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
Thursday, September 22, 2011
Wednesday, September 21, 2011
AND we're there!
Most Probably Yes..Action in US markets today was very clear. Almost half of the uptrend was wiped out within less than couple of hours.
I had been calling for past 2 days or so for 5150-5180 to top out this current upmove and for the next big wave down to start. In Hurst terms, for the 2.5, 5 and 10 week cycles to top out and the next big move down to start into the expected November lows(with a small pause October 1st timeframe).
So likely we started that yesterday.
Now price - Like I have been saying. 5000 first needs to break. Then 4900. Then only we can confidently say we are going to break the 4740 area also. But you know what my bias is :)
So I am short..probably too much..So as usual, I will book some as we go lower..And ofcourse then ride the rest...Hopefully into the abyss.
I am surprised guys..no comments around here..Is it that you dont understand what I am saying? If so, maybe I need to revisit the way I present things..OR is it that you fully agree with my analysis and dont want to comment and add anything more? :)
Or is it that you fully disagree with what I am saying..And dont want to argue with a crazy raving madman speaking gibberish..lol :D Well whatever it is, I always appreciate comments guys..Even if I dont reply directly, I appreciate it and if its a question, I always try to address it in upcoming posts - The last few posts are clear examples.
Ok nevertheless, back to business. A small note about cycles. Its funny. If this same news had come out lets say at a different point of time, the market would not have reacted this way. If you think about it, there was no need for such a big selloff but that is where cyclic pressures come into play and exert themselves. Bottomline is we dont need to worry about any news events. I was calling for a big top for past 2-3 days just like I called for a bottom around a week back.
Same ol game. Just need to be able to read it accurately and MORE IMPORTANTLY, be positioned for it in the right way with least amount of risk.
Wish you all a profitable trading day..And expect a bounce back from some level today..most likely around the 5080/5050 area if we can get there. If that doesnt hold, then 5000.
And as always, comments are welcome!
OH and EDIT: One thing more - the fractal I posted yesterday. Looks like its playing out. If so, close down the hatches - we are in for a bumpy ride down. Those who know me from 2007/08 know the amazing fractal I posted and traded at that time. This also has the potential to be something quite spectacular. Wait and watch. And as always trade safe!
One more thing is the USDINR pair - I was telling all my friends when we were at 42.XX that this is going to 48.XX first stop and probably above 50.XX soon. I think the call is already justified. Right now IT is rallying anticipating increase in profits but sooner or later a mean reversion will happen there are well..As I said, wait and watch. And dont forget to take profits periodically.
EDIT:
1. Booked around 25% shorts..Just to be on safe side. And also to sleep sound. Now my effective short price is way above 5200 - so I am safe for now. Its just good trade and money management. Cannot afford to be greedy in this profession.
2. Hmmnn...ever since I covered a portion, market seems to be building a base for a small move higher. So expect this. Maybe 5080 or 5050? Possible but I think not worth playing for - the big move is still short and stay short. But if you want to, covering here and reshorting higher might be prudent if you are awake and trading. I on the other hand dont have such luxuries. So I will sit tight.
Jesse Livermore once said "After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting"
Will go to sleep and see tomorrow what happens. Whatever it is my avg short price is way above 5200 like I mentioned due to trading and covering some portion right now. So I will hold. Wait and watch. I think this is JUST the TRAILER. Full movie will be released soon ;)
3. WOWZA..so much for the so called 'bounce'..LOL..Bye goodnight going to sleep..Still short and strong. ;)
Best,
Lee
I had been calling for past 2 days or so for 5150-5180 to top out this current upmove and for the next big wave down to start. In Hurst terms, for the 2.5, 5 and 10 week cycles to top out and the next big move down to start into the expected November lows(with a small pause October 1st timeframe).
So likely we started that yesterday.
Now price - Like I have been saying. 5000 first needs to break. Then 4900. Then only we can confidently say we are going to break the 4740 area also. But you know what my bias is :)
So I am short..probably too much..So as usual, I will book some as we go lower..And ofcourse then ride the rest...Hopefully into the abyss.
I am surprised guys..no comments around here..Is it that you dont understand what I am saying? If so, maybe I need to revisit the way I present things..OR is it that you fully agree with my analysis and dont want to comment and add anything more? :)
Or is it that you fully disagree with what I am saying..And dont want to argue with a crazy raving madman speaking gibberish..lol :D Well whatever it is, I always appreciate comments guys..Even if I dont reply directly, I appreciate it and if its a question, I always try to address it in upcoming posts - The last few posts are clear examples.
Ok nevertheless, back to business. A small note about cycles. Its funny. If this same news had come out lets say at a different point of time, the market would not have reacted this way. If you think about it, there was no need for such a big selloff but that is where cyclic pressures come into play and exert themselves. Bottomline is we dont need to worry about any news events. I was calling for a big top for past 2-3 days just like I called for a bottom around a week back.
Same ol game. Just need to be able to read it accurately and MORE IMPORTANTLY, be positioned for it in the right way with least amount of risk.
Wish you all a profitable trading day..And expect a bounce back from some level today..most likely around the 5080/5050 area if we can get there. If that doesnt hold, then 5000.
And as always, comments are welcome!
OH and EDIT: One thing more - the fractal I posted yesterday. Looks like its playing out. If so, close down the hatches - we are in for a bumpy ride down. Those who know me from 2007/08 know the amazing fractal I posted and traded at that time. This also has the potential to be something quite spectacular. Wait and watch. And as always trade safe!
One more thing is the USDINR pair - I was telling all my friends when we were at 42.XX that this is going to 48.XX first stop and probably above 50.XX soon. I think the call is already justified. Right now IT is rallying anticipating increase in profits but sooner or later a mean reversion will happen there are well..As I said, wait and watch. And dont forget to take profits periodically.
EDIT:
1. Booked around 25% shorts..Just to be on safe side. And also to sleep sound. Now my effective short price is way above 5200 - so I am safe for now. Its just good trade and money management. Cannot afford to be greedy in this profession.
2. Hmmnn...ever since I covered a portion, market seems to be building a base for a small move higher. So expect this. Maybe 5080 or 5050? Possible but I think not worth playing for - the big move is still short and stay short. But if you want to, covering here and reshorting higher might be prudent if you are awake and trading. I on the other hand dont have such luxuries. So I will sit tight.
Jesse Livermore once said "After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting"
Will go to sleep and see tomorrow what happens. Whatever it is my avg short price is way above 5200 like I mentioned due to trading and covering some portion right now. So I will hold. Wait and watch. I think this is JUST the TRAILER. Full movie will be released soon ;)
3. WOWZA..so much for the so called 'bounce'..LOL..Bye goodnight going to sleep..Still short and strong. ;)
Best,
Lee
Tuesday, September 20, 2011
Are we there yet?
I think so. If not, then close. Sorry I couldnt give an update yesterday..somehow got pretty busy :)
So yesterday..no denying it..Was very strong. Almost unbelievably strong. BUT now we are bang into the resistance or supply zone. I will be watching very interestingly over the next few days to see how the market reacts here. I think this is a very critical juncture here. Be very clear about this - I have been saying for a while we can get into the 5150-5180 zone and thats what we did yesterday. Honestly I did not expect this to happen yesterday but thats what happened. I had been saying for a while I will trade my shorts intraday to reduce cost and thats pretty much what I did yesterday - not an ideal situation but need to work with what we have.
So now we are in the topping range. As long as we do not get a strong close above 5200-5220, I will remain bearish and continue to trade like that. However a close above this and holding above this, we will have to admit something else is going on. But lets see. I think next few days should give us a concrete resolution.
I know its tough at times like this to hold the fort and trade believing in yourself. But need to do that. I know it was tough for me. But after a lot of study today, I see nothing to change my plans or ideas or market outlook. Still believe we are topping working for the next move down. But close above 5220, I will have to admit I am wrong. We shall see.
If you are not comfortable trading, my advice is - sit out for the next 2 months or so till November mid when we will be buying into some good stocks. This is safe to say the truth considering all the unknowns out there. But if you are into trading, then I would say these are one of the best times to be trading intraday and for a few days purely hit and run irrespective of whether long or short.
OK a look at a chart. I am not posting the Hurst charts because nothing has changed from last time. I.E topping for this current 2.5, 5 and 10 week cycle before the next move into first the 5 week bottom expected b/w Sep end and Oct 5th or so. And then a bounce before the final move into November 1st week. Rough guidelines for now..But we will refine.
Chart -
Ok I posted this a little while back mentioning its a probable fractal for the market. Looking at it right now, it has done exactly as projected - so likely we are closer to a top than ever. You can compare each move within the circles to verify whether what I am saying is correct. We shall see what the market says though!
Best,
Lee
So yesterday..no denying it..Was very strong. Almost unbelievably strong. BUT now we are bang into the resistance or supply zone. I will be watching very interestingly over the next few days to see how the market reacts here. I think this is a very critical juncture here. Be very clear about this - I have been saying for a while we can get into the 5150-5180 zone and thats what we did yesterday. Honestly I did not expect this to happen yesterday but thats what happened. I had been saying for a while I will trade my shorts intraday to reduce cost and thats pretty much what I did yesterday - not an ideal situation but need to work with what we have.
So now we are in the topping range. As long as we do not get a strong close above 5200-5220, I will remain bearish and continue to trade like that. However a close above this and holding above this, we will have to admit something else is going on. But lets see. I think next few days should give us a concrete resolution.
I know its tough at times like this to hold the fort and trade believing in yourself. But need to do that. I know it was tough for me. But after a lot of study today, I see nothing to change my plans or ideas or market outlook. Still believe we are topping working for the next move down. But close above 5220, I will have to admit I am wrong. We shall see.
If you are not comfortable trading, my advice is - sit out for the next 2 months or so till November mid when we will be buying into some good stocks. This is safe to say the truth considering all the unknowns out there. But if you are into trading, then I would say these are one of the best times to be trading intraday and for a few days purely hit and run irrespective of whether long or short.
OK a look at a chart. I am not posting the Hurst charts because nothing has changed from last time. I.E topping for this current 2.5, 5 and 10 week cycle before the next move into first the 5 week bottom expected b/w Sep end and Oct 5th or so. And then a bounce before the final move into November 1st week. Rough guidelines for now..But we will refine.
Chart -
Ok I posted this a little while back mentioning its a probable fractal for the market. Looking at it right now, it has done exactly as projected - so likely we are closer to a top than ever. You can compare each move within the circles to verify whether what I am saying is correct. We shall see what the market says though!
Best,
Lee
Sunday, September 18, 2011
A Look at US Markets - SPX
Been promising for a while that I will post my analysis and phasing on the US markets. So here it is - I have presented SPX here instead of DOW - I somehow have been following that index for a long time rather than DOW or NASDAQ.
Anyhow here is first a very long term look. Its a monthly chart.
You can see the longer term cycles here - First 9 year nest of lows shown here is in April of 1994. Next 9 year nest in March 2003. And now the next 9 year nest of lows sometime toward Dec end of this year? There is always a chance it can come a little bit later. Jan or Feb? This being such an important low chances are there it will extend.
Now I have been mentioning for a while that our Indian market lows will likely come in November 1st week because we have been leading the US market by few weeks. I think by around 7.5 weeks or so. This will also be similar to Oct end 2008/Mar 9th 2009 lows where we bottomed ahead of the US markets. But looks like the gap has reduced considerably right now :)
Anyhow now a look at the shorter timeframe.
The last 18 month nest of lows came in June end. And the last 40 week low came in March mid timeframe. And the last 20 week low came on August 9th. Right now we are in the last 20 week cycle within this 80 week cycle and also with the 4.5 and 9 year cycles. Timeframe for the projected 9 year nest of lows shows as around the last week of Dec. But it may extend also. Will see as we get closer.
A bit more of a closer look.
Monday 12th Sept likely made the first 5th week low within this last 20 week cycle and we had a good rally out of it. This is also the same timeframe that the Indian markets made the 2.5 week low. So we are just 1 week out of the 5 week low in SPX. So still quite early but likely we are closer to a top in both this 5week cycle and possibly the 10 week and 20 week cycles.
=====================================================================================
An update on the Indian market -
As mentioned before, we got the first 2.5 week cycle low last week Monday/Tuesday in this last 10 week cycle before a major low which expected in November mid timeframe. This 2.5 week cycle has run around 1 week now so we are in the topping region. And likely it will also be the top for this 5 week and 10 week cycles. The only question is - Have we topped already?
I think its a very high probability that we might have. If we havent then we might have one more push higher into the 5150-5180 range. As I mentioned before stops for shorts have to be somewhere in the 5200 area. If we push above it, have to accept its going much higher. But for now, lets go with the assumption that we have topped or are going to this week.
This week and the next has the potential to become very bad very quickly - the way I see it. But still lets go with levels. First 5000 has to break for the bearish case. Then the 2.5 week lows has to break next at around 4900. If both of these are done, then we can safely assume that this thing is cooked and we will soon go below the 4750 lows as well. But take a deep breath..and lets go one step at a time.
Friday was quite a whipsaw day..Got whipped a bit on my positions but still held on to most of the shorts I had with some exits and re-entries. Might reduce some today if there is some weakness just to reduce basis costs. I think I already mentioned that I have been scaling into 4700 NOV PUTS. Still have been doing that little by little. NF shorts have been trying to trade in them to reduce basis cost...Will continue to do the same intraday as long as we remain in this range.
Best,
Lee
Anyhow here is first a very long term look. Its a monthly chart.
You can see the longer term cycles here - First 9 year nest of lows shown here is in April of 1994. Next 9 year nest in March 2003. And now the next 9 year nest of lows sometime toward Dec end of this year? There is always a chance it can come a little bit later. Jan or Feb? This being such an important low chances are there it will extend.
Now I have been mentioning for a while that our Indian market lows will likely come in November 1st week because we have been leading the US market by few weeks. I think by around 7.5 weeks or so. This will also be similar to Oct end 2008/Mar 9th 2009 lows where we bottomed ahead of the US markets. But looks like the gap has reduced considerably right now :)
Anyhow now a look at the shorter timeframe.
The last 18 month nest of lows came in June end. And the last 40 week low came in March mid timeframe. And the last 20 week low came on August 9th. Right now we are in the last 20 week cycle within this 80 week cycle and also with the 4.5 and 9 year cycles. Timeframe for the projected 9 year nest of lows shows as around the last week of Dec. But it may extend also. Will see as we get closer.
A bit more of a closer look.
Monday 12th Sept likely made the first 5th week low within this last 20 week cycle and we had a good rally out of it. This is also the same timeframe that the Indian markets made the 2.5 week low. So we are just 1 week out of the 5 week low in SPX. So still quite early but likely we are closer to a top in both this 5week cycle and possibly the 10 week and 20 week cycles.
=====================================================================================
An update on the Indian market -
As mentioned before, we got the first 2.5 week cycle low last week Monday/Tuesday in this last 10 week cycle before a major low which expected in November mid timeframe. This 2.5 week cycle has run around 1 week now so we are in the topping region. And likely it will also be the top for this 5 week and 10 week cycles. The only question is - Have we topped already?
I think its a very high probability that we might have. If we havent then we might have one more push higher into the 5150-5180 range. As I mentioned before stops for shorts have to be somewhere in the 5200 area. If we push above it, have to accept its going much higher. But for now, lets go with the assumption that we have topped or are going to this week.
This week and the next has the potential to become very bad very quickly - the way I see it. But still lets go with levels. First 5000 has to break for the bearish case. Then the 2.5 week lows has to break next at around 4900. If both of these are done, then we can safely assume that this thing is cooked and we will soon go below the 4750 lows as well. But take a deep breath..and lets go one step at a time.
Friday was quite a whipsaw day..Got whipped a bit on my positions but still held on to most of the shorts I had with some exits and re-entries. Might reduce some today if there is some weakness just to reduce basis costs. I think I already mentioned that I have been scaling into 4700 NOV PUTS. Still have been doing that little by little. NF shorts have been trying to trade in them to reduce basis cost...Will continue to do the same intraday as long as we remain in this range.
Best,
Lee
Thursday, September 15, 2011
Upside pressure
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
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
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
Thursday, September 8, 2011
Topping Process
I can only view this current market action as a topping process. Nothing else. As I have been saying for a while 5200-5250 is rock solid. Can we do a little more than that? Yes possible. Probably around 5300 and above is when we need to reverse to fully bullish. Till then sell the rallies is the mantra for now.
I did enter some shorts yesterday. I will add today and continue to add as long as market remains below 5250. One thing I will say - The way I operate is I keep my initial positions very very low. And add as the situation arises - this may be break of certain pivot levels or it may be on rallies toward certain point on negative divergences. Setting a position is not easy and almost is never popular - because we are always going against the grain. I mean to say a short term trend follower thinks everything is quite bullish now. But a longer term guy says this is just a bounce in the downtrend. So a conflict arises. It ALWAYS about timeframe. As a trader we always need to decide what is our timeframe. Different people are comfortable is different timeframes. Has to do with your frequency and timeframe. Find that out and you will be so much more in sync with your trading.
So many people emailed me around learning Hurst methodology. What I will do is over next few weeks is probably present some material around that because I know its very expensive to learn this by yourself. What I will suggest is going back and looking at some of my earlier posts first..I mean to say there is one called 'backup from VFM' sometime this year probably couple of months back. Start from there and few posts after that. Then from next few weeks I will post more around learning and understanding this. Please understand this is not a simple thing for me to do. So it will take some time. But I will still do it.
Trade safe. Keep emotions out. Run your trading like a business.
Best,
Lee
I did enter some shorts yesterday. I will add today and continue to add as long as market remains below 5250. One thing I will say - The way I operate is I keep my initial positions very very low. And add as the situation arises - this may be break of certain pivot levels or it may be on rallies toward certain point on negative divergences. Setting a position is not easy and almost is never popular - because we are always going against the grain. I mean to say a short term trend follower thinks everything is quite bullish now. But a longer term guy says this is just a bounce in the downtrend. So a conflict arises. It ALWAYS about timeframe. As a trader we always need to decide what is our timeframe. Different people are comfortable is different timeframes. Has to do with your frequency and timeframe. Find that out and you will be so much more in sync with your trading.
So many people emailed me around learning Hurst methodology. What I will do is over next few weeks is probably present some material around that because I know its very expensive to learn this by yourself. What I will suggest is going back and looking at some of my earlier posts first..I mean to say there is one called 'backup from VFM' sometime this year probably couple of months back. Start from there and few posts after that. Then from next few weeks I will post more around learning and understanding this. Please understand this is not a simple thing for me to do. So it will take some time. But I will still do it.
Trade safe. Keep emotions out. Run your trading like a business.
Best,
Lee
Wednesday, September 7, 2011
Dejavu?
Extremely strong US market. Will our market remain true to form and take that as an excuse to take profits and sell off? Quite possible. Either way expect the unexpected and remain vigilant.
Replying to comments from earlier post -
Thanks a lot to everyone for your comments in the earlier post.
Sujatha, may have been a bad decision to short yesterday? Early? Maybe...I am not sure..still will work it out. I was very clear on it going to 5150 and above but still could control myself..lol..but its small so I am not too worried..I might also exit them today depending on what I see.
Nov Puts because of cycles only. No other reason. Oct also might work out but not sure how long this current bounce will run. Next week is a good time..cycles view wise..for us to turn down. Price is the grey area. 5200/5250 is still what I am thinking.
Not much more to say today. Same views as yesterday. My favoured scenario had always been a C wave - more bounce - into the 5150/5200 area. But even though I took some advantage of it, I could have obviously done much better. Its funny how the markets plays with our psychology isnt it? Still we are only human. We will make mistakes. The ability to cut it and go for the next trade is what will make a successful trader. I think this is one of the most important things I have learnt over the past 3 years and I think what everyone should learn - never to fall in love with a trade. Cut your losers and let your winners run. After all its just another trade.
Today could be interesting. As I mentioned, I did enter some long term puts and some shorter term NF shorts yesterday..Very small amounts but still I think I am early on this. So I might close some of them today on weakness. I think that might be the prudent thing to do.
If time permits, I will post my reliance and US markets analysis here a little later.
EDITS:
1. Covered all my pilot shorts on the early weakness. Not much of pilots were they? lol. Anyhow will play on intraday longs now..Market may be telling us its not ready to top..not just yet! I will update if I see something differently..For now things do not look too bearish. Market may have a date with the 5180/5200 area at a minimum.
2. Done with intra longs. Those were some good points to scalp. But beginning to look weak again. Will start adding shorts from here as we go higher.
3. I did add a quite a few shorts in there..Not very sure but it looks like this cycle has topped and we are going into the next 2.5 week low due sometime toward mid/end of next week. We shall see.
Best,
Lee
Replying to comments from earlier post -
Thanks a lot to everyone for your comments in the earlier post.
Sujatha, may have been a bad decision to short yesterday? Early? Maybe...I am not sure..still will work it out. I was very clear on it going to 5150 and above but still could control myself..lol..but its small so I am not too worried..I might also exit them today depending on what I see.
Nov Puts because of cycles only. No other reason. Oct also might work out but not sure how long this current bounce will run. Next week is a good time..cycles view wise..for us to turn down. Price is the grey area. 5200/5250 is still what I am thinking.
Not much more to say today. Same views as yesterday. My favoured scenario had always been a C wave - more bounce - into the 5150/5200 area. But even though I took some advantage of it, I could have obviously done much better. Its funny how the markets plays with our psychology isnt it? Still we are only human. We will make mistakes. The ability to cut it and go for the next trade is what will make a successful trader. I think this is one of the most important things I have learnt over the past 3 years and I think what everyone should learn - never to fall in love with a trade. Cut your losers and let your winners run. After all its just another trade.
Today could be interesting. As I mentioned, I did enter some long term puts and some shorter term NF shorts yesterday..Very small amounts but still I think I am early on this. So I might close some of them today on weakness. I think that might be the prudent thing to do.
If time permits, I will post my reliance and US markets analysis here a little later.
EDITS:
1. Covered all my pilot shorts on the early weakness. Not much of pilots were they? lol. Anyhow will play on intraday longs now..Market may be telling us its not ready to top..not just yet! I will update if I see something differently..For now things do not look too bearish. Market may have a date with the 5180/5200 area at a minimum.
2. Done with intra longs. Those were some good points to scalp. But beginning to look weak again. Will start adding shorts from here as we go higher.
3. I did add a quite a few shorts in there..Not very sure but it looks like this cycle has topped and we are going into the next 2.5 week low due sometime toward mid/end of next week. We shall see.
Best,
Lee
Tuesday, September 6, 2011
Bounce back continues..
So for the past couple of days, I have been mentioning that my preferred scenario is for the bounce to continue after consolidation above 4920 - And that is what the market did.
In between however, I began to wonder what if the global markets crash today - what then? There were reasons. Merkel's loss(big big news from a Euro perspective - its going to breakdown very soon), Euro bank issues, US economic news etc..It could have all come to a 1987 style move today - but there were some interventions out there that happened which has prevented this for now - I generally dont like talking fundas but just thought of mentioning this because its important and is going to come back to bite us very very soon. This may be reasons for the next big fall coming soon.
However we are traders and yesterday when the market was breaking out above 4980/90, I covered all shorts almost at breakeven but left the hedges on and doubled up which is showing a good profit today. I plan to cover atleast 50% of this if not ALL of it today. The other option is roll up to higher strike prices to reduce the amount of money at risk(holding 5100 calls..can roll up to 5200 calls).
So now as I have been saying is my preference, we are in a C up of this particular corrective structure - likely some sort of wave 4 or wave B. After which a final wave down is pending into November end timeframe. Topping area? Good question. I have been saying 5150-5180 for a while. If we get there, 5200/5250 area is strong strong resistance(previous breakdown area). So thats the point to build shorts. However if we manage to somehow get above that, we have to reevaluate. But we shall see. I dont favour us going above 5200 by much for now. So I will be playing accordingly.
Oh and one more thing. Today my blog hit 50000 unique views/visitors. Inbetween big breaks and what not. Still I am back and running - I hope better now than before. And also hope I will not ever stop this again.
Thanks to all for their support and encouragement in this journey!
EDITS
1. Booked the calls. Not very happy with opening. Into resistance area now. I also started rebuying my longer term puts(Novemeber 4800,4700 strikes) again
2. So been adding few puts in small amounts only for November series. This is longer term so I am not too worried about small term fluctuations. Also been adding some NF shorts with hedges placed. Again small amounts because I am well aware that this can go till the 5200/5250 range.
Best,
Lee
In between however, I began to wonder what if the global markets crash today - what then? There were reasons. Merkel's loss(big big news from a Euro perspective - its going to breakdown very soon), Euro bank issues, US economic news etc..It could have all come to a 1987 style move today - but there were some interventions out there that happened which has prevented this for now - I generally dont like talking fundas but just thought of mentioning this because its important and is going to come back to bite us very very soon. This may be reasons for the next big fall coming soon.
However we are traders and yesterday when the market was breaking out above 4980/90, I covered all shorts almost at breakeven but left the hedges on and doubled up which is showing a good profit today. I plan to cover atleast 50% of this if not ALL of it today. The other option is roll up to higher strike prices to reduce the amount of money at risk(holding 5100 calls..can roll up to 5200 calls).
So now as I have been saying is my preference, we are in a C up of this particular corrective structure - likely some sort of wave 4 or wave B. After which a final wave down is pending into November end timeframe. Topping area? Good question. I have been saying 5150-5180 for a while. If we get there, 5200/5250 area is strong strong resistance(previous breakdown area). So thats the point to build shorts. However if we manage to somehow get above that, we have to reevaluate. But we shall see. I dont favour us going above 5200 by much for now. So I will be playing accordingly.
Oh and one more thing. Today my blog hit 50000 unique views/visitors. Inbetween big breaks and what not. Still I am back and running - I hope better now than before. And also hope I will not ever stop this again.
Thanks to all for their support and encouragement in this journey!
EDITS
1. Booked the calls. Not very happy with opening. Into resistance area now. I also started rebuying my longer term puts(Novemeber 4800,4700 strikes) again
2. So been adding few puts in small amounts only for November series. This is longer term so I am not too worried about small term fluctuations. Also been adding some NF shorts with hedges placed. Again small amounts because I am well aware that this can go till the 5200/5250 range.
Best,
Lee
Monday, September 5, 2011
Market Update - Sept 05
Yesterday even though the whole world was in red, our market managed to get through without any major injuries..This lends more evidence to the idea that we might have one more wave up pending. However the situation in global markets worsened considerably afterward and today and everywhere is in deep red..And no recovery yet.
So today will be interesting. Will we set another low close by and rally from there? Or atleast make an attempt? Maybe? We shall see. After my update yesterday, there were some good opportunities for intraday longs. Watch out for same today..BUT caution..We have a notorious way of doing what is least expected by most! :)
I still feel we might have a few days of bounce/rally left. But we need to hold 4920/4900..Worst case 4870. Below 4920/4900 itself no longs should be held. Until then we can try longs with appropriate stops.
Ok now a look at the Hurst viewpoint.
Now what is new here is that the software is looking at the 4750 low we had few days back as the 20 week low now. Which is interesting to say the least! Why? Because this means its basically saying the last 20 week low ran very late..Almost 29.3 weeks. Is it possible? Yes ofcourse - basically once we enter bearish periods like now, cycles tend to extend.
Why? Because - in bullish times, lows are early and hence cycles a bit shorter as there is less selling pressure and more buying pressure. Folks can be falling over each other hurrying to jump on the train before it leaves again. The reverse tends to be true in bearish times as it takes longer to get low enough or "safe enough" to allow speculative buying (catching a bottom in bearish times). Hope it made sense.
So till now I was thinking it could have been the 10 week low but lets go with the view that the Sentient trader software has right now. This does not change much for us at this point..Except that there is the possibility that instead of the November timeframe MAJOR low, we can extend into December. But lets fine tune all that later. Now lets look for a top soon. Unless ofcourse its already in at 5050 odd. Tough to say at this point..Need to watch a little bit. Ofcourse the 20 week can top very very early being a bearish cycle as I have explained before..So caution should be excercised here.
I had promised a US market view soon..I will try to put that up asap. I was also thinking of doing an analysis on Reliance soon because I think it might be one of the leaders in the next bull market.
EDITS
1. To tell the truth, even though I expect a bounce still..I am very wary of holding longs now..Why? Because of possible crash like situations out there in the global markets..Lets just focus on hit and run trades only on the long side..Intraday only.
2. Short side. I am going to focus over the next several days on building a core short position with hedges. I will only scale into this very slowly because I still see a possibility of a rally to 5150 area..Hence the hedges as well. So strategy is to start a line..but add only closer to 5100/5150. OR on a break below 4920.
3. As mentioned started my short lines near the open. But this is a possible bounce zone..4940-4920..As I hinted above..Part book and reshort higher? Not sure but I am holding for now with hedges. Break 4920, and we get into a more precarious state.
4. Stopped out of all shorts at 4980 for breakeven..This baby looks like going higher..If it crashes, let it do so without me..Will reshort on retraces then. Good night..going to sleep.
5. Wow what a move after I covered..talk about good timing..WHEW!
6. Nice..couldnt sleep..Making some good money on them hedges..I should've have mentioned that I was still holding them :(...Anyhow doubled up on them also..So carrying a good profit on it.
Best,
Lee
So today will be interesting. Will we set another low close by and rally from there? Or atleast make an attempt? Maybe? We shall see. After my update yesterday, there were some good opportunities for intraday longs. Watch out for same today..BUT caution..We have a notorious way of doing what is least expected by most! :)
I still feel we might have a few days of bounce/rally left. But we need to hold 4920/4900..Worst case 4870. Below 4920/4900 itself no longs should be held. Until then we can try longs with appropriate stops.
Ok now a look at the Hurst viewpoint.
Now what is new here is that the software is looking at the 4750 low we had few days back as the 20 week low now. Which is interesting to say the least! Why? Because this means its basically saying the last 20 week low ran very late..Almost 29.3 weeks. Is it possible? Yes ofcourse - basically once we enter bearish periods like now, cycles tend to extend.
Why? Because - in bullish times, lows are early and hence cycles a bit shorter as there is less selling pressure and more buying pressure. Folks can be falling over each other hurrying to jump on the train before it leaves again. The reverse tends to be true in bearish times as it takes longer to get low enough or "safe enough" to allow speculative buying (catching a bottom in bearish times). Hope it made sense.
So till now I was thinking it could have been the 10 week low but lets go with the view that the Sentient trader software has right now. This does not change much for us at this point..Except that there is the possibility that instead of the November timeframe MAJOR low, we can extend into December. But lets fine tune all that later. Now lets look for a top soon. Unless ofcourse its already in at 5050 odd. Tough to say at this point..Need to watch a little bit. Ofcourse the 20 week can top very very early being a bearish cycle as I have explained before..So caution should be excercised here.
I had promised a US market view soon..I will try to put that up asap. I was also thinking of doing an analysis on Reliance soon because I think it might be one of the leaders in the next bull market.
EDITS
1. To tell the truth, even though I expect a bounce still..I am very wary of holding longs now..Why? Because of possible crash like situations out there in the global markets..Lets just focus on hit and run trades only on the long side..Intraday only.
2. Short side. I am going to focus over the next several days on building a core short position with hedges. I will only scale into this very slowly because I still see a possibility of a rally to 5150 area..Hence the hedges as well. So strategy is to start a line..but add only closer to 5100/5150. OR on a break below 4920.
3. As mentioned started my short lines near the open. But this is a possible bounce zone..4940-4920..As I hinted above..Part book and reshort higher? Not sure but I am holding for now with hedges. Break 4920, and we get into a more precarious state.
4. Stopped out of all shorts at 4980 for breakeven..This baby looks like going higher..If it crashes, let it do so without me..Will reshort on retraces then. Good night..going to sleep.
5. Wow what a move after I covered..talk about good timing..WHEW!
6. Nice..couldnt sleep..Making some good money on them hedges..I should've have mentioned that I was still holding them :(...Anyhow doubled up on them also..So carrying a good profit on it.
Best,
Lee
Sunday, September 4, 2011
Quick Update
Dont have time for much of a detailed update today. I am short from Friday..not too huge..so plan to cover today on initial weakness..Might not go long immediately but there is a possibility of a bounce(C within an ABC structure) which might go above last week highs or get close...Play with stops if going long - 4870 might be a good point to watch as a stop. But not very sure. Waiting and watching.
Best,
Lee
Best,
Lee
Saturday, September 3, 2011
Couple of Questions to All
I had a couple of questions/requests to all...I would appreciate it if anyone responds helping me out with this.
1. I wanted to build an intraday database on Amibroker esp for Nifty but am unable to find good sources of data for this. I have a subscription to desitradermall but downloading each days worth of data and building a DB for more than 2 years is a monumental effort..I know backups are there but even there, the data has differences, is a little bit spotty..so I tried but was not able to get this done..The main reason I am trying to do this is to be able to put EW counts on the whole correction we have got from the last top. So any help in getting the database built up would be appreciated.
The other option is - if anyone has the database already in ami, I could just copy it over and it should work - Please comment if anyone can help me out in this.
2. Tax question. I havent filed anything in my tax returns related to stocks till now. I am unsure how I need to go about this. I started trading back in 2003 mid/end timeframe. So till now no details about my trading operations in my tax returns. But I have been filing tax regularly based on my normal day job income and details. So basically its an omission from the returns.
The main reason I wasnt concerned in the initial years is because I wasnt really making much but now I need to do this to avoid future problems. So I am unsure how to go about this. Is there any way I can account for all the previous trading details in my next return? Will I get in any sort of trouble wrt fines etc if I decide to show all years or just the past one year? Is there any way to avoid this? What is the best way to get everything back to normal and legal? Any help is appreciated.
Comments and suggestions requested.
Thanks,
Lee
1. I wanted to build an intraday database on Amibroker esp for Nifty but am unable to find good sources of data for this. I have a subscription to desitradermall but downloading each days worth of data and building a DB for more than 2 years is a monumental effort..I know backups are there but even there, the data has differences, is a little bit spotty..so I tried but was not able to get this done..The main reason I am trying to do this is to be able to put EW counts on the whole correction we have got from the last top. So any help in getting the database built up would be appreciated.
The other option is - if anyone has the database already in ami, I could just copy it over and it should work - Please comment if anyone can help me out in this.
2. Tax question. I havent filed anything in my tax returns related to stocks till now. I am unsure how I need to go about this. I started trading back in 2003 mid/end timeframe. So till now no details about my trading operations in my tax returns. But I have been filing tax regularly based on my normal day job income and details. So basically its an omission from the returns.
The main reason I wasnt concerned in the initial years is because I wasnt really making much but now I need to do this to avoid future problems. So I am unsure how to go about this. Is there any way I can account for all the previous trading details in my next return? Will I get in any sort of trouble wrt fines etc if I decide to show all years or just the past one year? Is there any way to avoid this? What is the best way to get everything back to normal and legal? Any help is appreciated.
Comments and suggestions requested.
Thanks,
Lee
Thursday, September 1, 2011
Friday - EDITED
SO..market reopening after 2 days off. Will be interesting to see how we perform today. In my opinion its bit of a toss up today. Since we were closed for 2 days and other markets performed reasonably good in those days, we should have a tendency to catch up. However today US markets were weak. So we might also exhibit weakness sometime during the session today.
Last time, I mentioned that the 10 week low was in and we are bouncing out of it..And what a bounce. Going in even at 4840 levels yielded awesome profits. So it was a good trade and call. Now as I have mentioned several times before, we are in the last 10 week cycle of the 80 week, the 4.5 year and the 9 year cycle. So this is an extremely bearish cycle. Which basically means the top of this cycle will be left translated. Basically that is how the bearish cycles will work - The tops will come in very very early in the cycle - thats how we get left translation. In bull markets - exact opposite - Right translated cycles where the peak is formed very late and then weak and quick declines. Hope I am making sense. This one might be forming the peak already around here or maybe a bit more higher around the 5100-5150 range. This is what I am looking for now to slowly scale into shorts.
I am not sure if I should start today or wait for a few more days. I will take a call as we go through the trading the day. 5100 area and above might be good to start scaling in slowly. The important thing is not to get too confident on this and also to play position sizing adequately.
Now if you look at this chart, the breakdown point is quite clear - 5200. This is where the descending triangle broke down and culminated in a devastating move down to 4750. So this is why I was saying any rallies have a maximum cap of this area. If we do manage to go above and sustain above, then we have to admit that something else is going on. We arent supermen with insights into the future - we are traders - so we have to operate on IF-ELSE scenarios - sorry just grounding expectations here. We have good odds but that does not justify not using stops or stop out points.
So for the bearish case, 5200/5220 is the point where it should not go above.
Over next few days to 1 week is the timeframe I expect for this topping process. We should back in and out toward this. Not sure exactly what structure we will take but let us see. My bias is very clear - I will be looking for a top during the next few days - maybe sometime next week - maybe sometime today. Will wait and see how we trade today because making any further decisions.
Thoughts and Comments are welcome.
Oh and by the way, Chandra, I do have analysis on US markets also. I will put this up over the next few days. I do tie up my analysis b/w India and the US very closely even though I dont mention it here. I will explain more in next post(s).
EDITS
1. Big Gap up..Shorted a pilot position on the gap up and hedged it as well. Now wait and watch if this warrants additions to position.
Best,
Lee
Last time, I mentioned that the 10 week low was in and we are bouncing out of it..And what a bounce. Going in even at 4840 levels yielded awesome profits. So it was a good trade and call. Now as I have mentioned several times before, we are in the last 10 week cycle of the 80 week, the 4.5 year and the 9 year cycle. So this is an extremely bearish cycle. Which basically means the top of this cycle will be left translated. Basically that is how the bearish cycles will work - The tops will come in very very early in the cycle - thats how we get left translation. In bull markets - exact opposite - Right translated cycles where the peak is formed very late and then weak and quick declines. Hope I am making sense. This one might be forming the peak already around here or maybe a bit more higher around the 5100-5150 range. This is what I am looking for now to slowly scale into shorts.
I am not sure if I should start today or wait for a few more days. I will take a call as we go through the trading the day. 5100 area and above might be good to start scaling in slowly. The important thing is not to get too confident on this and also to play position sizing adequately.
Now if you look at this chart, the breakdown point is quite clear - 5200. This is where the descending triangle broke down and culminated in a devastating move down to 4750. So this is why I was saying any rallies have a maximum cap of this area. If we do manage to go above and sustain above, then we have to admit that something else is going on. We arent supermen with insights into the future - we are traders - so we have to operate on IF-ELSE scenarios - sorry just grounding expectations here. We have good odds but that does not justify not using stops or stop out points.
So for the bearish case, 5200/5220 is the point where it should not go above.
Over next few days to 1 week is the timeframe I expect for this topping process. We should back in and out toward this. Not sure exactly what structure we will take but let us see. My bias is very clear - I will be looking for a top during the next few days - maybe sometime next week - maybe sometime today. Will wait and see how we trade today because making any further decisions.
Thoughts and Comments are welcome.
Oh and by the way, Chandra, I do have analysis on US markets also. I will put this up over the next few days. I do tie up my analysis b/w India and the US very closely even though I dont mention it here. I will explain more in next post(s).
EDITS
1. Big Gap up..Shorted a pilot position on the gap up and hedged it as well. Now wait and watch if this warrants additions to position.
Best,
Lee
Monday, August 29, 2011
10 Week low IS IN - EDITED
Yep..sure looks like it. Yesterday before market open and I think even few days back I mentioned that likely the 10 week low was coming in and looks like it did last Friday/yesterday. I remember few weeks back I was mentioning of a likely low around this timeframe. In between I remember thinking it would come early. Overall worked out fine - except for the fact I missed to take full advantage of the shorts I had due to the huge gap up yesterday.
Unfortunately that's what happens at the fag ends of cycles. Still we know its a low...so take what we have and run..See the open yesterday..never even came close to it after the open...What a rally!..shows the power coming out of the 10 week low. So I humbly covered my shorts around 4840 and went long, pyramiding as we went upward so overall did good yesterday. Today, respecting the holidays, I might book profits. 4960-5000 area might be a good area to do this. We will see where it opens.
So like I mentioned yesterday, the last 20 week lows came in likely on June 20th. And now we are 70 days from that low = 10 weeks. So its the 10 week low alright. And what next. As has been the case on the last major lows, the rally and tops have been extremely left translated. This one should also be the same since we are in a bearish cycle and also this is the last 10 week cycle of this 80 week, 4.5 year and 9 year cycle.
So expect the highs to be set in within the next 4/5 days to the next 2 weeks. And the price should be something around 5100-5180(if we can clear 5000 for good). 5250 will be the stop loss for the bearish case to work out. If these work out the way I think it will, we will top around there and move quite lower into the Nov 80 week low..Somewhere below 4000/3800 is what I am thinking for the coming last leg. But one step at a time.
I will post some normal TA and charts next. Along with some more considerations. If you guys have any questions or comments, you are more than welcome. I see lot of visitors but very few comments..I hope people are getting what I am posting..If not, then just ask.
EDITS:
1. Covered 50% longs at 4988 AVG. Hedged rest 50% at same level. Now wait and watch.
2. Covered rest at 4980..Closed hedges also..Totally FLAT now. Just watching. I expected bit more but looks like everyone is scared of the holidays..Still not bad for a 1 day counter-trade :)
3. Got to go sleep. But if I was awake, I would try scalping a bit on short side now..Unfortunately cannot..So cheers all and I will post some more ideas over next 2 holidays. Its past 12:30am here and I need to go to work tomorrow..so GN!
Best,
Lee
Unfortunately that's what happens at the fag ends of cycles. Still we know its a low...so take what we have and run..See the open yesterday..never even came close to it after the open...What a rally!..shows the power coming out of the 10 week low. So I humbly covered my shorts around 4840 and went long, pyramiding as we went upward so overall did good yesterday. Today, respecting the holidays, I might book profits. 4960-5000 area might be a good area to do this. We will see where it opens.
So like I mentioned yesterday, the last 20 week lows came in likely on June 20th. And now we are 70 days from that low = 10 weeks. So its the 10 week low alright. And what next. As has been the case on the last major lows, the rally and tops have been extremely left translated. This one should also be the same since we are in a bearish cycle and also this is the last 10 week cycle of this 80 week, 4.5 year and 9 year cycle.
So expect the highs to be set in within the next 4/5 days to the next 2 weeks. And the price should be something around 5100-5180(if we can clear 5000 for good). 5250 will be the stop loss for the bearish case to work out. If these work out the way I think it will, we will top around there and move quite lower into the Nov 80 week low..Somewhere below 4000/3800 is what I am thinking for the coming last leg. But one step at a time.
I will post some normal TA and charts next. Along with some more considerations. If you guys have any questions or comments, you are more than welcome. I see lot of visitors but very few comments..I hope people are getting what I am posting..If not, then just ask.
EDITS:
1. Covered 50% longs at 4988 AVG. Hedged rest 50% at same level. Now wait and watch.
2. Covered rest at 4980..Closed hedges also..Totally FLAT now. Just watching. I expected bit more but looks like everyone is scared of the holidays..Still not bad for a 1 day counter-trade :)
3. Got to go sleep. But if I was awake, I would try scalping a bit on short side now..Unfortunately cannot..So cheers all and I will post some more ideas over next 2 holidays. Its past 12:30am here and I need to go to work tomorrow..so GN!
Best,
Lee
Sunday, August 28, 2011
Short term bottom in or close?
Well as I said last Friday, I did short near the top around 4870 and am enjoying some nice gains as of now...I believe we are close to a short term bottom or might set it today.
Need to watch this a little bit. Now we can assume that the last 20 week low was set around June 20th timeframe. I believe there was a question on this in the comments section so yes my answer is this is my preferred possibility. If so, then right now we are setting the 10 week low around now and from here we can expect a short term rally for a few days if not for a couple of weeks. But as has been the case for the past few lows, this one also should be left transalated and we should set the high in a few days and continue down until the Nov low - the 80 week major low.
So a dead cat bounce is all we can expect at this point. Lets see...Around this area till 5000? Possible. Clearing 4960-5000 and staying above will target 5100 around. More than that, is tough.
So today my plan is to cover shorts today..I am not sure, we might get a gap up and then consolidate for a while..a lower low is also possible. So wait for a while is what I think..And when going long, I will also hedge it considering the uncertainty and also the shortened trading week this week. If I go long, 4650 is the area I will be watching with great interest. Holding this is crucial for the short term uptrend. Longer term, I expect the market to slice through this like a hot knife through butter. But lets wait a little bit on that ;)
EDIT: Covered at open and trying few longs...
Best,
Lee
Need to watch this a little bit. Now we can assume that the last 20 week low was set around June 20th timeframe. I believe there was a question on this in the comments section so yes my answer is this is my preferred possibility. If so, then right now we are setting the 10 week low around now and from here we can expect a short term rally for a few days if not for a couple of weeks. But as has been the case for the past few lows, this one also should be left transalated and we should set the high in a few days and continue down until the Nov low - the 80 week major low.
So a dead cat bounce is all we can expect at this point. Lets see...Around this area till 5000? Possible. Clearing 4960-5000 and staying above will target 5100 around. More than that, is tough.
So today my plan is to cover shorts today..I am not sure, we might get a gap up and then consolidate for a while..a lower low is also possible. So wait for a while is what I think..And when going long, I will also hedge it considering the uncertainty and also the shortened trading week this week. If I go long, 4650 is the area I will be watching with great interest. Holding this is crucial for the short term uptrend. Longer term, I expect the market to slice through this like a hot knife through butter. But lets wait a little bit on that ;)
EDIT: Covered at open and trying few longs...
Best,
Lee
Thursday, August 25, 2011
What next?
Good question right? I am in a dilemma right now. As I mentioned earlier, cycles are very unclear right now so trading this is tough. I was expecting some sort of bounce into 5100 range - may happen or not - need to wait and see.
But, so far, the pressure or money flow has remained on the downside and that is expected to remain so until the projection of the Nov low.
Trading short term has been volatile and full of whipsaws.
This is the problem. And I am not sure how to resolve it unless you are ready to take some pain.
Today, I will look to close the few longs I have and maybe go short in few amounts. Not sure if the market will let me. Its very fluid right here. Need to see how the market is trading before making a decision either way.
The other problem is within US, tomorrow is a big day...there is a fed statement..there is lot of news coming out...So news will direct the trading atleast on a short term basis.
Wait and watch.
Best,
Lee
But, so far, the pressure or money flow has remained on the downside and that is expected to remain so until the projection of the Nov low.
Trading short term has been volatile and full of whipsaws.
This is the problem. And I am not sure how to resolve it unless you are ready to take some pain.
Today, I will look to close the few longs I have and maybe go short in few amounts. Not sure if the market will let me. Its very fluid right here. Need to see how the market is trading before making a decision either way.
The other problem is within US, tomorrow is a big day...there is a fed statement..there is lot of news coming out...So news will direct the trading atleast on a short term basis.
Wait and watch.
Best,
Lee
Wednesday, August 24, 2011
Trying on long side
Just started..4800 is support for today..Just started very small..will buy on dips.
Best,
Lee
Best,
Lee
Subscribe to:
Posts (Atom)
