is also a wild card here.



Best,
Lee

Market Updates - Oct 10th

So its pretty sure now I think..That we got the 5 week low on Oct 4th. And that we are in the last bounce from there. I think this is an ABC move from the lows and I think I mentioned last week, we have done the A looks like and in a B now after which we might get a small move high in a weak C. I mentioned Oct 12th as an important date. I see this bounce or sideways move will continue into then. Price wise I already mentioned - 4910-4950 range and then 5030. On Friday market couldnt sustain above 4900 and came down from there. So shorts in that area did well. If we get some more down from here, part booking and reshorting higher will be good. Trade management is important to reduce risk and also remain on right side of the market.



Ok so bottom line is - 5 week low came on Oct 4th. This is the last 5 week cycle before our expected 80 week nest of lows(nest of lows means its also the 40, 20, 10 and 5 week lows). So its an important low. And it will come around 5 weeks from Oct 4th. So around the Nov1st week-Oct 31st timeframe. Will be watching closely in this timeframe for a low and also a chance to buy into some good stocks on cash side. I know there were some comments and questions around this - remember I am waiting for broader market to bottom before looking at stocks. So we will start doing that in Oct end.

But first more work to be done on the downside. Lets watch Oct12/13th as a possible timeframe for topping out this 5 week cycle and heading down. Why does it top early? Because its a bearish 5 week cycle being so late in this 80 week cycle. So it tops early and should head down for 3 weeks or so after that into our 80 week low. Price might remain in this range until Oct 12th before heading down hard OR it might have started already - I am not very sure. But risk reward favours short side greatly right now until a clean close above 5030-5050 range. Keep shorting the rallies till then with some trade management.

A note to all - Please dont ask me questions about you personal trades. I will no longer answer. I did not ask you to get into any trade - then why consult with me on getting out? Is it fair? Also dont ask me questions like - is market going up? Is it going down etc etc. I am posting my clear cut views here daily. If you cannot get that info from here, then I cannot help you. Sorry for being a bit brash. But I have been getting some tiring mails and chats. See its technical doubt or a genuine question, I will answer. Just cannot spend time and energy to try and help with others trades at this point of time.

Will post edits if anything new comes up today.

Best,
Lee

5 week low is probably in

Yeah I know. Sucks doesnt it? Holidays in our market..And then the GAP from HELL when we reopen..LOL..I have always wondered why we dont have futures trading after hours. Kinda sucks when all the US markets have derivatives of our indexes and stocks. Kind of dumb if you ask me. But its what we have to work with right now.

Market will always throw us curve balls and bouncers. That is the aim of the market. To separate you from your money.

So looks like a big gap up today. I alluded to this possibility a couple of times in earlier posts. I.E that the 5 week low might be in. This is one reason why I covered shorts on that day I missed the 100 point downswing. Yes it happens. I tend to get these intuitions and signals a few days early. I had a feeling the 5 week low was coming in that day which is why I covered the shorts. What use? :) Still went and entered some shorts past 2 trading days. Nowhere fully as before covering but still around 40-50% short. Still the very good thing here is because of this conflict in my mind, I hedged up nicely..almost too much I think..So today's possible big gap will not injure me..maybe slightly. So I cannot complain.

Updated Hurst Chart -



Ok I mentioned in the last post that it is possible, the 5 week low has already come in. And this chart kind of puts lot of evidence to this view. I earlier thought the 5 week low might come in the Oct 10-14th timeframe as I had posted before. BUT when we talk about lows and cycles we need to give some allowance to the timeframe. So it looks like the 5 week low might have come in on Oct 4th. Ok now coming to possible upside from this low. Remember, this is the last 5 week cycle, so its a bearish cycle. So this is still a bear bounce. Quick and sharp. But it will also quickly roll over. Need to wait for it thought. Price points are 4910-4950 and 5030 levels. One of this areas should provide the rollover and return to downtrend. Before that we have 4860. So lot of points but short covering in atleast first few hours will happen, after which we might get back to the trend.

I think until next week mid. Oct 12th i.e, we might not see major downmoves and will be in a corrective sequence..i.e an ABC move..So A might complete today, B down will come and then maybe a weak C..I feel it might not get above 5030 level for this full corrective move. We shall wait and see.

Another thing what this new evidence does to us is it puts the 80 week low that we were expecting in Nov mid to come a bit early maybe in the Oct end timeframe to Nov 1st timeframe. So need to watch out for that. Either way since we are so close to a major low, caution is advised on bearish positions and we need to start looking for evidence of a more sustainable longer term low very soon.

I will post updates. I have some shorts. I might close them on opening and just keep the hedges I have. This in itself will put me in profit. Have some puts and NF shorts and more than 150% hedges on them because everything was uncertain. So will close/play with them accordingly.

EDITS:

1. 10:00AM Update - Covered all shorts at open. Holding the hedges which are in good profit right now.

2. 11:30AM Update - Covering the hedges..And slowly building into shorts..I might keep some higher hedges just in case. Just remember I think the bounce can go up to the Oct 12th timeframe.


Best,
Lee

No Update Today

Very tired..Going to sleep early. I will try and put up a detailed post tomorrow. Position update is short(40% only) - I plan to hedge today and also add to the shorts over time. I am expecting some sort of possible bounce(small chance only but it is out there) over next few days(did the 5 week low come in early?)..And then the downtrend to resume heavily. Not sure on this as I havent done any analysis yet. Will do so tomorrow.

Best,
Lee

Not Much..

...of an update today..Same as yesterday..Looks like market is trying to bounce..However I really doubt it gets much far in this bounce..4900 is a good point to watch..If it gets there..And if it can sustain for atleast 1 hourly close. Till then downside risks remain and risk reward favours shorts. Remember we are trying to build a bottom but until we do so...Sudden downside moves will keep coming in..Atleast until the 5 week low expected in Oct mid and the 80 week low expected in Nov 1st/2nd week.

EDITS:
1. I am covering some shorts here to reduce risk..and also like I mentioned before to sleep well..It removes lot of pressure to book some profits and let the rest ride..And if market does bounce back from here, we can always add back them shorts. Still short in the range of 60% or so. Whatever I booked now are shorts from the 5000 area - so excellent profits also.

2. Not sure anymore..Today's action is quite uninspiring from a bearish perspective. I am reducing shorts even more to just a bare bare minimum(just token position) at around 4840..Earlier shorts were cut at around 4830 and below. For now market is looking strong. I will readd based on market action tomorrow. Going to bed.

3. Gotta love it. Has it topped for today? I am readding shorts again..But in a very phased manner. I want to have shorting power till 4950-5000 or so. So going slow and steady. Started from 4860 NF.

4. Definitely not looking like it wants to hold 4860NF..Added some more when we got there just now..Market not letting me sleep!

5. Stopping out again on the shorts since its sustaining above 4860..Shoulda gone slept lol..Will come back tomorrow fresh!

6. LOL this is too much...As soon as I cut the shorts, market goes down :(
Yeah I got up just for this..Shorting back in slowly on this pullback. Gotta love the market though for the conditioning it does.


Best,
Lee

The Next Two Weeks

So last week was quite a tumultuous week with expiry also thrown in. I have posted my thoughts on expiry in earlier posts. There is no doubt that some kind of manipulation always comes in on expiry which will throw us off.

So now we are back to the trend which is down. Important price levels are at 4900 which I have been saying for a while. Break this and interest goes down to 4800 which we should do today. Break of this and a 3rd test of 4720 is assured and we should break that this time. Bottom line is I believe the past few weeks consolidation and breakdown level of 5200 test is complete and we will break 4720 soon.



As you can see from the chart 4720 is an important support cluster. More accurately 4720-4675 level is support. Break of this and a test of lower levels like 4400 will be on the radar. One step at a time.

Hurst wise, the Oct 10-14th timeframe should give us the 5 week low. And I expect this to be a very very weak low being the last one in this cycle. We might have a couple of days bounce from there before continuing along the primary trend into our 80 week low. Expected Nov mid timeframe. Again lets go one step at a time.





I shorted last Friday..Not fully but ok enough. So today if we gap down heavily it might not be a great time to add to shorts but we should have bounces which will give us that. Will post updates.

I will do a long term post sometime within the next few weeks. Because we are getting closer to an important low which should offer some safe tradable opportunities on the long side for several months.

EDIT:
1. Is that a bearish island formed on the charts? I can see it on the intraday chart on Ilango's site. If so, the its going to be bad for the bulls for the next few weeks I feel. For now a bounce seems to be on. Use this bounce to build into shorts if not already short..If already short, then can add a bit more which is what I will be doing.

Best,
Lee

Expiry Sucks!

Well what can I say..expiry really does suck and throws us off our game. I wanted to do a more detailed post yesterday before market opened but could not due to other committments. Anyhow like I posted yesterday at around market open, I kept on adding shorts throughout the day. And got an average price of around 4995. So not bad for a days work. Also got into Oct 4900 Puts. Overall size is not as great as I would have liked - around 75% short. I could have gotten more in but wanted to wait and watch a little.

Coming to expiry. All my observations were correct but this is what expiry does. Option players are the big guys..In the end, market will end up where they want it to be. When we started taking off above 4940, I started covering as I outlined in earlier post until I had just a little left..So I closed that also..Overall got out around 4950-60. So all in all not a bad thing since got to reshort again higher.

There were several important signs on expiry day.
One is the rupee still went weaker.
FIIs still sold.
Advance decline numbers were poor - showing that just few stocks pushed up.
And still market went up.
These were all signs that Friday would be weak. I wanted to outline all these before market open but didnt get time. Still thought I would mention now.

And really above were the reasons I shorted back into the market in the 5000 range. All in all a decent week. We shall review some charts and setups over the weekend.

Have a good weekend!

Best,
Lee

New Shorts

Not much of an update today. All relevant charts are there in last post. Today as per my last comment in last post, I am building shorts from open till now both NF and 4900 PUTS.

Best,
Lee

Top in?

I really think so. For this particular move. There are various portions of evidence supporting it. I think unless we manage to get above the 5030-5050 range, I think it makes sense to sell all rallies. And cover on declines partially to reduce cost.
Today we should see sub 4900 for atleast some time. Whether we can stay there is the question. If we can, then below 4870, we can see more declines.
If we get to 4720 area this time, I do not think it will hold. We will slice through it and the next level to respect would be 4650. Still once step at a time. Its always easy to think oh we are going to 4650, 4200 etc or even 5500, 5700 and sit on a losing position. Take one day at a time.

OK enough of today's rant :)

Coming to markets, like I said, 4870 level is crucial. And above 5030-5050 level. In between kind of no mans land but still lot of opportunities to go in and out to get a better price on your positions. This is important. I mean if you are in profit, just book 1/3rd of position. Hold the rest. While this reduces your profit potential, it is a great psychological boost - to hold the rest of the position until target. And as it gets closer to target, cover one more 1/3rd. Then ride the rest of it. I cant tell you how much of a difference this makes!

OK thats it I promise :)

So I did cover a little yesterday..might just sit tight today or cover a little bit more..Reasons are as given above. Just balancing. Rallies will come to re-add back.

First the cycles chart -



Ok next a normal chart look. I have commented on the chart this time -



Another look. This is interesting. This is the Nifty Dollar Index - Defty - Are you able to spot whats interesting?



The DEFTY had already broken the lows corresponding to 4720 on Nifty. So basically the Nifty in Dollar terms is much more bearish that Nifty in Rupee terms. So what do you think FIIs are doing or will be doing? Think about it a little.

Ok thats it. Trade Safe!

If I do anything today, I will post. One thing I didnt post yesterday was that I reentered by NOV 4700 PUTS that I was trading with on the last big fall. I had sold them to buy back and I did that yesterday in preparation for the next leg down.

I also posted some comments in earlier post(s) - you may read them if you missed since I think some good info is there.

EDITS:

1. Not exactly sure what is going on. So stopping out of several of my shorts. Covered few in the morning like I mentioned I might. And rest at around 4936. Better be safe than sorry and live to fight another day. Unfortunately too much of news is coming out tomorrow..so another wild card. Probably around 40-50% short now. Above 5030 something else is happening so will likely stop out fully. Shall wait and watch.

2. Wow..that was some spike..toned down on shorts again..When in doubt better to stay out or reduce exposure..Maybe around 20% short only now. Will reevaluate tomorrow. Yeah I know I might regret this tomorrow..But still better safe than sorry.

3. Dont know. I am out fully. Hope the market does not crash tomorrow. Will reevaluate and come back. For now, bulls look very strong. Expiry sucks! :)



Best,
Lee

Quick Update

Ok..now I suppose everyone is feeling slightly to raving mad bullish and not at all bearish..cursing themselves for taking those short positions hehe..Its good. This is how everyone is feeling..and is a natural cycle of market psychology nothing else.

So as I mentioned..Options were disintegrating yesterday so I covered them all..I had OCT PUTS...did not want to hold against the obvious decay in price and this turned out to be a good decision.

SO...I am holding shorts today..October NF..hedged with 5000 calls which I entered yesterday around 17-18. Its 33 right now. So it offered me some sort of protection. Not much but something. And also in these kind of situations, I hedge at the ratio of more than 1:1..Means if I have 2 lots NF short, I might have 3 or 4 lots Options 5000 call long..This is because of deltas. A google can help you understand this better. I am not the best person to explain.

So coming to the crux of the matter, I dont think we are entering a new bull move. This is just a squeeze of the shorts. And this is the same game thats played always..over and over again. Once all the shorts have covered or have been squeezed, the next move down will start. Is it ready? Are we there yet? Maybe..But definitely close.I will be trading today according to this principle.

Updates will follow with charts. Havent got a chance to look or analyse them yet.

EDIT:

1. If you have been trading/adding short like me since morning, now maybe a good time to take some off just to be on safe side and also to reduce shorts cost. I have done this and will be going offline in a little while.


Best,
Lee

Bounce back continues..

Sorry for the late update guys..dont have anything more to say from yesterday or from what I posted comments section yesterday - If you missed it, I would urge you to read it now.

Anyhow I am shorting into these levels here. I dont know if it can clear 5050 but I think until it does so, downside pressure remains. Take it for what its worth. You know my bias. 4925 upward till 5050 are good areas to short gradually.

EDITS:

1. I have to mention..I have closed all my NIFTY PUTS at a loss of around 25%(just quantifying the loss on the option values alone - if you look at my full account, this is just maybe 0.5% loss or less. Its all about money management..which is why I mentioned before its not about being a rockstar or owning the world in a few days..just to make profits consistently - Anyone who is a full time trader or experienced trader will understand what I am talking about here...Atleast I hope so.). Full disclosure - Just mentioning openly. I mentioned my profits so mentioning my losses. I am closing all options today. I do not know. This is going too fast and too strong for now. Still holding my NF shorts and earlier updates still stand. Remember - do not trade beyond what you are comfortable on.

2. Just wanted to be clear here - Reason I closed PUTs is coz of time and time alone. Options always have a clear expiry date. Cannot hold hoping for something - similar to holding some milk close to expiry date lol. What I wanted did not come, so closed..Nothing else. After I closed I have been adding nicely in Futures(OCT) with hedges on 5000 calls. Coz I am still bearish.


Best,
Lee

Market Update - Sept 26th

So back refreshed for another new week of battle :)

Last week was an excellent week for me as you can see from the posts. So it was a nice weekend off away from the market without having to worry about any open positions. And I think it was a good decision on my side - got almost low tick and almost the absolute bottom to cover the shorts. And maybe today we will get a rally to start re-initiating shorts.

I want to be clear on this. Re-initiate does not mean all in at once. I will go in small increments so as to reduce risk and also hedge a little so that if the market moves up some 100 points extra than what I expect, I will still be ok. OK - so the shorting range is around 4950+or-25 points - can use your own discretion. Also maybe hedge with 5000 calls. Will get rid of this as the situation arises - will post updates. Thats the plan for now. Still bearish for now. This will be just a dead cat bounce in my viewpoint. The 5 week low is expected in the October 1st week timeframe. So maybe around Oct 7th plus or minus a few days. Will tone down on bearish positions before that. But till then the downside pressure should be on. After that another dead cat bounce.

As I have preaching for some time, the 80week(4.5 and 9 year) nest of lows is going to come in November mid timeframe only. Till then its a bear only punctuated with bear rallies. If something changes in this view point which I think is unlikely, I will alert in advance.

Now price targets - I generally dont like to do this. Because it ties up our mind in one expectation. But still a wild guess for me would be around 4400/4500 for the 5 week low and lower that than for the major 80 week low. Still one day at the time. Dont want to go with targets. Will go with my timing model. If price also works out, then great.

Charts below. Just in a picture what I wrote about above.


http://www.sentienttrader.com/

So like I was saying the last major low at 4720 was likely a 10 week low(this software shows it as 20week but I think this is unlikely), and then the 2.5 week low came at 4911 on Sept 13th. So we are now 28days along the 10 week low and 10days along the 2.5week. The software is expecting the 5 week low around Oct14th(I think it will come in earlier because the 2.5week low came in early). Also the 80week low is showing as expected in last week of November(maybe might come earlier as I mentioned above but bit early to say right now). Just explaining so you can understand better what is shown in the chart. If you have questions, please shoot.

There are also some good comments in the previous 2 posts. You may read if interested.

Ok there were some questions on the Hurst material. I have mentioned before. Its not for the faint of heart and its expensive as well. But if you are really interested and really dedicated -

https://www.traderspress.com/detail.php?PKey=99

Alternatively, read what I write here and try to understand for yourself. There is another book that Hurst wrote initially - I will not recommend this one. Its confusing and Hurst wrote it when he just started developing this concept. The above link is best if you are interested and dedicated. Its not going to be easy.

Also here is the Jessie Livermore Audiobook I had promised. Download when you can. I will deactivate the link in few days -

Reminiscences of a Stock Operator - Edwin Lefevre.rar

One more thing - please refrain from asking me about your specific trades. I will not answer. I think I am providing more than enough thoughts and guidance here to be able to figure out for yourself what to do.

One question to readers - Whats the feedback on ZERODHA if anyone is using? Indiabulls is really eating into my profits because of brokerage. Really eating.

Okay - updates later during trading day. As I tried to explain above, my aim will be create shorts as much as possible toward the 5000 area. If we can get close enough.

EDITS:

1. Hope everyone shorted atleast partially at open..I just started a round(20%) at around 4872 NIFTY OCT FUTURES. Will add if we go higher. Also a small round of OCT PUTS 4800. Hedged with 4900 calls of current month.

2. Continuing to add as we go lower..boths PUTS and FUTS..I might go up to 75% allocation for now provided we do not break back above 4850 on spot. Looking very weak to be frank!

3. Trading trading, enjoying ;) Lots of shorts taken from 4870 down to 4840..now covered 50% at around 4765....Will add back as we go up..Keep trading to reduce cost..No longs at all for now..My view..just my view..you are always welcome to do hit and runs!...enjoy ;)


Best,
Lee

Staircase UP..Elevator DOWN...

Thats it. Nothing else can describe past few weeks move. Just in one day, gains of several days were wiped out..In a few hours infact.

I just wanted to put up a quick update before going out. Once I am back I will add more details and charts as well.

Now, as I mentioned, I covered 25-30% of shorts..covered a bit more also but couldnt post. Idea was just to be safer - and also its a psychological thing. Once you cover few, you reduce your cost and things become much more easier on you. Thats what I did and slept very nicely.

So now, today a gap down open is very likely..And I expect over next few days we MIGHT try to consolidate here before breaking the 4800 level - After which we should see another free fall. I think the market might give one more opportunity to others to get short again over next 2-3 days. This is what I think. However I would never recommend going long. Shorts can either sit tight. Or part book and wait for more opportunities. The next major low is only around Oct 1st/Sep 30th timeframe. So there are quite a few more days before any sort of good playable bounce can happen - Unless ofcourse you do intraday hit and runs.

This has been an awesome trading environment. And Hurst has helped me a lot. I want to thank everyone for their comments in the earlier post - it means a lot to me. I have also replied over there to everyone..So dont miss it.

EDITS:

1. A very quick update..covered 10% more shorts and hedged the rest with 4900 calls..so now only 50%(or less) short. I will post more on this psychology later. Should have mentioned price.I did this around 4854.

2. Ok Folks. I think action so far tells us it might be a quite day - I mean relatively - i.e we might not break 4800 today. As I said before and consolidation move for a few days. Look at the fractal posted somewhere before and you can see this. Market needs to digest this move. Without that, it cannot move lower..Or even higher for that matter..You know my bias ;)

3. I dont know guys..I am taking profits here in this area on almost all shorts. 4825 Nifty. The profits are too much to ignore. So I am booking here to refresh and come back. Its good to do that. As I said I do not think it will break 4800 today. If it does, there its another quick elevator ride down to 4700 area and lower. So I dont know. I want to relax a little and take my profits - well earned I think. We will come back with a fresh mind tomorrow.

4. Oh yeah for the record. My trades since I closed them and also since I was talking about these for a while -

- Nifty Futures short from 5150(higher due to trading but for the record lets take this figure) down to 4825.

- Nov 4700 PUTS from 100 up to 205 today.

Yeah I will sleep good and relaxed today..Totally FLAT ;) Let the market crash without me if it wants to LOL.

Happy and Safe trading to all!


Best,
Lee