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.