So the 2.5week low came and went by. So what we are seeing right now is intense upside pressure. I could have traded this much better in hindsight but I have to deal with things as it is right now. Frankly when talking from a trading perspective, we need to always go with our gut. But once a wrong decision is made, its tough to backout to the right trade.
Frankly, the last 2 weeks before this one were probably one of the best in my trading life. But last week was bad. The point is that I had the tools but chose not to trade according to that.
Most websites like mine will say they knocked the ball out for sixer..they will rarely tell you that they made a booger trade. But I am saying that past few days, I did that...Could have done much much better.But hindsight is always 20/20. I dont believe in that. So that last/this week was bad - I ll say - but still its just 30% of the profits I made couple of weeks before that.
I am not superhuman..just plain human like you guys..so a loss is a loss. Need to deal with it. Above 5050 yesterday, I stopped out lot of shorts. but still have quite a few. So need to deal with it today.
Its also the RBI day. And I frankly think the news will be a non event unless these guys do something very very extreme. Right now its 25bps or nothing. I think either of these and market expecting this..so its likely to consolidate. If they cut..which I think is unlikely, we might have a spike out!
Ok coming to price levels. 5180-5200. This should be stops for shorts. Above this, it can go much higher. But it will still fail later. But we need to respect it. We shall see how things turn out today.
Best,
Lee
Thursday, September 15, 2011
Wednesday, September 14, 2011
2.5 Week low confirmed
No other way to read it now. Looks like we confirmed the 2.5 week low at around 4900 - This also came up in the timeframe I was expecting - Wednesday/Thursday. So its done now.
What next? We will likely rally for the next few days - until we get to a top for the 5 week cycle. And then again decline down into the 5 week low expected toward end of this month. Wild card is how high we can rally in this current bounce up. Will it be a double top? Will it stall in 5080 range? Will it get to 5175? Lot of questions but no way to know for sure. We have to observe market action for next few days.
Either way it looks like it would have prudent to atleast take off 50% of my shorts yesterday near 4900 - I was expecting the low - So could have definitely reduced the risk. Problems with having to trade at odd hours in the night. Well its done now. I have double hedges in place for the futures but the puts might lose some value today. So not quite sure how to handle. I might just close all and try scalping intraday until I see opportunity to put the shorts back on. Very fluid here right now - need to see how the trading day goes. Will update here.
Charts with a few more clues below -
EDITS:
1. Well I dont know. I expected a better performance today. Not to be. So it bounced but quickly went down. SO..Who knows. I think its better to go by levels..So 5040, above that 5150-5180. I think better to think about shorting in these areas. The Indian market is turning into a great deceiver nowadays lol. If world is up, India goes down and vice versa.
I covered lot of shorts initially..and then put them back on..so essentially still a status quo. I hate it..really hate it..but dont know what else to do. Lets see if this guy can trade above 5050. If it does, then I might cover some shorts. Right now looks damn weak. I will offer some more thoughts around this psychology tomorrow.
Best,
Lee
What next? We will likely rally for the next few days - until we get to a top for the 5 week cycle. And then again decline down into the 5 week low expected toward end of this month. Wild card is how high we can rally in this current bounce up. Will it be a double top? Will it stall in 5080 range? Will it get to 5175? Lot of questions but no way to know for sure. We have to observe market action for next few days.
Either way it looks like it would have prudent to atleast take off 50% of my shorts yesterday near 4900 - I was expecting the low - So could have definitely reduced the risk. Problems with having to trade at odd hours in the night. Well its done now. I have double hedges in place for the futures but the puts might lose some value today. So not quite sure how to handle. I might just close all and try scalping intraday until I see opportunity to put the shorts back on. Very fluid here right now - need to see how the trading day goes. Will update here.
Charts with a few more clues below -
EDITS:
1. Well I dont know. I expected a better performance today. Not to be. So it bounced but quickly went down. SO..Who knows. I think its better to go by levels..So 5040, above that 5150-5180. I think better to think about shorting in these areas. The Indian market is turning into a great deceiver nowadays lol. If world is up, India goes down and vice versa.
I covered lot of shorts initially..and then put them back on..so essentially still a status quo. I hate it..really hate it..but dont know what else to do. Lets see if this guy can trade above 5050. If it does, then I might cover some shorts. Right now looks damn weak. I will offer some more thoughts around this psychology tomorrow.
Best,
Lee
Tuesday, September 13, 2011
Quick Update
Just a quick update - I am sorry didnt update anything till now..was busy..anyhow whatever I updated before in posts and comments still stand. We are trying to bottom for a 2.5 week low but this is ofcourse bound to be weak being so late within the bearish cycles SO whatever rallies comes, it will be short lived and we will go down toward the 80 week lows expected beginning of November timeframe. I have given more details in my earlier post - dont want to repeat them here.
Rangebound action is what we are seeing right now. 4900 needs to break for bearish case and 5040 and then 5175 needs to break for bullish cases. I think by this itself you can understand which case is stronger. My bias is also very clear I hope.
Trade Safe.
EDITS:
I am maintaining a status quo for today. Basically not doing anything from yesterday. Am short heavily but also have hedges in Nifty futures. Probably only a matter of time before we break below 4900-4875. Then it might be a bear party.
Best,
Lee
Rangebound action is what we are seeing right now. 4900 needs to break for bearish case and 5040 and then 5175 needs to break for bullish cases. I think by this itself you can understand which case is stronger. My bias is also very clear I hope.
Trade Safe.
EDITS:
I am maintaining a status quo for today. Basically not doing anything from yesterday. Am short heavily but also have hedges in Nifty futures. Probably only a matter of time before we break below 4900-4875. Then it might be a bear party.
Best,
Lee
Monday, September 12, 2011
Minor Squeeze might be ON - Is the 2.5 week low in?
So market took support at around the 4900-4920 area I mentioned yesterday in the final comments and bounced from there. Today this should continue for atleast a little bit in an effort to squeeze out some of the late shorts. Dont be fooled by this. Always remember the larger term trend is down and all longs should be hit and run affairs - Intraday longs only is best.
From a cycles perspective, it looks like the 2.5 week low came in early - this was always a possibility - one of the reasons I reduced on shorts yesterday/booked profits and also hedged the rest. I had mentioned this clearly in the comments and the edits section. With yesterday's trading day, we have run approximately 15 days in this cycle off of the 10 week low which also translates to 2.14 weeks - Close enough for government work. Lows can come early especially in very uncertain situations in the geopolitical front as we are seeing today.
5080 area on the upside - Might not even manage to get there - this is what we need to watch today and also next few days. I will be watching closely to see where I can reestablish the covered shorts. But initially I might cover some more at the open to re-add later. But not sure. I will update on the edits sections if I do anything. As of now almost double hedged and also covered more than 50% of the puts. Still have opportunity to reduce and re-add higher. We shall see how it turns out.
2.5 week, 5 week, 10 week - These are the cycles running right now in this 80 week cycle before we bottom in Oct end/Nov mid timeframe. The tops of all of these might have already come together last week at 5175 odd. But there is always the chance of the 5 week top coming in which could be a double top or a lower top at 5125 odd. Keep your thoughts and options open. If the market decides to rally from here, I expect it will still top out in few days which will be the 5 week top and we shall go down toward Sept end for the 5 week low. If we bottomed the 2.5 week cycle yesterday, calculate 2.5 weeks more to get the projected 5 week low - this gives approx Sept 27-29th timeframe for the 5 week low - You may calculate this for yourself and see how it works out. From here, you can also easily project the next 5 week cycle and so on - This is the basic tenet of the Hurst Method! So we are in the first 2.5 week cycle of this 10 week cycle. We will have 3 such 2.5 week cycles left. Calculate it and you will get approx Nov 2nd for the 10 week low, the 20 week low, the 40 week low and also the 80 week low. Also quite possibly the 4.5 year and 9 year lows - as I have explained before. If you want to understand this better, read and reread it again and ask questions if you need any clarifications.
EW wise, if the corrective is still running and what we saw recently was just the 'b' of the C wave, then more upside is pending toward maybe a double top kind of situation. Its quite possible and so we need to be open toward it. The preferred count is ofcourse that we have completed some sort of motive move down and we are now correcting it. So more hard down should come after a small corrective rally - This is obviously what I prefer bounces or not.
But whatever happens with short term bounces, the medium term mantra should be to short the rallies because downside pressure will be there until the Nov low which is expected by Hurst methodology. In between this we will have some intermediate lows as I have outlined above.
EDITS:
1. Added back some shorts here...I had covered a few lots at the lows of the morning and the rest what I had covered yesterday. Also rolled up hedges from 5000 calls to 5100 calls. Moving to more of a bearish allocation. Lets see..Can we get to 5025? 5050? Looks quite weak for now.
Best,
Lee
From a cycles perspective, it looks like the 2.5 week low came in early - this was always a possibility - one of the reasons I reduced on shorts yesterday/booked profits and also hedged the rest. I had mentioned this clearly in the comments and the edits section. With yesterday's trading day, we have run approximately 15 days in this cycle off of the 10 week low which also translates to 2.14 weeks - Close enough for government work. Lows can come early especially in very uncertain situations in the geopolitical front as we are seeing today.
5080 area on the upside - Might not even manage to get there - this is what we need to watch today and also next few days. I will be watching closely to see where I can reestablish the covered shorts. But initially I might cover some more at the open to re-add later. But not sure. I will update on the edits sections if I do anything. As of now almost double hedged and also covered more than 50% of the puts. Still have opportunity to reduce and re-add higher. We shall see how it turns out.
2.5 week, 5 week, 10 week - These are the cycles running right now in this 80 week cycle before we bottom in Oct end/Nov mid timeframe. The tops of all of these might have already come together last week at 5175 odd. But there is always the chance of the 5 week top coming in which could be a double top or a lower top at 5125 odd. Keep your thoughts and options open. If the market decides to rally from here, I expect it will still top out in few days which will be the 5 week top and we shall go down toward Sept end for the 5 week low. If we bottomed the 2.5 week cycle yesterday, calculate 2.5 weeks more to get the projected 5 week low - this gives approx Sept 27-29th timeframe for the 5 week low - You may calculate this for yourself and see how it works out. From here, you can also easily project the next 5 week cycle and so on - This is the basic tenet of the Hurst Method! So we are in the first 2.5 week cycle of this 10 week cycle. We will have 3 such 2.5 week cycles left. Calculate it and you will get approx Nov 2nd for the 10 week low, the 20 week low, the 40 week low and also the 80 week low. Also quite possibly the 4.5 year and 9 year lows - as I have explained before. If you want to understand this better, read and reread it again and ask questions if you need any clarifications.
EW wise, if the corrective is still running and what we saw recently was just the 'b' of the C wave, then more upside is pending toward maybe a double top kind of situation. Its quite possible and so we need to be open toward it. The preferred count is ofcourse that we have completed some sort of motive move down and we are now correcting it. So more hard down should come after a small corrective rally - This is obviously what I prefer bounces or not.
But whatever happens with short term bounces, the medium term mantra should be to short the rallies because downside pressure will be there until the Nov low which is expected by Hurst methodology. In between this we will have some intermediate lows as I have outlined above.
EDITS:
1. Added back some shorts here...I had covered a few lots at the lows of the morning and the rest what I had covered yesterday. Also rolled up hedges from 5000 calls to 5100 calls. Moving to more of a bearish allocation. Lets see..Can we get to 5025? 5050? Looks quite weak for now.
Best,
Lee
Sunday, September 11, 2011
Topped?
Probably yes. I think it is more or less confirmed that we have put in the 5 and 10 week cycle highs last week. So now what next? The 2.5 week low will come first off of the 8/26 low(which was the 10 week or the 20 week low - doesnt matter right now - I will take it as the 10 week low for now even though my s/w thinks otherwise). The 2.5 week low will run approx 18-20 days - Of which we are done with 14 days from the low - So we should expect this low this week maybe Tuesday/Wednesday. Could extend to Thursday also. But in that approximate timeframe.
Remember that these lows include market holidays ALSO - Hurst methodology says that even on the days market is closed, we should count it as an actual trading day - Which makes a lot of sense to me - Because we are having market moving events all the time! Even when our markets are closed. A couple of weeks back is a very good example. Even on weekends lot of things are happening. So notionally our markets are trading all the time. So when I say 2.5 or 5 weeks, it includes all non-trading days also.
Ok coming back to market, expect some sort of low in the next 2-3 days. But it might be a weak low and we might just continue on to the next 5 week low expected beginning of next month. One step at a time though.
So last Friday I think was an excellent opportunity for discerning traders to add on to shorts. Break of earlier supports at 5100 and 5090/5080 was good for even conservative folks to add on to shorts. I kept adding on and on and now own a big amount of NF shorts and Index puts. Today I will roll that down to lower strikes essentially making them free and also will reduce exposure - Think I am bit over leveraged right now. So will reduce risk a bit. And ofcourse taking profits is always a good thing. I have NF shorts from 5125 avg price, 5100 puts(sept) and 4700 puts(Nov) probably overleveraged way above my comfort levels. So will reduce them today. Just trying to explain my trading strategy a bit. 5100 puts rolled down to 4900 puts essentially make them free for me and also puts some profit into the pocket. NF shorts hedged make them also protected - will book few lots profit also. 4700 puts(Nov) - These I will likely reduce by 30% just to reduce basis cost. All ideas for today. Will post updates. Also will add charts and more learning matter a little later today.
I mentioned last week - Worldwide things are looking real real bad. A crash cannot be ruled out. I just wanted to remind everyone to be really careful with how you manage your trades out there. Expect the unexpected.
Bharat, I will address your question shortly. You might have got some ideas from above.
EDITS:
1. I executed all trades as per plan above - reducing risk here - hedging the rest - basically what I am doing is locking in profits. I am getting risk free/very less risk right here. I dont know what will happen tomorrow - well lol not that much - I know a low is coming next few days - can be a weak low - can be lot of price destruction before that - but still want to be safe here. Hurst methods have guided me a lot here so I have to mention the same here.
2. Golf Dude said - "Cool blog. I like the fact that you also mention your trades. I think we are in wave 5 now ( 5170 to present ). I expect a turnaround 4950 for 2 of 5"
My reply - Thanks Golf Dude - Do you actually play golf/are you a golf fan? Lot of my friends over here in Houston play golf..They are trying to pull me into it...I am skeptical about it/worried about if I can get even time or energy to play it...But I might still go ahead and start playing it soon. I do know a little bit about the game.
Wave5 with 2 up - yes quite possible. I am not sure. I do do a lot of EW. But nowadays give less importance to it. I see the possibility. But will wait and see.
3. Bharat said - " Dear Lee,
Considering that Nifty is STILL above the week pivot(4970), do you think there is a possibility that Nifty might meet R2 of the week (as said earlier), i.e 5229 in the coming week? Would it be wise to buy around 5000 levels if there be further downside of about 50-70 points?
AND SECONDLY, when do you think the downside cycles start again? You had earlier mentioned in your blog that we 'might' see 4000 some where in november... considering that, do you feel the 'corrective bounce' ends at 5177, w/o fillinf the gap and meeting 5229?
I have been following your blog and Ilango Sir's blog and the views that both of you present to us are excellent!
Actually the reason WHY I am asking you specific questions is because despite both of you use different methods of analysis, the outcome is similar and very accurate!"
My reply -
Always the possibility is there Bharat. We try to forecast the market. But trading is a totally different animal to deal with. Thats why you see so many blogs/sites tell you what the forecast is but dont tell you HOW to trade it. Trading is tough because that is when you deal with your most primal emotions - FEAR and GREED. Tough. We need to have some kind of pre-made plans but also need to have the foresight and planning to be able to modify that according to circumstance.
The downside cycles as you call them might have already started. We might get a bounce from somewhere around here to 4875 upward which should offer some opportunity to reestablish shorts. But either way I think the 2.5, 5 and 10 weeks cycle may have topped already last week. So this gives us some big downside targets. 4500 first, then after a bounce even sub 4000 to 3600 levels. Quite possible very soon. This is what will give us a platform for the next bull market.
As I have been saying for a while, the 80 week low is coming soon. As early as October end to November mid timeframe. So its close. Price destructions happens always as we get toward the low - this is why I have been warning for a while about crash scenarios and to tone down on bullish expectations.
Need to be flexible here. The reason I reduced shorts and reduced the risks is because I want to be safe here and also sleep well.
3. More comments coming soon. Just wanted to say, if you guys have any questions, feel free to ask. I wont bite lol..Its through comments only that this blog will get active again.
Read these 2 posts I made earlier - Read it, study it, I want to build on it. So this will form the first part of your Cycles Education -
http://theindianmarketblog.blogspot.com/2011/08/hurst-cycles-872011-backup-from-vfm.html
http://theindianmarketblog.blogspot.com/2011/08/nifty-hurst-cycles-815.html
After this is done, I would still recommend reading the posts after that. Remember guys - No Pain, No Gain!
4. I think its all looking really bad now. 4920-4875 needs to hold. Else good bye to bulls and we will break recent lows..Then its 4500 coming soon. Enjoy!
On the other hand, what I will say is looks like it is taking some support in this range 4920 I mean. So for more downside this needs to break. I am going to sleep guys..enjoy the rest of the trading day!
Best,
Lee
Remember that these lows include market holidays ALSO - Hurst methodology says that even on the days market is closed, we should count it as an actual trading day - Which makes a lot of sense to me - Because we are having market moving events all the time! Even when our markets are closed. A couple of weeks back is a very good example. Even on weekends lot of things are happening. So notionally our markets are trading all the time. So when I say 2.5 or 5 weeks, it includes all non-trading days also.
Ok coming back to market, expect some sort of low in the next 2-3 days. But it might be a weak low and we might just continue on to the next 5 week low expected beginning of next month. One step at a time though.
So last Friday I think was an excellent opportunity for discerning traders to add on to shorts. Break of earlier supports at 5100 and 5090/5080 was good for even conservative folks to add on to shorts. I kept adding on and on and now own a big amount of NF shorts and Index puts. Today I will roll that down to lower strikes essentially making them free and also will reduce exposure - Think I am bit over leveraged right now. So will reduce risk a bit. And ofcourse taking profits is always a good thing. I have NF shorts from 5125 avg price, 5100 puts(sept) and 4700 puts(Nov) probably overleveraged way above my comfort levels. So will reduce them today. Just trying to explain my trading strategy a bit. 5100 puts rolled down to 4900 puts essentially make them free for me and also puts some profit into the pocket. NF shorts hedged make them also protected - will book few lots profit also. 4700 puts(Nov) - These I will likely reduce by 30% just to reduce basis cost. All ideas for today. Will post updates. Also will add charts and more learning matter a little later today.
I mentioned last week - Worldwide things are looking real real bad. A crash cannot be ruled out. I just wanted to remind everyone to be really careful with how you manage your trades out there. Expect the unexpected.
Bharat, I will address your question shortly. You might have got some ideas from above.
EDITS:
1. I executed all trades as per plan above - reducing risk here - hedging the rest - basically what I am doing is locking in profits. I am getting risk free/very less risk right here. I dont know what will happen tomorrow - well lol not that much - I know a low is coming next few days - can be a weak low - can be lot of price destruction before that - but still want to be safe here. Hurst methods have guided me a lot here so I have to mention the same here.
2. Golf Dude said - "Cool blog. I like the fact that you also mention your trades. I think we are in wave 5 now ( 5170 to present ). I expect a turnaround 4950 for 2 of 5"
My reply - Thanks Golf Dude - Do you actually play golf/are you a golf fan? Lot of my friends over here in Houston play golf..They are trying to pull me into it...I am skeptical about it/worried about if I can get even time or energy to play it...But I might still go ahead and start playing it soon. I do know a little bit about the game.
Wave5 with 2 up - yes quite possible. I am not sure. I do do a lot of EW. But nowadays give less importance to it. I see the possibility. But will wait and see.
3. Bharat said - " Dear Lee,
Considering that Nifty is STILL above the week pivot(4970), do you think there is a possibility that Nifty might meet R2 of the week (as said earlier), i.e 5229 in the coming week? Would it be wise to buy around 5000 levels if there be further downside of about 50-70 points?
AND SECONDLY, when do you think the downside cycles start again? You had earlier mentioned in your blog that we 'might' see 4000 some where in november... considering that, do you feel the 'corrective bounce' ends at 5177, w/o fillinf the gap and meeting 5229?
I have been following your blog and Ilango Sir's blog and the views that both of you present to us are excellent!
Actually the reason WHY I am asking you specific questions is because despite both of you use different methods of analysis, the outcome is similar and very accurate!"
My reply -
Always the possibility is there Bharat. We try to forecast the market. But trading is a totally different animal to deal with. Thats why you see so many blogs/sites tell you what the forecast is but dont tell you HOW to trade it. Trading is tough because that is when you deal with your most primal emotions - FEAR and GREED. Tough. We need to have some kind of pre-made plans but also need to have the foresight and planning to be able to modify that according to circumstance.
The downside cycles as you call them might have already started. We might get a bounce from somewhere around here to 4875 upward which should offer some opportunity to reestablish shorts. But either way I think the 2.5, 5 and 10 weeks cycle may have topped already last week. So this gives us some big downside targets. 4500 first, then after a bounce even sub 4000 to 3600 levels. Quite possible very soon. This is what will give us a platform for the next bull market.
As I have been saying for a while, the 80 week low is coming soon. As early as October end to November mid timeframe. So its close. Price destructions happens always as we get toward the low - this is why I have been warning for a while about crash scenarios and to tone down on bullish expectations.
Need to be flexible here. The reason I reduced shorts and reduced the risks is because I want to be safe here and also sleep well.
3. More comments coming soon. Just wanted to say, if you guys have any questions, feel free to ask. I wont bite lol..Its through comments only that this blog will get active again.
Read these 2 posts I made earlier - Read it, study it, I want to build on it. So this will form the first part of your Cycles Education -
http://theindianmarketblog.blogspot.com/2011/08/hurst-cycles-872011-backup-from-vfm.html
http://theindianmarketblog.blogspot.com/2011/08/nifty-hurst-cycles-815.html
After this is done, I would still recommend reading the posts after that. Remember guys - No Pain, No Gain!
4. I think its all looking really bad now. 4920-4875 needs to hold. Else good bye to bulls and we will break recent lows..Then its 4500 coming soon. Enjoy!
On the other hand, what I will say is looks like it is taking some support in this range 4920 I mean. So for more downside this needs to break. I am going to sleep guys..enjoy the rest of the trading day!
Best,
Lee
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