Sunday, June 22, 2008

Are people making money?........ Maybe

I know how difficult it is for the retail investor to short the market and then to keep short -- our natural instinct probably tells us to think positive. Every ray of hope is grabbed upon to build our castles of making money. This is especially so when any dip in the past few years have been an opportunity to buy and build better positions. Will we change our mindset now and will retail get into shorting as he would have done for accumulating stocks? I don't think that it is an option. Why? because he feels that at the end of the day he does not owe anything. This will prevent him to be the one to short the market -- and at the end of the day -- humans may be a kind of animals who will keep day dreaming of better times/better markets and profits and come what may will keep coming to the markets to loose more money. When a retail investor looses he gets into depression and keeps the loss to himself, on the other hand when he gains worth a penny he projects it as a great success. This just keeps his ego or may I say alter ego satisfied. This attracts more of such retail investors who undergo the same cycle over and over again.

At the end of it there will only be a handfull ones who will learn -- progress and make some money after loosing a lots and lots of money.

What made the markets crash on the last three days of trading? Was it Ganns turning date? Is elections around the corner? Is oil prices spiralling out of control? Is inflation the problem? Is American economy the problem?

It may be one or all of the above. But whatever it is, the last three days have not been good, for the retail investor at least. Traders may have had made money -- but that's about all. A perfect mood for recovery has been spoilt because of so many reasons. The same charts -- which were looking positive now spitting fire, once again we have on the candles that three crow pattern and to top it all there are still so many negative signs. We have touched the January lows, MACD Red Line is below the blue line. RSI is touching the 30 marker and looking down but not oversold. Slow stochastic --Red Line that was trailing above the blue line is now way below the blue line. sprinkle on top of this a little bit of inflation figures - and we have a wonderful recipe. In this kind of a market there are no support lines, I could give any arbitrary figure and in all the possibility we may touch those figures. 3500? 3000? my guess is as good as yours.

In all this gloom I still do not give up hope. The volumes are not as we had during the January fall. In all the probability the oil production will go up next month. The TRIX not really facing down and I do not know whether to trust my eyes but I do see divergence in the red and blue line on MACD.

Apart from all this discussed above there is one mushroom cloud on the PM desk -- the decision to go nuclear. That and this idea's acceptability by the Communists will decide for sure which side we head.

A red opening? Almost certain. The recovery? Well only markets will tell.

Best of luck to me for Monday -- I am long. I didn't sell a single stock 200 points up and now I'm just too scared to sell. Only a market recovery can save me. Pray for me.



S S Cheema said...

To Uma the writer: I wrote or may I say I dictated this entire article on Dragon naturally speaking. My writing skill are bad -- sometimes I too do not understand what I meant but all the same it is a kind of good feeling that with minimal touching of the keyboard I managed to pull this article off.

Which side of the bull -- bear fight are you? I would definitely change sides if I can on monday.


Uma said...

Cheema, I could actually relate with everything you wrote and it's a good post. On Friday I sold all my demat shares and bought Nifty calls. Most of my demat shares were moving in line with Nifty anyways. Let the market crash to anywhere...I don't care now.
Most of the time, I have one long and one short in the market. One of these hits my stop loss, the other buys me lunch. I plan to stick with that and you might try it too. Find your favourite loser stock and your favourite winner stock and just let the market decide which one will make you rich :)

preet said...

thanks for the encouraging words Uma.
Morale down the boots.

Uma said...

I know...I don't feel any better. My Ranbaxy calls are down the drain. That's doubly sad cause it was an impulsive purchase.
I covered my Reliance Capital short yesterday and today it crashed around 8%.
I've bought Chambalfert calls, the stock is going nowhere.
And you know about my Nifty calls last session.
Anything else?
Tomorrow, I plan to do NOTHING. Let the damn market do whatever.

Uma said...

yesterday = Friday