Wednesday, July 30, 2008

Sorry..... cannot update at the moment -- Busy

Will do so later - green opening? Ofcourse - Green closing -- likely


Monday, July 28, 2008

Its lonely............ being one of the only green

So we did do it - we closed green. Except Nikkei all the other major indices in Asia, Europe and US ended Red. In Asia Nikkei closed .14% in green, Hang Seng .24% in red and Strait Times .43% in red. Europe had a worst day than this - FTSE closed .75 in red, the Dax 0.47% in red and CAC 1.2% in red. The US had opened a flat but then dropped and never looked up again. There may be a recovery later tonight but as of now it does not seem so. Dow is at the moment 1.08% in red, NASDAQ .89 per cent in red and S&P 500.65 per cent in red. All this has been attributed to rise in oil prices and the drop in the earnings of some companies.

On nifty today there was a small white candle. this is nearly what I had expected - a flat to low opening with a white candle. Unfortunately, this candle does not solve the purpose that I had wanted it to do. In fact on the contrary the candle would ordinarily signal a continuation of the downtrend. The bulls could just not managed to close the index up a little bit higher up. With the expiry around the corner there may be some strength as the shorts are covered. But after that there may be blood on the streets again. We have in fact pulled quite a feat by showing this white candle as all other indices were in the red.

Well as to how I read rest of the indications -- MACD is up and bullish,RSI is bullish, the TRIX is bullish and shows an uptrend, StochRSI has moved down from its extreme overbought positions and TRIN as given by jaggu is bullish. So I would say make hay till the sun shines but remain extremely cautious of the longs you intend carrying to the next month. If we do drop by the end of this week expect levels definitely below 3800.

The results so far have been good for most of the companies. There is another factor that may contribute to tomorrow's trade and that there is this Reddy's angle. In fact most of the day today has been spent by the idiot box debating whether or not there is likely to be a hike tomorrow. What happens tomorrow remains to be seen but as far as I am concerned I do hope and expect another white candle that may signal a bullish uptrend next few days negating what I have written about the candle being a continuation pattern today.

Best of luck and hope you all make tons of money.


Sunday, July 27, 2008

Monday blues...........

US markets paved a green path for the Asia opening this week. Will we open green - worth betting a few dollars. The reason I say so is that the crude is still trading weak and that the financial giants of America will not be allowed to die. Club that with the fact that though we closed below the 38.2% fibonacci retracement - it was due to the blasts in the IT city that probably prompted the same. May not have been so had it not been this external terror factor. Also the indications on the charts still remain bullish. The present level of closing is strong support. Sprinkle another few facts that Sharp rally in last 10 days of almost 20% upswing, Sharp fall in crude prices, Commodity market showing signs of panic and a large no of lower circuits, for all the hulla of recession, US economy still has not been declared negative growth and FII funds are postive inflows in last 6-7 days. SBI has posted 15% rise in net despite MTM provisions and there is some satisfaction that inflation moderated. ;-)

That said - the fact remains that we closed below the 4315 level even though by three points and that is not too good. There has been follow up blasts continuing after the IT city and that bears are dragging their feet to the further upmove. We may not have the kind of gap up or gap down opening and the fight of the titans - namely the bulls and bears will spill over to this week and atleast on Monday there are not likely to be clear cut winners.

Just a fact that the 230 points that we gained on 23 jul has not been lost inspite of last two days of black candles and the bounce back with a white candle can still signal the continuation of the uptrend that has started last week.

The bullish indicators remain to be RSI, MACD, TRIX and ADX. The pull down indications are the TRIN (courtesy Jaggu) and StochRSI. I will not spell out the trend because I am just too afraid and secondly though I am personally of the opinion that the rally up is not still over - there are other stalwarts in the blogging world that feel otherwise. SO please do make your own assumptions. - Oh and green opening and a white candle can go a long way to show us light.

One of views of a Nifty analyst is: "According to me we are slowly and steadily moving towards 2954-3000 in months to come. This view will only change if we close firstly above 4664 and then 5158. According to me, when we touched 4539 last week, it has already created a stage or the stage has been set for 3040, which I have been mentioning since beginning of June."


Friday, July 25, 2008

So the journey down south begins?........ Let's see

The market opened at yesterday's close - went up and then started its journey downwards never to look up again. The euphoria of the Govt walking away with the deal seems to have died. In anycase to have a rally in the present conditions was itself a great achievement and by all indications we will hit a few lower stops. Now on the lower side we see if 4315 is a resistance and should hold. If broken then lower levels can be seen once again. If it holds then it may turn out to be good.

On the external indications - Europe closed 1.5% down with FTSE 1.51% down, DAX 1.46% down and CAC 1.38% down. Ford in US dragged the markets down by declaring that even the survival of the giant was questionable. On an average they were 2.0% down. DOW down 2.43%, Nasdaq down 1.97% and S&P 500 down 2.31%. Taking these cues in the correct sense Asia has opened 1.5% down and shows no signs of coming up till now.

On candles the indicators all look bullish but as said yesterday the breather had to come - and the indicators follow the markets except for a few that lead. Hey all that negative talk apart take heart - all the indicators are still bullish - MACD, RSI, TRIX.... It is only somewhere down the line we have become overbought on StochRSI and bearish in TRIN (courtesy Jaggu).

Red opening is certain and if no other factors play then we remain red. Best of luck for all.


Thursday, July 24, 2008

Take a deep breath..................... Think

The rally was expected yesterday-- all the indicators were highly bullish, but that streak of uncertainty I had was squashed quite badly. Once again the run-up was beyond any of the expectations I had. It took on the first resistance as suggested by me at 4315 Nifty -- and then went on till the 50% Fibonacci level that is 4489. Though it did tested this level and went up to 4494 but it could not sustain and fell back to 4477 that is just 12 points down. the next Fibonacci level is 61.8 per cent and stands at 4636. Can we now teach this level -- my heart skips beat to take sides now. It may -- it may not, the run-up has been too fast and too much.

All the same the global indications still remain bullish with Europe closing green, US wavering but closing green and Asia dancing in green but showing signs of giving up some gains. After all this rally has been five days old now and frankly expect oil and some reformist statements we continue in same times.

As far as the candles are concerned MACD remains extremely bullish, RSI is bullish, slow stochastic bullish but now in overbought territory, volumes yesterday were above average, TRIX is still looking up and ADX is bullish. Now the caution buttons -- the StochRSI is highly overbought for last four days and jaggu's TRIN says bearish. With all this a green opening is perhaps a foregone conclusion but where do we go from there? if it turns out to be a black candle today then a reversal to this trend is certain. However if we continue this journey upwards then touching the 61.8 Fibonacci level is a possibility. Around this level is also June 17 high. To believe that we will violate these levels as easily as we have done the 38.2 per cent Fibonacci level would be naive. Remain cautious and keep stop losses trailing.

Best of luck for today -- there may be some selling pressure on the corner.


Wednesday, July 23, 2008

Singh is King.........

Despite of all the apprehensions and misgiving's the UPA managed to survive the vote of trust in the Parliament. So far so good. On the international front, as a norm now Europe closed confused with one index in red and the other in green. The US on the other hand was comfortably into the green ending 1% and higher up. Dow was up 1.18%, NASDAQ up 1.07% and S&P 500 up 1.35%. Taking cues from the US Asia too has opened green. As I write Nikkei is up 1.07% and the Straits Times is up 1.55%. as far as US is concerned-- the stock market posted solid gains on Tuesday, after a late day surge led by financial sector helped investors shrug off worse than expected earnings reports from major technical and financial firms. A drop in crude prices, thanks to the easing of tropical storms threat, also helped bring buyers to the table. Tuesday had earlier to looked like US is going to have one of the worst session as the stocks had opened .9% lower on an average but the investors took this as an opportunity to buy on dips and pushed the stocks higher.

And finely despite of all my misgivings the three white soldiers in the candles broke the resistance as listed yesterday and ended higher closing at 4240. The next resistance kicks in at 4315-- and once broken the next level should be 4489.the indicators are all good -- MACD good, RSI bullish, slow stochastic good, TRIX good and TRIN listed by jaggu bullish. going by all these indicators we have some steam left to go up. So enjoy the ride as long as it lasts. The volumes too are not bad.

There is now no doubt that with the bullish indications we have - we will continue going up for some time. But on the cautious side just for the sake of it now that the government did not fall may be the classic case of buy an anticipation and sell on news. Other than this - as of now there is nothing against the move that has been seen and breaking off 4216 level will go a long way supporting the bullish trend. I would keep an eye on this level today too -- for that just in case scenario.

Best of luck to everyone.


Tuesday, July 22, 2008

Bulls will be what they are ............ Bulls

They will ordinarily not see the dangers that lurk in the open waters. will the sectors that were left out for past few days join up the rally or is this rally about to finish? NO straight answers. Well there never were. IT is one of them. the other - healthcare took part yesterday - let us say in a half hearted manner.

Europe yesterday ended green with half a percentage point. FTSE was up by .52%, DAX up .66 per cent and CAC 40 .65%. US closed flat but with a red bias. DOW was down .25%, NASDAQ town .14% and S&P 500 down .05. Asia too has not opened very encouraging. Hang Seng is down .22 per cent and seems dropping, Strait Times down .76% and looking bad. Nikkei is the only bright spot that is 1.29% up and does not, at least for now show signs of going down. so overall not very encouraging from the world markets. after all, the run-up quite a bit and in a fairly short time.

On the candles -- yesterday was a third candle which was white and that looks good. It can be classified as three white soldiers that should ideally take us up some more. But the X-factor -- the political front will continue to bear heavy and is likely to keep the market is highly volatile. Surprisingly the volatility was missing yesterday. As of today all the major indicators are bullish -- but the markets as we know hardly follows the indicators alone. Incidentally we're now very near to the 4200 levels and that can become a landmark from where the fall begins. Remember Jul the 11th? That was the day and that was the level from where we started falling to 3800 levels. If we fall now - 3600 levels are achievable. There is still no clear indication whether the government will survive or fall. That will have a bearing on our markets whether it is for good or it is for bad. another indicator that I would like to point out is that StochRSI is over bought -- what it may imply is that though the RSI is bullish it may take a breather.

Have a wonderful trading day. Personally I would see the fall starting today.


Sunday, July 20, 2008

Humpty Dumpty sat on a wall.............. Humpty Dumpty had a great fall

only a few days ago I was absolutely confident that a jump back was due. We waited for a rally, waited as all the indicators turned bullish one after the another. And then the rally came, two days of wonderful white candles. Why am and not so happy then? Am I just plain jittery or have I lost my mind? but one thing I'm sure of is that am not happy. what made the markets jump the way they did? Drop in oil prices? A buoyant in Europe or America? A stable political situation? I don't know.

I'll try to tackle all these points one by one. Firstly the US -- the US rallied not because the economy is improving but because firstly they had gone into oversold zone and secondly like I had mentioned earlier there is a limit to your reaction on bad news. Citibank posted billions of losses -- then where is the good news? The market says the good news is that they had expected a little billions more in losses. Not convincing -- but I'll take it with a pinch of salt. Second is the oil -- Jaggu had already mentioned days in advance that oil is about to drop and drop it did. I too remember mentioning that the oil has gone up to much too soon and it was only speculation that kept it up it had to cool down even in case it was to continue its journey upwards. Is it the consolidation before moving up? Or will it now remain at lower levels -- only the time spent and we can do nothing except to wait. Third, is a political situation. The horse trading is going on but who will emerge as a winner? Once again only the time can tell.

So you see on the first account there is no good news. On the second, the oil account there is good news but the trend is yet to declare itself. On the third account only the gods can guess. So will this rally be meaningful? Or are we being moved to a higher plane just to drop us harder? we will know in the coming few days. In any case the lesser the exposure in the markets till 22nd may deny you gains but not rob you of all that you have.

The US markets on Friday, DOW was up by .44%, NASDAQ in red 1.28% and S&P 500 absolutely flat at .03% green. All in all inconclusive and probably a little negative. What now remains to be seen is probably the opening of Asia tomorrow morning. However, under our present political situation unless a there is decisively green or red should not make too much of a difference to our opening or closing. For Monday I expect the markets only to react to whether the government will survive or the government will topple. Also this news should keep the volatility very high as 22nd is just the next day.

Coming to the charts, two wonderful white candles if followed by another white candle will take us to the next level of 4200/4400. There should be a strong resistance at 4216 before we move up. That was the last high made on Jul 11th. There after there will be the level of 4325 to be broken upwards to continue up as that is the 38.2% Fibonacci level. Apart from that MACD is looking good, RSI is good, TRIX is looking up and slow stochastic is looking up too. On the other hand TRIN as told by Jaggu is bearish and so is ADX. So going further up is a strong possibility but not a must. A drop can be very - very severe too.

Keep this all aside and keep a very very sharp eye on the political developments before taking positions. Best of luck for Monday and have a ball of trading day.


Thursday, July 17, 2008

Is this rally for real? ............ Your take...?

A wonderful day in green after so many depressing days - but the question remains - is it for real? I don't know - I will not trust till 22nd come what may - Our markets are crazy enough to swing a few hundred Nifty points on whether this politician has to sit on the chair or the other one will sit. Someone I spoke to earlier this morning says the range around the proving of majority by Congress is 1500 points - I said I do not get what he wanted to say - He meant exactly what he said. The markets can either run up this much or drop this much - depending on what the news is. That is what India shining is all about. Chidu Uncle may already be sitting on the right side (he is active in stocks i am told) - only problem is that you and me have to take a guess and the upside may be wonderful - but the downside can kill anyone.

We have the inflation figures to come out today - then there is the weekend - and then whether the majority can be proved in the political market place. Also throw in the fact that after a long time the oil prices are below 130$ and that is some feat - for how long will they remain below this figure will however remain to be seen.

In any case the way the Europeans have ended and the US traded the green and ended green - a green opening is certain though Asia is yet to open. If we have a gap up opening - as I think there is likely to be a correction there after - this will not go well and this is what I feel would happen. A white candle today will however go a long way to shine the way a little after the kind of bad sultry days we have been having for so long. MACD and RSI are looking good - both bullish. Slow stochastic is in oversold zone and TRIX is looking up. The problem area is the StochRSI is in overbought zone again and the turbulence on the political front that is expected to keep affecting us. TRIN - I will leave it to Jaggu as always.

I too am waiting eagerly for the day today. It would be interesting to see the bulls and bears fight it out. Best of luck.


Wednesday, July 16, 2008

Nothing lasts for ever............ nor will your money at this rate.

Jokes apart - how long do you think will this down trend continue? Can't last for ever but the jitters it is giving evreyone is nobody's business! On the day when Asia closed green (flat to green) Europe was well into green territory and so is US - then what is wrong with our markets. As of now US is dancing green - 1.5% on an average. Is our political system creating so much havoc? To many questions and little or no answers. I really do not care which way we close as I had really expected only a 200 point rise before we march down and recovery expected by me was not meaningful - however now I do expect a recovery and there is none in sight.

Fear not - the recovery may be painfully slow but now when it comes it will take us better levels. I am not too concerned because as I put it in fauji parlance - We Kalu Indians have a habit of overreacting in all situations - we were best performing markets and now we are the worst performing markets. We have a habit of hyping all events and that is about it and that is what is happening. The recovery now will be as sharp as the fall and I am confident about it.

Well till that right time comes - here is what I feel the charts say. The situation is not good with this black candle. Only thing is that the size has reduced and the relentless selling that was there was missing - there was bargain hunting and there were sectors and stocks that were in green with conviction. The MACD red line has finally given up and is now below the blue line. I would still not call it too bad. RSI is doing well so far. In the Slow Stochastics the red line has already reached the oversold location with the blue line following. Will take time to settle there so the indication so far is not so good. StochRSI is still not oversold but fast reaching the oversold territory - mind you as said a no of times before - it can remain oversold for long periods of time. Sorry to disappoint every time I list the TRIX - it is still looking up and Jaggu's TRIN will be left to him that can be seen in the morning. I feel it should be in highly bullish area now.

I had listed a combination of two stocks - one on the short and second on the long. The idea is that if both are dropping then profit and loss will cancel out each other. On the other hand on a day like to day - the bullish one should go up and short should go down. I would recommend Aban for long and HDFC for going short. If you have a stomach for this kind of ride you may try it out. But hey remember read the disclaimer below before you enter this position. Entry and exit is an art and I might not do it myself. All the profit is yours to keep and loss too is yours without cribs.

Best of luck to all.


Tuesday, July 15, 2008

Drop in oil may give a break...... hope you are not short overnight!

Like I said yesterday, there topsy turvy will continue - all the same we have broken the previously laid down support and are once again on our way to go further down. Finally the time has come when the analysts were saying that the selling was not the result of selling in Futures and options but was done by dumping cash stocks. This ideally gets us to the last stage of panic. There is nothing there after expect that after this stage finally is over the retail will take a long time to gain confidence and step back into the markets. Ofcourse after selling his stock at the very bottom - he will pick it back up when the markets build euphoria and are at a high. That's the cycle we / retail investor goes through. Rather than slowly build a portfolio now - the dumping has started.

There seems to be two significant news in the world markets - firstly oil dropped 7 odd dollars and Intel posted better than expected Q2 results. That boosted the US markets to come off their lows- go green - but ended once again into red - but not to the lows seen in early trading. DOW and S&P500 about a percent down each and Nasdaq flat in green. This prompted Nikkei to perhaps open flat go in green and is now trading confused near the flat line only. Strait times too has opened green. If Asia remains flat or green - it may prompt some recovery after the blood shed we say yesterday. Only problem is that our domestic news on politics is too overwhelming to be ignored.

To candles now. Nifty has violated the 2nd jul low of 3848 by 12 points but managed to close above it. If we violate it again then we are going down once again for sure but I personally would not think so. Unfortunately the markets have never listened to me. MACD after remaining bullish for so many days and taking a beating - has started to give up and red closing today will get the red line below the blue line definitely and turn the tables on MACD. RSI will too will give up at this rate. Stochastic had given up a long time back and was already giving bearish signals. That leaves up with TRIX and surprisingly the TRIX still holds it s head above water and looks up. StochRSI too has dropped to 60-65 levels and I would call it an improvement.

As I am about to press the publish button - Nikkei dives down and is definitely down quarter a percent and Straits still sails green but just. We should have gone to just short of 4400 to have begin this journey southwards - but then markets have decided and done what it felt the best. So here we are. A red opening with a further downside is a possibility but will not be good at all. I would expect a flat opening with some recovery as a lot of index heavies are in middle of nowhere actually - neither overbought - nor oversold but still with some positive indicators. But then as I said the market never believes me or follows me. I am as sc**wed up as anyone else so make your opinion as to what the market will do today.

Happy trading - If you have survived so long then what is these few days here and there. Best of luck - and do not forget to see Jaggu's TRIN before forming opinion.


The party is about to begin............ don't be naked with shorts

Many indicators are turning bullish - the pressure is now being kept up by politics to remain bearish - the day it is released - for good or for bad - we may see a good recovery from the lows and might give nightmares to shorts.

I reached back well past mid night so will not spend too much time and will go ahead with what I feel about the markets. As always a run down of the Europe and US - Europe closed fairly into the green, US then went nose diving south and that may be the main factor that the Asian markets that opened now are deep down in red. Nikkei 1.48% down, Hangseng down 2.69% and Strait Times down 1.69%. This alone will would have ensure that we open red.

The candles however tell a different story altogether. The bollinger band is closing in slowly - showing a reduced volatility. At this rate within this week perhaps the channel will be close enough to signal a breakout - which way the breakout will be - wait and see.

On 2nd jul onwards we had the markets going up steadily - on 10th we had a doji and that put the upmove to a temporary halt. 11th saw a black candle and yesterday a sort of a doji or a spinning top - basically indecision/lack of conviction probably to drop down. What next then? I feel we may have positive breakout anytime now. There are other indications to support this. For one MACD red line continues above blue and it is bullish. RSI is bullish but the Stoch RSI - that is called the indicator of indicators is overbought. This gives a opposite signal. The slow stochastic is below 80 that is considered a overbought zone and would have ordinarily given a sell signal. The redline here is below the blue line reinforcing the sell indication for the time being. The TRIN is bearish but the TRIX is looking up -- remember it is one of the leading indicators and is giving positive indication for the coming days.

Well the meat - we may open red and remain confused for the day. Close - as BJP, Samajwadi party, UPA or someone else - I cannot place my bets any way till 22nd.

Best of Luck to all. Make money - hedge your positions but for GOD sake do not hold naked shorts.


Saturday, July 12, 2008

Water water every where ...... but not a drop to drink

Yeah - its true in a sense - there are good stocks lurking in every nook and corner but the one you touch turns dust before you can take the cup to the mouth to savour it. Well I did not have time to check the candles for last two days. When I opened the iCharts today I saw almost a Doji formed on 10th and followed by a good fall on 11th. Infact so much so that I pulled up charts of lot of stocks and many had made Doji on or around 10th. I say so for Nifty, L&T, BHEL etc. The sell out - I believe was a part of the lingering uncertainty for last so many days.

Till the time the political uncertainty is sorted out for good - the problems will remain - and the way the things are the upper targets of 4200 or 4400 etc which were being given are not likely to be met. The reason is simple - everyone was expecting that the 5 EMA will crossover the 200 EMA and we will have the market stabilising and looking up - as of the last days charts - it is not the case - the 5 and 20 EMA lines have dropped down and started their journey downwards again.

But then on the other hand we have MACD that gives us a bullish indicator and RSI too gives us a bullish indication. The MACD Red Line had crossed over the blue line and still remains above it. The RSI was on its way to cross the 50 marker but has looked down last two days. Nevertheless it still remains bullish. The slow stochastic's red line was for past few days above the blueline but on Friday converted on to the blueline -- it may go on to the over bought zone. The TRIX surprisingly is looking up and may crossover 1 marker. What it implies is that it may turn bullish if we close well for a few days. The TRIN on the other hand has been marked as bearish by Jaggu.

So - in a nutshell we can classify that our markets are as confused as the indicators and the indicators are as confused as our politicians. And that is the way I feel we will live for some time to come. The global indicators -- Europe closed way in red, US too closed red and the Asia opening will have a say on how we open. How the markets behave thereafter and how we close will be dictated by how our politicians behave.

I shall be travelling tomorrow and will just get the snippets of the markets on my GPRS phone. In all the probability the markets will play the yo-yo again. The best of luck to all -- especially the traders who can make use of these wild fluctuations.


Wednesday, July 9, 2008


Sorry everybody - I will be travelling so I will not be able to update next two days
Bye and best of luck


Tuesday, July 8, 2008

I smell the rat............ Do you?

With the declaration of the withdrawal of support by the CPM - why did the markets not crash any more than what they did? Have we discounted the news? No I do not think so. Going by the logic the fall should have bee much more severe - but the today's 41 points cut is just not enough especially with the TRIN saying otherwise. No I smell the rat - expect the unexpected - live each day as nobody's business.

Any way the good news first - Oil has fell as Jaggu had said and the markets world over are rejoicing. DOW up 1.36%, Nasdaq up 2.28% and S&P500 up 1.71%. Asia has taken the cue and as I write this The Nikkei is up almost 2%. rest are yet to open. The markets closed confused and the major reason that was there was the political concerns. With these concerns out in the sense that govt will surprise and the cat being out of the bag should see our markets soar for some time to come.

MACD red line should cross the blue today and that signals "press buy", SlowStochastic both red and blue lines are above the 50 marker and gave buy as of yesterday. TRIX is no longer facing down. StochRSI above 50 marker again - so expect RSI all indicators are fairly bullish.

Like I had said a few days back too. The Fabonacci Retracements from the high made on 2nd may and the low made on 2nd july - the 38.2% is near the 4400 mark - so be ready for a party. I feel that is the level we should touch inspite of all the troubles we have home and the we see where we go from there.

Enjoy the ride for all that it is worth. Ahh and just by the way Strait times too have opened in Green and is now 1.24% up. Inspite of this if some unexpected political development takes place - keep some shorts in place at higher level to support such news.


Monday, July 7, 2008

Two steps forward .... one step back .... as long as we go ahead

One interesting fact that I came across today. FII registration is on a continuous rise. The reports says - As per data available with SEBI, the number of FIIs who have registered with the regulator has risen to over 1,400 while sub-account registrations have topped the 4,000-mark.Apart from the long term growth story of India, what worked in favour was the easing up of the norms for sub-accounts. Also the closure of the participatory note route helped spur more registrations.

Does this mean that our growth story is still intact? Yes it may remain so. S P Tulsian adds - "Another factor working in favour of India, believe it or not, is the Olympics in China. Yes, China has been on a superfast growth track and has been making development at a harried frenzy, to meet the deadline of the Beijing Olympics. This will flag off in August and once Olympics is over and the euphoria settles down, the Govt would surely sit down and work out the spendings, just as we do after a big party. Surely, after four years of nonstop spending and having more or less developed all that it wanted to, post-Olympics, the Chinese are expected to cut down on their expenses. Just as we do after going over budget. And this has always been the trend, the year after an Olympics, the country which hosted it, goes through an economic slowdown.

Take the case of Greece. It was the host for Olympics in 2004 and after the event, which cost more than 7 billion euros to stage, stretched the finances of the smallest country, widening Greece's deficit to 5.3 percent of output. Government debt grew 112 percent of gross domestic product, its highest in more than a decade. And to overcome this, Greece had to cut about 400 million euros from its planned defense spending by the end of 2005 and had to sell shares of Greece's postal savings bank to the public. Australian taxpayers are still paying off to clear its 2000 Olympic debt, which is costing them $32 million a year and is expected to be cleared off by 2010. Barcelona is still paying back a $1.4 billion Olympic deficit. And even the Salt Lake City Winter Olympics in 2002 left Utah with a $155 million deficit. Hence the logic which FIIs give is that post- Olympics, it best to exit from the hosting country and look for better pastures. In the BRIC countries, surely then India, figures out higher, though Brazil, to some extent might have an edge, as it is a strong exporter of iron ore and ethanol, the oil substitutes".

Okay that's all well - lets get back to the markets and stop day dreaming. When I last saw the european markets they had closed well into green - US too opened in green - then it decided to nose dive down in red and so far shows no signs of changing it sides. I do not take our sell off in the end that happened too in good stead. It just shows that no one trusts carrying the positions overnight. The candle on the other hand has made an inverted hammer - what does it mean - well the opinion is divided but it somehow the verdict goes like this - It indicates that the shorts are being covered. If that is so - then expect the positive sentiment to continue. The other interpretation (though I will not subscribe to it) is that it is a shooting star - see my reasoning is that it is hardly a uptrend to warrant this interpretation.

Other than this Slow Stochastic seems good with the red line remaining above the blue line and inching towards the 50 mark. RSI is good. TRIX is very slowly turning upwards. MACD is not good but my sense is that it will turn positive after another day or so of this up move. I have very little idea about TRIN but it seems to be around 0.8 and that should be good. Please do cross check what Jaggu has to say about this.

At the end if the politics does not make our day bad - then I expect the market to open flat or red taking the global cues and climb up to another day of green closing. If strong political statements float around then a sharp red cut may be seen.

Best of luck - people are advising light trades as the swing can be severe and unpredictable.


Sunday, July 6, 2008

Ride the Rally for all its worth..... but which way?

We are in a Bear Market - that is for sure and no one should have any doubt about.... rally or no rally. The moot question is - as put across by Morgan Stanley is "How long will this bear market last?" Eighteen months is one estimate and it is absolutely probable. The report goes on to say that for the market to bottom out, retail investors have to panic, and there has to be a wave of earnings downgrades. This is about the worst performance in more than a decade on a year-on-year basis. However, domestic households still seem convinced that equities have to be bought and not sold. Another interesting fact listed by the report was - “Eventually, long bond yields need to stop rising, or put to put it another way, the market has to get confidence that the medium-term inflation rate is under control. On our residual income model, if the 10-year bond yields rise to 9.5% the Sensex fair value drops to 11380 (13% lower from here) signifying the importance of this indicator of macro fundamentals,”

I was talking to my uncle who has just started investing in equities - he wanted me to tell him when to buy again - crazy - he is sitting on tons of losses - as much as 50% erosion and he wants to buy again. This goes to show that the retail still have faith and will start investing in any rally we have taking it as a bottom. That might get another round of selling - the crude still has upside to it even though in short term there may be a dip down.

Okay to candles now - What I would wish is that 5 EMA crosses over 200 EMA - but the distance is so so high up that it seems impossible as of now. On a shorter target -- 20 EMA being crossed over by 5 EMA - That too is some time away.

As of now the MACD red Line has turned upwards and with a good session or sessions will crossover the blue line making it bullish. RSI and SlowStochastic is looking good. The only problem I see is that the TRIX is still facing down. StochRSI has given its divergence from the general trend and that too may be good. TRIN is what I am missing for an otherwise perfect green opening.

The politics will continue to rule the roost and whichever way the market goes on Monday - I expect the volatility to be very high. If you do feel like ideally you should have very very strict stoplosses lest the market does the unexpected.

I will end with some personal mesages - I will be extremely busy next week and may be off and on the blog. I have tried to put up a RSS feed on the site for whatever it is worth.

Best of luck for the week (hey this does not mean I will be unavailable)


Thursday, July 3, 2008

Round two........ go to Reliance Bears?

Despite yesterday's strong pull-back, the Sensex today opened with a negative gap of 134 points at 13,531 owing to weak cues from the global markets. Fresh selling pressure in the markets forced the index drop to a low of 12,935. Some buying in late trades saw the index recover a bit, but eventually end with a loss of 571 points at 13,094. The BSE Realty index plunged over 9% to 4,295, and the Metal index shed 8.5% at 12,114. The market breadth was fairly negative - out of 2,684 stocks traded, 1,875 declined and 750 advanced today. The Nifty dropped 168 points to settle at 3,926.

Was it expected? Not really - atleast the kind of drop we saw today. I was dumb struck - I talked to one of a trader and the word around was that if the market gaps down - it is likely to recover during the day, on the other hand if it gaps up there may be strong selling pressure. What happened is in front of us but why it happened - atleast I will be honest - I do not know. I went to dozen sites to look for possible explanation but that eludes me still. It also happens one of those rare days when TRIN said bullish but the market crashed. The StochRSI too is moving from overbought to oversold in two bloody session and the market does not follow it still. I would love if someone can make anything out of these technicals for whatever they are worth and tell me. Because I can't.

Okay to the commingday now. Europe ended green and US - DOW was up .65%, S&P 500 up .11% but Nasdaq down .27%. Asia - Nikkei is down but not much at .11% and Strait times in green .38%. The charts today are all mixed up like rubbish. One indication is saying oversold the other is near the overbought line. Anyway I will list out the indications for all they are worth. The Nifty candles made tweezers the closing daybefore being just two points short of the opening yesterday. RSI trying to go back to oversold region below 30 marker, Slow Stochastic redline is still above the blue and is above 20 marker and many would have bought into this indication. StochRSI that had gone from zero to just short of being overbought has turned down is just above the 50 marker now. MACD indication remain bearish with the redline below the blue and divergence increasing. The line from May 2nd to day before's low has a retractment (38.2%) at 4400. will we ever reach there? Lets just wait and see.

As I finish and push the publish button - Nikkei is trying to recover and will hopefully be in green by the time we open and will give us some courage to go up.


Wednesday, July 2, 2008

Round One to Reliance bulls....... Many more to go.

The battle lines which were drawn yesterday saw action today. The bulls -- after having been beaten so badly for the last few days decided that enough is enough, especially when the Bearstry to hammer down the all-time favourites --the reliance pack. the bears should have known better than to finger the already cornered bulls. My eyes had been longing for a long time to see a tall white candle -- and I wish were granted.

The white candle as fully engulfed the Black candle made yesterday -- meaning that it signals a bullish engulfing pattern. This should provide a relief rally that may in its best take us up by 15 to 20 per cent. In just today one days rally the Slow Stochastics red line has crossed over the blue line and started looking good. It has also crossed over the 20 marker. RSI has moved up from the oversold zone. The MACD red and blue line divergence has reduced. The StochRSI however has moved from near Zero (oversold) to near 80 - though is in overbought zone - but what a move. If we move this way today too, we will definitely hit the overbought zone in StochRSI.

In yesterday's euphoria and one bullish candle let us not forget all the other things that will affect us. Oil has made another record high and US fell like sh#tting bricks. DOW down 1.46%, Nasdaq down 2.32% and S&P500 down 1.82%. Asia took the que and has opened in red. Nikkei down .97% but if I see it correctly - seems to recover -but opened too low. Just by the way - Japan's main stock index fell for the 10th straight day — its longest slide since 1965. Strait Times too is 1% red on opening.

On the other hand DLF buy back will instil hope in the market. At a time when the CPM top brass in Delhi are preparing to withdraw support to the Manmohan Singh government, the CPM in West Bengal has suffered yet another electoral defeat on Wednesday after it lost as many as eight of the 13 municipalities to opposition parties — Trinamool Congress and Congress. Elections to these civic bodies were held on Sunday and results were declared on Wednesday. This should go well with the markets as CPM may think a bit longer to pull the carpet. The indications by other parties to support the Congress in event of CPM ditching the ship too brings hope to the political stability in the country. I am not sure how Mr Reddy's statement made yesterday will affect the market.

So the indication though bullish and has all going well - has to end with a watered down tone because of the Asia opening and the fact that the US will be closed on 4th July and the week will be cut short - I am not sure how many would like to take the longs over the weekend tomorrow. In any case there are those that make hay whether the sun shines or not. But remain careful.

Best of luck to all and take positions deliberately. either way the rewards can be phenomenal and the pain too may be as much.


Tuesday, July 1, 2008

Loss of faith..... V Vmbani

It is a day that would be remembered as one of the worst days in the history of the stock market. Not because the Sensex fell by 500 points (3.71%) or Midcap Sensex fell by 245 points (4.54%) or small cap Sensex fell by 317 points (4.73%) or BSE 500 fell by 213 points (4.08%). Above all this, it would be remembered as the day when all the six stocks of the Reliance ADAG fell across the board, falling between 3% to 14%.

Though the whole market has been in a tailspin, the disappointment from the ADAG stocks is more painful. Investors have always looked up the Reliance group with a lot of faith and consider it to be investor friendly but this free fall of the ADAG stocks, has today shattered this belief also. More than the market crash, it has actually been a day when faith got crushed.

Too much of manipulations -- cannot do any good and I do not see the market from Uma's eyes or for that matter anyone else's -- bulls or no bulls -- be ready for some bad times in reliance counters. Today’s fall in share price of all ADAG stocks, which has been supported with huge volumes, actually signals confidence crisis of institutional and high net worth investors. Are they sensing something which we are presently not able to? It is also said that market has stopped factoring futuristic announcements like early commencement of Sasan Power Project, procurement of EPC contracts by Reliance Infra, signing mega deal with Big B by Reliance Big Entertainment or setting up cement plants of Rs.10,000 crores by RNRL.

If the share price of the ADAG keeps falling like this, it will betray confidence of over 4 million investors of the group and hence would also damage the age old investor friendly image of the RELIANCE Group. Reliance becoming unreliable? Never thought a day like this would also come!

Anyway let me dissect what I should. I wanted not to wait for the morning for posting this I pulled up US and it was down to 1.5% -- just left it at that and had my dinner - by the time i came back there was a small recovery -- but that does not seem to be taking us anywhere. So most likely US will close red. Asia will open red and we will see another day with lower bottoms? Frankly the kind of fall we had today -- I did not foresee it and am sure that a lot others too did not see it coming. Any way the third candle of the three black crows has formed and it signifies more downside. Any rally or an attempt to do so will be killed in the bud by these crows. I was trying to see the effect of these crows and could not come up with any example where i could say that they lied. They ominous to bad times and forming second time -- the effect of first had not washed away so far.

That besides - the bollinger bands have widened once again and the candles are now violating the boundaries on daily basis. MACD negative widening continues. StochRSI, SlowStochastic and RSI are oversold but to what affect - no one can be sure. TRIX continues to face down. I could not get and accurate reading of TRIN but it seems to have dropped below 0.6 in probably .55 region. I will not touch it or what it means and leave it to Jaggu. Please click the link and see his page for TRIN.

Sorry to be gloomy -- but that is all that I have for now. GOD Bless.


Nikkei green............ for all its worth

Its good to see green - even if it is Nikkei. After all there is where our spirits rise from every morning. One thing for sure - there is hope today seeing Nikkei green. Strait times too getting a que perhaps has started the day green. Only reds yesterday were DAX down .06% and Nasdaq down .98%. Asia does have relief and and atleast looking at the charts will not stress our eyes as much as last few days -- you see -- green is good for health of eyes ;-)

That apart there is no good news from any front that should actually make the markets go up - every thing remains the same as before. Political uncertainty, Hike in the bank rates, slowdown in economy and down forecasts of revenue earnings. It is just a matter of time that big big names in reality, banking and auto in india say so. Everyone is busy revising the targets for Nifty and Sensex downwards. Infact the news now is that the selloff now is not speculative in Options segment but led by the nose by selloff in the cash segment. Nifty, said on 30th that this is happening because a greater downside is expected by the masses. The cash volumes are four times the average.

I will work on three likely scenarios today and start with gauging their probabilities. The most unlikely scenario today is that we open above the half body of yesterday's black candle and make it the lowest point of the day and continue upwards. This would mean opening above 4100 levels. Though this is the most unlikely scenario -- it would spell a brief relief for a lot people and give hope -- however momentary.

The second scenario would be that we open green below 4155 - touch an intraday high and then drop to another low - below yesterday's candle. That might be the next probable on candles and will spell doom as this would be the third crow of the dreaded three crow pattern - that we are seeing a little too often for everybody's liking.

The last - probably the most likely is that we open flat, green or just red and close above 4055. Well this would make white candle that pierces the yesterday candle - this would give a weaker reversal signal than the option one, but would be better than nothing.

In army we are often told that if you plan an operation and think of five possibilities then the enemy will surely surprise you with a sixth option. The markets are behaving like a good enemy. That aside - I do expect a white candle today. I am basing my assumptions not only on a odd oversold indication of nifty but oversold indication in the frontrunner index heavy stocks. As far as the candles are concerned TRIX is facing down and being a leading indicator - gives no relief in short/medium term. RSI is over sold but not giving a buy signal. MACD is bad with the red - blue divergence on the increase. Stochastics (Slow) the red is below the blue line and none in the oversold territory. Like I said a few days back the StochRSI was overbought when all else seemed to be near oversold. Now the StochRSI is approaching 50 marker and the divergence and the conflict between indicators should finish. Then we may atleast have some worthwhile trends on technicals - till then the confusion will continue.

Well people on an average I am having 35-45 visitors everyday on this blog and it is unfortunate that expect Uma and Jaggu and perhaps rajandran there is no contribution by the way of a meaningful exchange of ideas. Could you please post comments so that I get some encouragement and we use this forum to learn and teach? Pen down your thoughts whatever they might be. I am sure that no one can be a worse writer than I am.

Psst.... Jaggu still sleeping so I am not sure of the TRIN - but I expect it to remain around yesterday's levels only. Cheers