Bounce is on...For Now..

Well what can I say..been a tough few weeks in the market. This is the reason why I havent been posting much. I dont want to say something stupid and cause anyone else to make a mistake. I had suggested best thing to do maybe stay out until more clarity emerges. I am also really confused what is going on bigger picture wise.

Let me just try to think aloud here - We do know that some sort of major low was seen on Oct 4th at 4740 around. Lets assume this is the 80 week low for now. It was quite early but let us go with that for now. If we go with that assumption, then the 10 week low is due around Nov end/Dec beginning week. From there again, we can expect a decent rally. We should continue to decline into that low area. BUT for now however, yesterday, I think we saw some sort of very short term low below 5000 and we are doing the bounce up. For longs the obvious stop is yesterday's low.

Last 2 days, I got rid of most of my cash positions - the drawdown was not looking good on paper. But still its a small loss only because of the hedges. Overall I havent done so good last few weeks - so I decided to get rid of cash and go back to trading in Nifty. Since outlook is uncertain, I will be able to get in and out of positions. Also I am beginning to rethink on my longer term ideas. But I will keep that to myself for now and present them here when I have some more confirmation.

So long for now in NF..hope to get out around 5100-5150 area. From where again will try to build some short positions up into 5250 area.

Charts posted below.







Trade safe.

Best,
Lee

Pullback continues

So we got a higher open and then pulled back a lot..Today looks like 5100 test might be on the cards. I think its very important for the market to hold 5050-5080 area - worst case should hold 5000 area. Its been very confusing for few days now..I havent been trading much. Using puts to hedge, cashing it when its making some money - this is what I have been doing. Overall like I said yesterday, it does look bearish and expect it to remain this way until last week of Nov when the 10 week low will come in. The problem though is that I see this as the first 10 week cycle after our Oct 4th 80 week low - so we can expect lows to come in early.

After we get the 10 week low, I still expect a good year end rally from there. Problem is how much we will decline until then. We will wait and see. Ideally we should hold 5050-5080 worst case 5000. Lets see what happens. I might not update for few days atleast until I see some more clarity emerge OR I have something substantial to contribute.

Best,
Lee

Week Ahead

Dont have much time for a detailed update. Whatever I said earlier still stands. But I am seeing a few more bearish signs out there. So maybe we remain rangebound until Nov end or Dec first week which is when we can expect the 10 week low?

Today we should attempt higher and then maybe fallback to consolidate. Last week's lows are important. Breaking will lead to a test of 5080-5050 area. This should hold for the bullish case I think. Overall dicey here. Still holding to cash longs but will hedge them today. I have been buying the big scary declines as I have been saying for a while.

More later.

Best,
Lee

Friday

So big global turbulence going on while our markets are closed. Dont know why this always seems to happen when we are closed :) I have wondered about this before also on the blog..Its weird. Anyhow, it is what it is.

I still stand with my earlier views. I.E the 80 week low did come on Oct 4th at 4700 and we are unlikely to break that for next 4-5 months(till the 40 week cycle top). Next the 5 week low - I did mention it came likely came in last week. But not very sure now - it could be right ahead of us maybe today. Then the 10 week low likely around end of November. Maybe we will just chop around a bit more.

Looks like today market will gap down below 5200 so 5150 becomes important and below that 5100. But unlikely to get so far - Atleast I think so. But we are at potential supports here and so we might get a good size bounce here and then we can re-evaluate. There is pretty good put support at 5100 and 5000 so I do not expect these to break this month. I can be wrong but just seems extremely unlikely unless something really really bad happens on a global scale.

I mentioned in last time update I will be using these scary declines to buy back into stocks..All with the expectation that the 80 week low is behind us and the next 10 week low end of November will provide a base for a good end of year rally into Jan/Feb timeframe. Will phase out my buying until Nov end. Need to wait and watch.

Hope I answered all your queries here Aly.

Have a good trading day All.

Best,
Lee

80 week low confirmed

Yeah I know quite late. But better late than never right?..Anyhow I have the 80 week low confirmed on Oct 4th at 4740 odd. And the next 5 week low came up much higher at approx 5200. This 5 week low came up approximately where we expected our 80 week low. So overall since this low came up very early, its bullish in cyclic terms.

Latest ST outlook -



As you can see in the chart, the 80 week nest of lows is confirmed. And so we are cleared for atleast a few months worth of rise. If I have to guess, I would say cleared for upside until Feb end. This is when we can expect the next 40 week cycle to top. But lets take one step at a time.

What am I doing? - After selling most of my longs at approx 5300-5350 range, I accumulated a good portion back as per my earlier post in the 5200-5280 range. So still net long but have more ammunition to add longs if we do get some one or two day scary declines. It will be a good opportunity if we get that.

Next we have the 10 week low around end of Nov. So this can be another good opportunity to add to longs. So buy the dips will be my mantra going forward.

Target wise - I have a very rough target of 5700 based on Hurst methodology. But I havent fine tuned this yet. Sustaining above 5700 can open up 5900 and even a challenge of our all time highs.I will do a detailed post on this tomorrow. This is based on FLD(future line of demarcation) crosses which generates targets per Hurst Methodology..I havent spoken about this yet but will do so tomorrow.

Best,
Lee

Thrown off the bus?

Looks like a big gap up today. Again I am in a quandary here. Did we get the last 5 week low at 5200? A little early but still in the window. So did the market just throw us weak hands off the bus, consolidate ABOVE 5200 and is getting ready to take off? Funny how that works. And I did mention that possibility a little while back. Nuts!

See the ST screenshot below.



Sentient Trader Software

See those question marks? Its actually ST's way of saying possible low might have been seen and as some more days and price conditions are met, it confirms the low.

I do not know exactly what to do right now. I covered some shorts yesterday when we tested 5200 area. The rest is hedged with 5300 calls. So today likely will just take the pain and wait for more clarity. I might also start buying back into the cash positions I sold few days back. Yeah I know dumb move on my part but this is how cycle lows work..throw most people out of the bus and then reverse.

The other big thing here is the downslopping trendline which comes at approximately 5450-5500 area. Unless market clears that area, we cannot confirm anything at all.
I might not post for few days until more clarity emerges.

One more thing..I mentioned I would address the longer term buy question. I am not very sure but I think if this 80 week low is in which it most likely is, then we should be cleared for upward prices atleast until next Feb-March timeframe. This will be when the next 40 week cycle tops approximately. We will fine tune as we go along. But markets might be bullish into that timeframe..maybe even very bullish once we clear 5500. Then again I am expecting a bear move into the 40 week lows toward end of June timeframe. All very fluid right now and we need to see as we go along. Cannot assume anything right here. I remember someone mentioning Vivek Patil's views which seems to gel with what I am saying above. So I also concur with it..Can anyone post a direct link to his latest views?

As always, comments are welcome. Have a good long weekend all!

EDIT: I just wanted to add one more thing. The most likely scenario here is that we test 5400-5450 range here and then go down again to test the 5200 support again before taking off to the upside. Else we could just take out 5450 and take off. Wait and watch.

Best,
Lee

Que Sera Sera

So..looks interesting right here what the cycles are doing...If I were not trading or directly involved in the market, I think I might have taken this as a serious academic exercise. Thats how interesting these cycles are playing out right now.

In college, I used to hear, cycles, fourier transforms, spectral analysis etc..But now I see the practical analysis of it. Funny right? Now we see the practical aspect of it!

Ok so now coming to the market, I sold cash positions yesterday. I dont know maybe market will brand me as a fool very soon because I did this. I know most of you will lol..but I have to go with what the market told me to do..So sold cash positions, established shorts at the 5300 area with hedges at 5300 calls. So I will just watch today most likely. We are declining now into the the 80 week low but the problem here is that the US 80 week low is projected toward Nov end while our 80 week low should come in sometime next week. This is the reason why we are more bullish that the US or other western markets.

This is the reason why I mentioned better to sit out and then buy in size when we have more confirmation on the low. I know in earlier post comments, there were questions on longer term buys etc..And what will happen next year..I have some ideas on this..so I will do a post on this a little later. It looks like we are NOT THERE YET.

Best,
Lee

Tough Call

Once again I feel we are at some sort of crossroads here in the market. Today we have to hold 5200-5160 area. Else the trapdoor to lower lows might open up again. My idea of shorting in the 5350-5400 area was correct but I also covered too early I guess when I did yesterday. There are some quite bearish possibilities opening up here atleast for the next 1 month. I think we need to be very careful here over the next 2-3 weeks. Remember I was looking for the next low in the next week but it can extend a bit being a major low. So its time to be careful I think.

So I am wondering what to do today. I do have some long cash positions as I have been mentioning for a while. But today I am again wondering whether it makes sense to close most of them and again rebuy again in a couple of weeks. Its a tough call. I would say if you dont have any positions, better to just sit out the next 2-3 weeks and then buy in size. Break of 5160 opens up 5050. And break of that opens up 4800 and maybe even new lows. But we might bounce about a little today and tomorrow before the market makes a decision on what to do next. Lets go point to point without any preset notions. On upside market needs to break above 5450-5500 to go higher. Maybe much higher.

I am sorry I am not able to make much of a directional call here but market has once again thrown us a curve ball and so need to do our best to navigate it.

Bottom line is I will be taking a very defensive position here for the next few days until more clarity emerges. And we should get this over the next few days.

Comments are welcome. Remember always - I am also just like you guys trying to navigate the market.

Best,
Lee

Bottom Line

Likely the 80 week low has already been seen price wise. This was on Oct 4th. So the next 5 week low is expected to come in around this week Friday or next week Monday/Tuesday. So shorts should not be taken beyond that and buys are going to be more profitable...Buying the dips that is. Shorts taken yesterday can be covered today and retaken at higher levels or managed with some sort of trailing stoploss. But I still think the big money is to be made on the long side buying the dips into the next 5 week low.

Charts posted yesterday are still valid.

Best,
Lee

Week Ahead - 31/10/2011

Updates for the week ahead. I have included most of my comments in the charts itself but increased the font size so should not be a problem to read now - right click and open in a new window to see the charts. Let me know still if anyone has a problem reading and I will move all my comments to the text section only.

Bottom line is the nominal lows of this 80 week cycle might have already be seen and we are in an uptrend. However we are close to resistance at 5450-5500 so expect a pullback and consolidation for next few days/week. Infact if you remember, this was one of my preferred scenarios - break out above 5200 and then retest it from above. But several possibilities are there.

See the charts and study them. I have tried to analyse various timeframes and possibilities here. I have included a GOLD chart also. Also the final picture is the portfolio update. I think I will move this to be a bi-monthly update from now on - being a cash portfolio will take time to grow. Posting weekly does not make much sense.

Nifty Normal View - Daily



Nifty Weekly View - Weekly



Nifty Hurst View



Nifty Hurst View - Expert Model



Gold Hurst View



Cash Portfolio Update



Link to Sentient Trader Software

Comments are welcome.

EDITS: 10:07AM - In case you guys are wondering whats going on, there is a major currency intervention going on in the Japanese markets. This is what is causing the turbulence in the markets..Yeah its a reason..but we are going for the cycle lows soon looks like..A higher low as I have been saying..So I have been slowly building into shorts here in futures. Cash positions remain as is. The last time they intervened in Forex was Aug 4th. You all know what happened Aug 4th, 5th and after that also. Play cautiously

Best,
Lee

Update for 28th of October

Will Update a little bit late..probably 15-20 mins late.

EDIT: WILL UPDATE TOMORROW. NOT MUCH OF UPDATE TODAY. UPSIDE CONTINUES.

Thanks,
Lee

Wishing everybody a very Happy and Prosperous Diwali

First of all wish everybody a very Happy and Prosperous Diwali!

So looks like this confused bull is maybe slightly vindicated right now with the markets above 5200. So the next thing to see is can we get into the lower 5300 range and then consolidate above 5200 - this is what I will be watching out for. Let us see.

I got up today early morning for this special session. I have few NF longs from the 5050 area which I will be covering today. Its a pretty good profit to take today. Still holding the cash portfolio - To tell the truth its not performing as well as I would have liked but then need to give it more time in the larger scale cycles..We shall wait and see. I am churning it around..cutting down the losers and adding to winners..will be doing this for some more time. Market needs to gain more momentum and confidence. It might only happen after the next 5 week low(and higher scale possibly) expected in the 1st week of Nov. I will post a more detailed view with charts tomorrow.

Happy Trading!

Edit: 5pm: Covered NF after some time after the open and now bought back some. Frankly speaking, not seeing much bearishness. Maybe because its today :) still the Nov 1st week cycle low is looming in there..need to be watchful.I would really love to see some consolidation around here building a base and then moving higher. Anyhow, we will see in coming days how it all works out.

5:10pm - Out again..Thats it for today.

5:20pm - One more add..Buying few 5200 puts now. Not sure if this is a wise move with a lot of big news coming tomorrow but this is in part to protect my cash positions and also because of the upcoming cycle low in Nov 1st week. We shall see.


Best,
Lee

5160-5200

This obviously remains the BIG barrier right now for market upsides. This needs to be cleared before we can say all clear for higher prices. I earlier thought market might clear it an then retest it from above. But does not look like it at this point. So we might consolidate and move lower here for a few days to set the 5 week low before we can rally higher.

Of course today is a big news day so anything can happen. And together with that expiry. So could be quite a day. I still have some future longs from 5050 area. I think I will close them today to be on safer side and wait and watch. Cash side I have already spoken about before. I will be doing some rebalancing today - removing some underperformers and freeing up some funds for later.

Charts are still relevant from yesterday. And I will post some more thoughts later on the market cycles. Dont miss the comments section from last post.

Best,
Lee

Week Ahead - 24/10/2011

PS: I changed my profile picture to a 'confused bull' LOL :D



Maybe now the market can go down in earnest!

EDIT: 10:05AM: Looks like my comments have been taken in wrong sense. It was part in joke. See my confused bull comments and picture were just to put forward a humorous view on my mentality right now. I am bullish dont get me wrong. But I am still cautious till Nov 1st week end. After that I think we wont see a lower low so buying is the way to go. So Today I had lot of NF longs from Friday.I covered some today...and still holding the rest FWIW for higher prices..But if I think it wont go higher from here, I will be quick to cover..will post updates.

Best,
Lee

Oct 20th

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

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



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

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

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



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

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



Best,
Lee

2.5 week low is close...

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









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

LINK TO SENTIENT TRADER

Best,
Lee

Some thoughts..

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

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

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

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

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

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

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

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

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

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


=====================================================================================


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

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

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

CLICK HERE FOR THE SENTIENT TRADER HOMEPAGE

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



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

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

Bests,
Lee

Status Quo

Best,
Lee

Crucial Juncture

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

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

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

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

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

Chart -


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

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

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

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

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

Best,
Lee

Oct 12th/13th

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

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

Best,
Lee