Sunday, August 31, 2008

New week...... to do the balance tests of your nerves....

The indications are as crazy as ever with the technicals and fundamentals flying flying left, right and centre. What ended as a wonderful session for the US gave impetus for a good beginning for Asia. We too had a good session with a big white candle and then the problem started, Europe open flat and traded around the flat line -- but ended in green FTSE 0.60% green, Dax 0.03% green and CAC 0.47% green. it was the US opening that turned the tables with the opening in red and ending down deeper red 1.47 per cent, NASDAQ went the same way starting red -- ending deeper red at 1.83%. S&P 500 ended 1.37 per cent red.

That has already laid down the groundwork for red opening -- or may I say that Asia's red opening. Where we go from there is part technical and part fundamental. Both come with mixed signals in them and can justify an upswing or a downswing. On the fundamental side the inflation has taken a breather, but may have already been taken into account. On the other hand this inflation is not acceptable by Finance Minister and may continue taking steps that he deems necessary to control it. This may come in form of some more fiscal tightening. The GDP grew by 7.9% in the first quarter - slow definitely but healthy growth nevertheless. The rupee continues to depreciate with respect to the dollar. Oil is stable so far but it can move up on the Gustav heading for the oil fields. Do not forget the OPEC meeting scheduled on Sep 9th. Just another small storm building up - the US elections - one candidate favouring a protectionist stand - looks poorly for tech and outsourcing firms and the other trying to send signals that he would be the best deal with the Russians and the Europe issue. Classic case of well on one side and ravine on the other.

As far as the candles are concerned - like I said earlier it was a good day and there was a good tall white candle. The markets opened green and never looked back climbing and ending almost at the highest levels for the day. The volumes were only slightly less than the average volumes. With this one candle the 5 EMA that was below the 20 EMA has suddenly looked up and reduced the difference between the both. Mass Index continues to show the positive trend that started mid jul. MACD looks bearish but the divergence has somewhat reduced. RSI is looking up, SlowStochastic has the red line crossing above the blue line and seems set for another offtake. The TRIX is one indication that refuses to look up. Ofcourse we continue to trail the lower end of Bollinger band with the bandwidth neither increasing nor reducing.

Asia has just opened and as expected it is red - all three main indexes - Nikkei, HangSeng and Strait Times 1.50% or more in red. That is surely likely to make sure that we open red and thereafter - maybe climb up towards closing. The period continues to be indecisive so keep holding to your horses and wait for some clear indication before taking sides on day to day basis. For the horizon of probably a year or more - this is the golden opportunity to start collecting gems available at such wonderful discounts.


Mass Index: An explanation

The Mass Index was designed to identify trend reversals by measuring the narrowing and widening of the range between the high and low prices. As this range widens, the Mass Index increases; as the range narrows the Mass Index decreases.

The Mass Index was developed by Donald Dorsey.

According to Mr. Dorsey, the most significant pattern to watch for is a "reversal bulge." A reversal bulge occurs when a 25-period Mass Index rises above 27.0 and subsequently falls below 26.5. A reversal in price is then likely. The overall price trend (i.e., trending or trading range) is unimportant.

A 9-period exponential moving average of prices is often used to determine whether the reversal bulge indicates a buy or sell signal. When the reversal bulge occurs, you should buy if the moving average is trending down (in anticipation of the reversal) and sell if it is trending up.

A 9-day exponential moving average is plotted on top of Nifty's prices. I drew arrows when a reversal bulge occurred (i.e., the Mass Index rose above 27 and then fell below 26.5).

You can see that the signals generated by the Mass Index during this time period occurred a few days before the trend reversed.


To calculate the Mass Index:

1. Calculate a 9-day exponential moving average ("EMA") of the difference between the high and low prices.
2. Calculate a 9-day exponential moving average of the moving average calculated in Step 1.
3. Divide the moving average calculated in Step 1 by the moving average calculated in Step 2.
4. Total the values in Step 3 for the number of periods in the Mass Index (e.g., 25 days).

Psst.... I just use the iCharts to draw me Mass Index - LOL

Uma - hope that this answer's your query. I have gone through a lot of examples and the Mass index is fairly accurate in giving trend reversals.


Friday, August 29, 2008

Seesaw way...... a new session of sep futures

What a week we had! All expectations of recovery and continuation of the uptrend were dashed against one wall then another. But all said and done - bears could beat one odd indications to their bearish terms but could not get all indicators to their side. Except for yesterday when the drop was with little more than past few days average (maybe only because of expiry) the volumes remained low. So in a sense the fall was because the bulls did not participate - not because bears were fighting against a great challenge. The inflation figures yesterday were a reason for cheers. That coupled by the global indications may alone be a reason for better days ahead. Another thing that one should keep in the mind is that the support set by the tweezers on 29 and 30 jul of 4191 was not broken. The low yesterday remained 4202 and finally closing at 4214. If you recollect this was the support level laid down in past one of the writeups - as a strong resistance. Either we survive at this level and bounce back or go down to 3823 levels. The chances of our surviving are great now - let us however see the reasons for and against....

Europe after opening flat to red did a turnaround and closed well into green FTSE at 1.32% up, DAX at 1.57% up and CAC 2.02% up. Basically on the US shoulders. Dow was up 1.85%, Nasdaq up 1.22% and S&P 500 1.48%. All this was on better than expected GDP and jobs data. Asia too has taken it well - Nikkei opening and trading 2.19% up, Hang Seng 1.77% green and Strait Times 1.01% green. It is actually crude only that can spoil the party in a relatively tension free mood.

As said earlier on last few days the Mass index has still not given a reversal of the uptrend that started mid jul. besides that the charts are basically negative. MACD is bearish with the red line still trailing below the blue - the divergence having increased yesterday. RSI is looking down. Slow Stochastic's red line has crossed below the blue and faces down after giving a buy signal beginning this week. We are continuing to hug the lower end of the Bollinger band and bands neither contracting nor widening. TRIX - a leading indicator is still looking down. StochRSI is in oversold zone a last few days and is trailing zero.

Now here is the dichotomy - as of now all indicators are negative without exception - but all the global indications are positive. Where will be going from here? One must take the technical indicators in the following manner: -
Firstly most are the indicators that indicate the trend on basis of what has happened in past.
Secondly there are very few true leading indicators and they too require that they are supported by trend indicators.
Trends change only after some indicators change based on daily indications.

So for the time being is - Mass index is showing continuation of the uptrend but all other indicators are bearish. If we have a good run up for a few days this mass index may be supported and we may then start our journey up again. The falling inflation, sorting out of our neighbours problem, good monsoons and recovering US will definitely give us the fundamentals to recover. Remember the billions about to be pumped in the economy due to pay commission. And this last quarter is in any case good for our economy. Let us see if we start our uptrend today!




Wednesday, August 27, 2008

Choppy way to go............ no clear trends in sight

It is difficult to see the trends in the present state of the markets. Indecisive, side ways, consolidating, waiting a breakout, choppy... etc are the half a dozen ways to describe the markets. What seems to have happened is that the markets are fed up of the negative news and are not really reacting to them - the way they might have done in the past. On the other hand there seems to be no triggers that can take them out of the bear hug really. A breakout may be good for the bull confidence and for the markets - infact it does try hard to move up and show down bears - but nothing so far is really right for the break through. The problem is the we are now in a tight channel - a break up will take us to new heights - which is a possibility as we are trailing the upper edge of the channel - but there is also a strong possibility that we break lower and go to 4100 levels. The reasoning is that as of now - there are slightly more bearish indications than bullish.

The indications from the international markets are as mixed as ever - only good thing being that the markets everywhere tried to and in some cases recovered from the day lows. In europe FTSE opened red and ended red with a dip in the mid session and a fair recovery from the day lows. It ended 0.63% red. Dax opened red and ended 0.69% green. CAC opened red and ended green 0.29%. US repeated the story with starting flat and ending confused. Dow started flat ended 0.23% green, Nasdaq 0.15% red and S&P 500 0.37% green. See what I mean by confusion? no clear trends but a definable green bias. In Asia as of now Nikkei is mildly red at 0.12% down, Hang Seng 1% green and strait times 0.09% red.

Charts say - a doji yesterday. Meaningless actually - a doji after confusing trend is of no use as it does not indicate anything really. We are near the lower bottom of the bollinger bands - with the width more or less the same. 5 EMA is still below 20 EMA and running parallel, not dropping and increasing the divergence. Volumes were somwhat better than day before but still low. MACD is bearish with the red line below the blue - divergence same as day before. RSI with the bulls, Slow stochastic is in the third day giving buy signals and lastly Mass index says that the uptrend that we saw since 17 Jul is alive and not to be buried yet. If it says that the trend is not dead take it seriously - it is a fairly strong indicator along with other bullish indicators. Unfortunately TRIX (leading indicator) is looking down. The coriander topping is still missing as jaggu is still not back to give me his TRIN.

So as long as we do not have a clear trend in sight it is difficult to try and predict the markets. So I still end my writeup with a word of caution. The markets can actually go anywhere.

As far as the Bongaigaon Ref is concerned - all is against the script except the mass index that has reached the band from where within a day it can give a reversal trend. but the TRIX is still down - so we might wait for some more time before buying more.


Tuesday, August 26, 2008

Way to go -------- Bear way

So the volatility that was predicted for this week remains to be the highlight for the first trading day of the week. The topsy turvy will continue as on one hand the Bulls want to make a niche for themselves with technicals playing half the spoilsport and international markets being the other half. Bears - are too putting up a fairly stiff competition. There may be another way to put this - neither has that killer instinct to prove it.

I will also apologise for not updating the blog on time but was busy. Actually my HTC Cruise crashed and I sat through the night updating its ROM and bringing it back to life. Just could not get up in the morning to see through the Blog.

Anyway - I take it as never too late. Well on the International front - Europe was with the FTSE green at 2.52%, and the rest both trailing red with DAX 0.72% down and CAC 1.01% down. US was confidently red with the financials dragging it under - DOW down 2.08%, Nasdaq down 2.03% and S&P 500 down 1.96% - well that is an average 2% drop on account of the financial companies losses. Nikkei, HangSeng and Strait Times opened red and remain red. Only Nikkei making an attempt to come to terms with the situation and trying to recover. The others remain steady down and under. Ofcourse we know where we are this moment (1025 AM) - trailing red. Nifty down 27 odd points and Sensex down 76 odd points.

On the candles nothing spectacular has happened with most of the indications giving no sign whatsoever since yesterday. the bullish indicators remain bullish and bearish ones remain bearish. The bollinger bands have stopped growing - so we may see the last few days worth downtrend reversing - The small white candlestick that you saw yesterday - just by the way was on the least volumes the we have seen on nifty in last three months. MACD remains bearish. RSI confused and Slow Stochastic bullish. So like I said yesterday - take your picks.

I have not forgotten the Bongaigaon Ref - will post definately when the balance 50% has to be thrown - or the towel for whatever it is worth. Best of luck and at the cost of repetition - be hedged.


Sunday, August 24, 2008

Nope -- bulls you did not do it right..........

Okay bulls -- you tried hard but that is not the way to defeat the bears. A candle that does not even reach midway the last candle -- well enclosed in its body -- and you go out to defeat the bears with that? Think again -- that is not the way to do things. You had a wonderful opportunity to get the bears to the knees but then we decided to put and a half hearted effort. Anywayz ...... read on.

There has been no change in the indications on the charts that suggest that we should go up any higher. But then the markets will decide tomorrow what they have to do. And they do have a strong possibility to go green and go to high-highs'. And if they do that it should be on the strong global clues that we got from the Europe and US. The Europe was up by almost 2 per cent. FTSE was up 2.52% in green, the Dax was up 1.69% in green and CAC was up 2.23% in green. This was after a very very flattish opening. The main reason was US pumping up the sentiments -- oil fell and Federal reserve chairman Ben said that inflation pressures are likely to moderate in the near future. That gave a good jump to Dow Jones -- that ended almost 200 points up - that is 1.73% in green. NASDAQ on its part was up 1.44% and S&P 500 was 1.13% in green. These figures coming at this time will be music to bull's ears. And it is this reason that can improve the sentiment and make the markets go up. We will however also see how the Asian opens tomorrow morning.

On the charts the pattern made the last trading day, that is Friday could be classified as 'Harami'. The word Harami means pregnant, the previous candlestick to it being its mother. The small candlestick is the baby or the fetus. The Harami is not as much as of a reversal signal as the hammer, the hanging man, or the engulfing patterns but all the same this indication coming in face of the global cues may give another chance to the bulls. and this is where the indication end for the Bulls. the Bollinger bands continue widening - indicating the contribution of a bearish trend that was set in motion on 12th August. The 5 EMA line continues trailing below the 20 EMA. The MACD remains bearish with the Red Line trailing below the blue. RSI is basically indecisive -- perhaps mildly bullish. StochRSI remains oversold. The TRIX is looking down like there's no tomorrow. the mass index has stopped moving down below the 23.5 marker and may start climbing up in the 26-27 band. The slow stochastic on the other hand has started looking bullish with the red line crossing over the blue and both giving a buy signal.

All in all the confusion remains with the lines divided between the bulls and the bears with a large no man's land in between. This may lead to highly volatile sessions in the coming week. Watch your back whatever positions you take and make sure that you hedge your positions before you take sides. I will be adding to this right up if I have some time tomorrow morning after seeing the Asian markets open. Best of luck to everyone and have a ball of time.

P.S - If we do not get the Nuc deal working there may be hell to pay by Congress. Watch out for this news to move markets.


Friday, August 22, 2008

Okay then bears....... you have proved yourself....... now what?

The moment 4375 was violated I knew we were heading for a disaster in spite of opening above the yesterday's closing levels. The problem is that there is no indicator before 4191 that can present any kind of support to a fall. So with this kind of trading that we saw yesterday chances a bright that we test that level before we have any kind of recovery now. If for any reason we break the level of 4191 too then once again we are in a freefall region till 3820. I will not go predicting beyond that levels as that is too far out as of now. The narrowing Premium on Futures may indicate that the bottom this time over is not far out now.

The drop yesterday was on twofold reasons:- firstly, the oil spiking up to $121 and the reports by one of the so-called global research firms saying that oil is headed to $140. The second was the expected inflation figures -- fortunately the wholesale price index spiked to 12.63 per cent for the week ending August 9, 2008 as against 12.44 per cent in the previous week - somewhat in lines of expectations and the experts saying that at the present rate the max upside may be capped at 13 odd percent before the inflation starts cooling off again. The Asia was trading in red when we opened and it gave a chance to the bears strike. They then went on to consolidate their hold on the markets driving it further and further down finally ending at 4284. So we have another hundred odd points to go before the bear's will power is tested again.

The indications from Europe yesterday were not encouraging with FTSE opening red and closing flat. The Dax opening red closing red at 1.28 per cent and CAC closing down 1.40 per cent. The US however in spite of starting red ended with the green bias. Dow Green points on .11%, NASDAQ red .36% and S&P 500 green .25 per cent. Asia today again is showing signs of trading red. Nikkei down .29% and straight Times down .09% at the moment.

The indications on the candles -- mind you are bearish giving no scope for a recovery for the time. Five EMA has gone below 20 EMA - never a good signal. On MACD the red line still trails below the blue and continues looking down. RSI is looking bad, StochRSI once again is in oversold territory hovering near zero (it has bee so for some time now). On the slow stochastic however the red line has crossed the blue but both red and blue at the moment below the 20 marker. the TRIX too is looking down -- never a good sign by a leading indicator. if we have a black candle today too when we are definitely going to trail the lower end of the Bollinger bands. The bands narrowed down to the narrowest point on the 20th of August and as of yesterday seems to have started widening up again. This widening can carry the downtrend for some time to come. This might mean not so good closing of the this present FNO session coming Thursday.

Last two days fall of Bongaigaon refinery. have probably catered to the rupees five dividend dished out day before. I am not recommending buying till we reach 50-52 price band. At the levels of 50 to 52 a dividend payout of 50 per cent would mean 10 per cent return on investments -- beating most of the fixed deposits in the banks. The max downside to this stock that I would see in the worst of conditions should be around 45-46 level. RSI for the stock is down at the moment, MACD shows a downtrend and TRIX is looking down. The StochRSI however is in the oversold territory for a last couple of days. So I suggest that you hold on to the balanced 50 per cent of the amount kept aside for investment in this stock till it shows some more downside. There is a gap at 66-68 levels that is likely to be filled up in due course of time.

Best of luck to everyone for the trading today.


Thursday, August 21, 2008

Do you have it in you?............ Bears -- no you don't

As had said yesterday -- in spite of bears and giving one bearish candle after another -- they just did not have the kind of momentum/willpower to crack the nifty any further. Day before the attempt by the bears are just about half-hearted and that had resulted in formation of a hammer candlestick. the hammer rightly signalled the end of the downtrend giving a fair chance to the bulls to get their act together and that is exactly what the bulls did. they promptly countered the bears with a white candle -- the body being 51 points.

Europe had started flat yesterday thereafter kept on oscillating between red and green and ended firmly in green. FTSE closed 0.97% in green, and Dax up 0.56% and CAC 0.76% in green. US also mirrored the Europe and ended the erratic day in green. The door was up 0.61%, NASDAQ up 0.20% and S&P 500 up 0.62%. The Asia seems to have disregarded Europe and US green ending and is trading with a negative bias. Nikkei starting green but presently more than 74 points down that is 0.58% in red. The Straits Times started down, meant further down and now shows signs of recovery but still 0.53% in red. Hang Seng too has started red down 168 points.

On Bollinger bands the candles and did not reach the lower end and have turned back. They have a full opportunity to once again start trailing the upper band. The volumes were a shade better for the white candle yesterday. MACD -- the red line still trails below the blueline and that continues to be bearish. RSI has started looking up. TRIX is showing a trend down. And mass index again has started showing continuation of the uptrend that had begin in the first week of July. the slow stochastic red line has crossed the blueline and is at 20 marker and giving a mild buy signal. The blue line that is the %D is yet to start looking up but is likely to do so today if the go green.

If we were to take Asia a little seriously then red opening may be the flavour of the day however we have strong chance to recover and go green. like I had written yesterday -- that closing above 4425 would have been the best case scenario. It did attempt and trade above that level but eventually closed at 4416. That has not gone too well with me. I would still wait and see this level on nifty violated on the upside before I confidently say that we are back trending upwards. the possibility however remains bright that we end in green today too.

The Bongaigaon refinery mentioned by me yesterday was trading on an average of per cent in red. I'm absolutely certain that it presented of wonderful opportunity to accumulate some stock. all the best today. The levels to watch out for the remain the same as of yesterday -- that is 4425 on the upside and 4375 on the downside.


Tuesday, August 19, 2008

Do I see bears giving up?.......... Where are you?

The bears are not trying hard enough to crack the markets. If this is the way they behave then it is just a matter of time before the Bulls wake up to this fact and strike back. So much so that inspite of such (good bearish) indications from the global markets - the bears cracked Nifty by what? a mere 25 points down. Shame on you. The pattern is a hammer and could spell trouble for the bears if they do not get their act together fast. And more so the bears have to keep the markets in depressed state till I get my Sixth pay commission arrears and I can buy some good stocks. Ha - so you see why I am a bear now a days?

Europe had an extremely bad day yesterday - FTSE closing more than 2.38% down, and Dax down by 2.34% and CAC down by 2.61%. US by that means was a shade better with the DOW 1.14% down, NASDAQ down 1.35 per cent and S&P 500 pound .93%. All this was blamed on to inflation data and financial worries. there has been a hefty jump in the wholesale inflation in US along with a fall in new home constructions. back here in Asia taking these global cues Nikkei opened more than a hundred points down and almost immediately started climbing towards a recovery. Just a few points below the flat line it decided to reverse and went down again. The recovery was sharp and we may see it turning green during the course of the day. Strait Times opened red and turned green almost immediately and as I write it oscillates between red and green.

As far as the candles are concerned yesterday's candle gives i.e. the reversal of the downtrend. So once again we stand at the crossroads with 4425 being that resistance on the topside. If we meaningfully crossed this level and stay above we can start a journey upwards once again. However like I said yesterday if we continue going down then the next support level is at 4190. the fall yesterday and the recovery for whatever it was worth was on even thinner volumes than day before. MACD is now definitely bearish with the red line below the blue. Mass index once again supporting the downtrend and not showing the doubts it had yesterday. RSI is turning bearish. And the StochRSI has moved away from the oversold indications. the TRIX is now definitely looking down -- bearish. Slow stochastic's both red and blue lines are below the 20 marker giving oversold indications -- and may help the market find it bottom. the Bollinger bands continue to narrow and the candles now are very near to trailing the bottom of the band. In other words you can call it the candles at changing sides from trailing the top of the Bollinger band to the bottom. if we do not have any triggers then today too we may see trading in a narrow band with probably a little positive bias.

As promised earlier today I pick up a stock for recommendation that is 'Bongaigaon refinery'. ideally I should have depended the stock or talked about it at least 14/- rupees back when it was at 54/- levels. The wonderful part of the stock is that it may prove itself to be as safe as a FD. It has been one of the highest dividend payment company of our country. coupled with that it has indications that look bullish. on the negative side the problems are that it is a public sector undertaking and any problem in the east of our country is celebrated by an odd blast in this refinery. so I would say that whatever you may decide to keep aside for the stock - invest atleast 50 per cent of that at these levels and thereafter wait. like I said a little before it may turn out to be a good FD. P.S. please see the stock from the medium to long term horizon only.

Now I have a request to all the bloggers who visit my page to contribute meaningfully to this suggestion of mine on Bongaigaon Refinery. I realise that there may be a few hundred scripts that deserve a better honour than this but once again I repeat that for making this suggestion meaningful please restrict your discussion to this script only. this suggestion of mine has been on part technicals and part instinct.


Round one to the Bears............ Ding

Infact - had it been any other way I would have been surprised. Three crow pattern on the candle sticks would have been a complete Hog Wash and that is not the respect that is given to Technicals. On the other hand that convincing bout was missing - the round went to the bears with the bulls putting up an half hearted fight. Where is your killer instinct - bears? Come on - let's give it one more try.

Not to worry bears - today the global cues point towards giving another chance to you. Europe as always oscillated between red and green -- FTSE opening red -- moving to green and ending red 0.08%, Dax starting red move into green during the mid session and then ending red 0.20%, the CAC too had a mixed session starting red -- going green and ending red 0.11%. the US was more decisive in what it had to do. Dow opened marginally green at the flat line and ended well into red at 1.55 per cent, NASDAQ down 1.45 per cent and S&P 500 down 1.51%. The reason for the showdown by US was renewed concerns regarding the financial health of the economy and the bailout fears. Asia -- as always taking these global indications seriously starts in red. Nikkei opened red and presently is treading 2.50 per cent red. Straits Times too has opened 1.6 per cent red.

On the candlesticks -- the yesterday's candle has broken the 4425 support level. This may spell a further downside anywhere up to 4191 level. This was the level at which it tweezers were formed an 29th and 30th of Jul. The Bollinger bands are narrowing and the candles are now definitely moving -- going towards the lower end of the band. Once again to all those who don't track Bollinger bands trading the lower edge means confirmation of the fall. The divergence of the red and blue line on MACD is near nil. If we have another red candle today too then definitely the red line moves below the blue line and gives us an even stronger bearish signal. The mass index is indecisive -- neither signalling the trend reversal nor the trend continuation. The RSI looks down. The TRIX too is looking down negatively. on the slow stochastic the red line trails well below the blue line and has gone into the oversold territory. It may remain in the oversold territory till the time blue line to joins it there. The StochRSI is already in the oversold territory. But unfortunately its capacity to stay oversold or overbought is phenomenal.

So all in all except that the fall yesterday happened even lower volumes than previous days there is nothing particularly sunny on the candles. At this rate we are likely to have another bear day. the crude cooling down further may be a saviour -- that is if it continues to cool down.

Good hunting to all those who believed in 'The Crows' and are short since 4600 levels.


Sunday, August 17, 2008

Another week for a good fight.......... Bears Red corner -- Bulls Blue corner

So it ultimately took some time but the fall as expected did happen and now builds up into 'Three Black Crow candle Formation'. Further fall expected? The life has become more complicated than ever. There is good news and the bad news all in one big bundle. Well firstly, over last week we saw the Georgia hammered by Russia and Crude prices falling. The Georgia now seems to have reached somewhere as the conflict for the time being has been halted but the crude has decided to climb somewhat.
Secondly, Indian Stock markets lost 2.92% in sensex and 2.18% in Nifty - and that is for the week that started on strong positive note on account of Global cues and crude price drop.
Then came the miracle inflation figures - touching 12.44% as against 12.01% earlier and probably will become a factor to consider hereafter as the announcement came on Thursday after the market closed for a long weekend.
The last news that will has been debated and will continue to be debated is The Sixth Pay Commission that has been through the cabinet. Call it Good, bad or ugly it will go a long way to overall boost the economy especially in some consumer sectors. This debate is too long to fit this blog of mine with everyone having his own opinion.

So if the above factors were to affect our markets in the comming few days then I would like to make my assessment and put it across in the following manner: As I have said earlier - the world cannot brush the Georgia conflict under the carpet and now with the US missile presence in Poland and Russia getting aggressive this will complicate the scene. Any way - the earlier it gets resolved - the better as it will affect the Black sea and the Caspian sea oil flowing out. Oil going up suits no one expect the oil producing countries. Infact they too have realised that it may not be in their best interests too to have oil too high in long term. High oil does no good to us especially as all the efforts go down the drain as far as inflation control is concerned. The money flow due to pay commission is being talked about as inflation creator but will certainly be beneficial to a lot of white goods manufacturers, telecom penetration and veh sales. There will be a large portion of this money flowing back to the govt as taxes (20-30%) depending on who is making the estimates. So all in all if we go purely by the news then we have a reason to go down a little bit further. Till where? let us try and see -

Well the Europe closing last was confused with an index red and two green but with probably a green bias. FTSE was 0.77% red, DAX was 0.06% green and CAC 0.74% green. The US too could not make up its mind which way to go but had probably had a green bias. Dow closed 0.38% green, NASDAQ 0.05% red and S&P 500 0.41% green. For the rest the opening in Asia will dictate how we begin.

Going now by the candlesticks -- firstly, it has made the three black crow pattern. And that spells out some more downside to come. On the positive note remember when I talked about the resistance at 4425 levels? well the last Black candle has failed to close below that level so unless we break it cleanly we might have some respite here. another good thing that I see in the charts is that the fall for the last three days has been on relatively lower volumes. The MACD red line is still managing to keep itself above the blue line and remains bullish. The RSI has still not crossed over to give bearish signal - so so far it remains bullish. The slow stochastic red line remains trailing under the blue line and gives bearish signals. It may be a few more days before the lines go to the oversold territory.the TRIX has certainly stopped looking up and may face down in the coming few days. The mass index does not give a trend reversal still but has stopped showing the continuation of the uptrend. The much feared narrowing of the Bollinger bands has started taking place and this may not go well for an uptrend. Jaggus's TRIN says bearish. So overall-- there may be some bullish indicators but the majority is showing the bearish trend -- at least for the time being.

In spite of what I said above -- I would like to strongly put forward to those who do not traded daily and are not into futures and options to start building up a good portfolio. In our journey during the last few months we have seen one blow after another. Journey on the downside may take us anywhere -- in fact there are a few but faint voices that have started gathering momentum to say that 2500 is a possibility. They may be right -- there may be wrong! I really don't care but what I know for sure is that all those who pick up stocks at these levels will make good money in the times to come. India is not in a recession and come to think about it OUR time is it yet to begin. The developed economies will stagnate -- whether the call at stagnation or recession or stagflation -- it really doesn't matter. We may be effected for some time by them but then in the end we have our own momentum that will carry us to higher highs. So do not bother about this trend take sides now and take positions to a great future.

Best of luck. I am keeping extremely busy and that is the reason I missed on 14th. this may continue as this is just a hobby. However if I do have time I will look up charts and start discussing some good stocks with a future.


Wednesday, August 13, 2008

Crude down to 113............ then what?

I have started the day again without electricity - thankfully when I had a few hours of electricity yesterday - I recharged my laptop and here I am. Market did not sink as much I had thought it would yesterday. Why was it so? I do not know but for sure it was good. some brakes remain to be healthy for a continuation upwards - also this dance may continue for a few days like the stalemate between the bulls and bears we saw on Aug 6th, 7th and 8th. A few points (Hic! hundred) after 7-800 point rally should not scare anyone - or should it?

The world markets were down in the dumps - Europe being more flattish - FTSE down 0.13%, DAX down 0.36% and CAC down 0.44%. It is US that was down on financial concerns - S&P 1.2% in red, Nasdaq down 0.38% and Dow down 1.19%. Asia morning opening becomes even more worrysome with Nikkei down 2.23%, Hang Seng down .98% and Strait times down 0.97%.(as I write). That makes our opening a certain red. we too may open and remain in red for the day - may I say again we may show some recovery towards the afternoon - though green is a remote possibility it may not be totally ruled out.

On charts the black candle could not negate the gains of the previous day so that's not bad - only thing is that the RSI has started to look down and slow stochastic is certainly showing bearish signals. The bollinger band is howing the signs of contraction (most trend changes happen when it narrows down). MACD on the other hand is still good. Mass index does not show trend reversal but has signalled stopping of present run up. TRIX remains bullish. Jaggu's TRIN says bearish.

Gorgia situation has improved and the crude is around 113$. so far there is nothing to worry but if the down trend gathers momentum then please be ready to abandon the longs that you might have been holding on to and we may get time to enter longs once again at lower levels. Best of luck and pray that my system is online with the electricity restored.


Tuesday, August 12, 2008

First individual Olympics Gold...... Bindra - carry us along

Its the Real Thing - that's how everyone listed Bindra's success getting home first every individual Olympics Gold. And how market reacts - was infront of everyone. Was it his getting Gold or something else - he gets my vote. Unfortunately I am without electricity for last 48 hours now and all power has run out so I could not follow the markets yesterday - all the same - what a runup. It has surely signalled that we are clearly out of the bears grips. As far as I am concerned it will take hell of an effort by the bears to convince me or anyone that we are in bear rally phase. Hell of a lot I repeat. There are now supports at every level it has climbed back on. Short term - 4400 now would show good support with half a dozen more below.

IIP Numbers expectations and thereafter the numbers themselves might dictate where we head towards today and next few days. Expectations are better than the last numbers.

Europe closed well yesterday ending almost a percentage up. FTSE was up 1.17%, Dax up .73% and CAC up 1.04%. US opened red but climbed to a peak in green - lost some its gains later but still closed reasonably in green. DOW up .41%, Nasdaq up 1.07% and S&P 500 up .69%. All this is well but Asia is showing different colours - starting the day in red and going into deeper waters. Nikkei is down .71% RED, Hang Seng dropped after opening green to .1% red and strait Times opened and trades about .44% red. The opening is definitely likely to have an influence upon our opening - likely to be flat to red. Thereafter - all those on longs for some time now may decide on taking out profits depending upon the hysteria built up thereafter. If we do not touch this hysteria level then definitely we may bounce back in green otherwise continue drifting in red.

On the candles - it was a definite good white candle putting to rest all doubts about the trend we will follow. MACD remains bullish, RSI has shunned its bad boy image to turn bullish again, TRIX looks up towards the sky. Mass index does not indicate a trend reversal. Slow Stochastic red line has climbed above the blue line again and looks up - bullish. ADX is bullish. Only Jaggu's TRIN remain bearish.

Gorgia may be pushed to the sidelines due to whatever - but if it does not cool off - we will see it affecting - crude and markets both. Hope for an early resolution of differences - whichever way it is.

With all this I feel the coming drop in markets can be good time to gather some stocks. Best of luck - and if the electricity eludes me today also - I may not be in a condition to follow the markets once again. Best of luck to all who do.


Sunday, August 10, 2008

Candle candle on the chart ......

We again made a doji on the last trading day - that is friday. The only thing with the doji made every subsequent day is that the lower wick is slowly but steadily increasing. But the fact remains and bulls have not given up the rally and the bears are still not strong enough to crack them. How long do we continue before we have a decisive win? Not very long now. All the indicators that were bullish are now started to hover near or about the overbought zone - it is not difficult to guess which way we go from here. When - or what will be the trigger - difficult to guess but whenever it will be - it is not very far away. But the answer may not be so simple or ready made. The bullish impetus too remain with the green looking international markets.

Europe opened flat - traded flat - fell towards the end of the trading session - and finally on seeing US I suppose they finally ended green. The FTSE was .21% up, CAC .77% green and DAX .28% green. US opened negative but immediately on opening started recovering and never looked back thereafter. So much so that it closed on an average 2.5% up - and that's quite a closing. The reason was simple - crude fell it went down to the 114.7 $ marker before making a recovery and settling to 116.2 $ - and it is a reason to rejoice no doubt. US finally ended with Dow up 2.65% green, Nasdaq up 2.48% and S&P 500 up 2.39%. Asia taking these cues opens up - Nikkei presently 1.83% green and Strait Times 1.13% green. If we sustain these greens for another three hours - our green opening is certain. Gorgia is one issue that we are closing our eyes on - watch out if the situation there does not improve. We are having enough trouble spots for us to have one there. War will unsettle the oil and everything we are now seeing falling in line.

What do the candles say? Candles - Doji (trend less indicating reversal), MACD bullish and does not waiver. ADX bullsih. RSI and StochRSI are giving a divergence - no divergence is good. SlowStochastic is bearish with the redline below the blue and dropping down. Jaggu says that TRIN is bearish. TRIX however is still looking up and Mass index indicates trend continuation. All in all we can still break our higher resistances. 5 EMA is above 20 EMA and 20 EMA at this rate likely to cross 50 EMA.

A green open may be a foregone conclusion - it is how we sustain this uptrend that would be interesting. The levels on the upside now are 4600 and lower side 4400 on nifty. Best of luck to all and may you make tons of money.

** some late news - assault on Gorgia continues, 11 dead in series of bomb blasts in China, Musharraf in a dock.


Friday, August 8, 2008

Inching higher..... Still underconfident..

My wife is glued to the soap opera's -- and I am glued to the nifty dances. I always used to think what the soap opera's have -- cannot convince anyone in the world to sit down and watch more than two serials. And then I started seeing the nifty dance every day. One day my wife comes to me and asked me what you find seeing the same charts over and over again. I explained to her - its just like your soap's -- the nifty dance is the same, there are twists and turns on everyday basis and like Ekta Kapoor's soaps -- it never ends.

So let's get on with it. The Europe was flat -- as always confused. FTSE opened red spent most of the time in green and ended .16% in red. Dax ended .27% down and CAC .2 per cent in green. The US -- at least knows decisively where it has to start and where to end. It started in red and closed deeper in red. Dow down 1.93%, NASDAQ down .95% and S&P 500 down 1.79 per cent. The red in US has been attributed to a jump in oil prices on account of fire in Turkish pipeline and negative reports from the Wal Mart. Asia taking these cues started in red. Nikkei opened in red, dived down further and as of now is making a recovery (hope it lasts till we open). Strait Times opened marginally in red and dived down deeper with no recovery in sight. As of now Strait Times is threequarters of per cent down and Nikkei a quarter per cent down.

Yesterday on our candles we made a lower bottom and the lower top. The saving grace is that we are still above our support levels and we have inched up further - even if a mere nine points on nifty. The candle is doji and once again it gives us indication of reversal to come. When will it come? Is anybody's guess. The MACD remains bullish, and if anything else seems to have further improved since yesterday. RSI remains to be okay and is still not in over bought zone. TRIX is looking great. Mass index shows no signs of reversal. StochRSI has moved below the over bought zone. The slow stochastic is showing signs of trouble -- the red line having convincingly moved below the blue line and trying to break the 80 point line. Then TRIN is bearish (refer Jauggu's blog) The close yesterday was 4524 -- a mere one point below 4525. I hope like hell that it closes above this level today - but the troubled indicators remain and has to be taken with a pinch of salt.

Additionally the markets it is expected at 12.5 per cent inflation. The inflation figure yesterday on the other hand has been 12.05 per cent. That is below the expectations and may figure positively today. Our neighbours on the Western front are preparing to impeach Musharraf - trouble there is too close physically to set aside.

So all in all - remain sensitive to the noises and trade with caution. I remain a bear. Best of luck to all.


Wednesday, August 6, 2008

Its a Grave Stone Doji........ Shall we run for cover?

Gravestone DOji is one of the gravest reversal signals on the Candlesticks. The Gravestone Doji is described as:
A "gravestone doji," as the name implies, is probably the most ominous candle of all. On that day, prices rallied, but could not stand the "altitude" they achieved. By the end of the day they came back and closed at the same level. The example is as shown in the jpg image.

I am sure that most of you visiting this site would have been already aware of this. The point is that does this spell the doom that we have been waiting for or the markets will have the momentum and the wherewithal to brush it aside and move ahead. Frankly the fall that we saw towards the end of the session was not really anticipated. It just goes to show that there can be no laid back attitude when dealing in stocks and that either you are awake during the trading session or trail stop losses. Now comes the hard part -- do we define the candle today as a doji? Let us see -- the open was 4506, low was 4504, high was 4616 and the close was 4518.
This breaks down into
upper wick -- 98 points
lower wick -- 2 points
body -- 12 points
the problem as I see lies with the body 12 points - had it been lower the better it would have been.
The related point that confuses me is -- are we really above the 61.8% retracement or are we below it? Actually I write what I see on the iCharts - and I realised that the charts may not be very accurate. In any case we can declare that the close was around the 61.8% retracement and this level remains as a resistance yet to be convincingly broken. So the vote on seeing the above evidence is definitely against the bulls. They could not save a 100 point rally from being taken by the bears! Give me a break.

The Europe closed in green but the journey through the day was painful hovering around the neutral line and recovering only around the closing. FTSE was up 0.58%, DAX up 0.65% and CAC up 1.41%. Infact it was only CAC that remained convincingly up in green through the session. The US opened flat to red and later recovered closing well in green with the better than expected results of Cisco and drop in crude prices. The asia has not taken the US cues and has opened red. Nikkei down 1.29% and strait times down .57% as of now.

Next I will list out the bullish indicators and the berarish indicators and leave the "what will the markets do tomorrow" to you. Of course the bullish ones come first.
Head and shoulder pattern being advocated strongly by Vikas Sharma
Trailing along upper edge of bollinger bands
Mass Index is not signalling a trend reversal so far.
Crude down by 87 cents.

The bearish indicators are next
SlowStochastic redline has crossed below the blue line and both lines individually are in over bought zone.
StochRSI in overbought zone.
Gravestone Doji.
Jaggu's TRIN

Now after this please do take your own pick. Overall bullishness remains but a breather may do good overall. Best of luck.


Bear with me.......... for just one more time

Believe me - I have nothing against the bulls - it is just that it was so unrealistic. It has been a nearly 700+ points rally on the nifty and that is the time frame it took me to get convinced that it is what we see - a recovery and not a dead cat bounce or whatever. we are now at the approximate 61.8 per cent retracement level. This was the same level that was tested on 24th of July and we could not sustain it. It is the second time we're trying to test this level and circumstantially we are much more poised to break it and go up. But bear me for another one-day as I wait for this level to be broken convincingly. After this the level to watch out for is 4653 on nifty.And then we are likely to have a resistance free run by another four to five hundred points.

On the international front what a run-up we had yesterday. Europe was up 2.5 per cent in green on an average. FTSE up 2.52%, the DAX up by 2.66% and CAC up by 2.47%. US not wanting to be left behind out did Europe. Dow was up 2.94%, NASDAQ up 2.81% and S&P 500 up 2.87%. taking these cues Asia has opened in green and likely to remain so. This is the reason I'm so positive that we are circumstantially much more poised to break this resistance level of 61.8% retracement. This rally is incidentally in US as Federal reserve left interest rates unchanged and assuaged some of the market's fears about the economy.

The day before's candle was inconclusive --it really did not give out the reversal signal as expected however yesterday's candle spells out bullishness. I do say again that I would wait for a reconfirmation of a clear breakout above 4525 levels. on the individual indicator levels MACD remains bullish and continuue looking up, RSI is bullish, TRIX looking up and is bullish, slow stochastic is bullish with the red line above the blue line. the ADX too is bullish. We are as of now trailing the upper edge of the Bollinger band and the bandwidth is not narrowing, so the rally as I see should now continue. A small word of caution however the red line of slow stochastic is in overbought territory and as of yesterday the blue line is too at 80 marker entering the overbought zone. StochRSI continues to be in this zone, overbought at hundred. Jaggu's TRIN says Bearish. So overall the bulls still overwiegh the bears. I personally feel that the bears are now not in a position to strike - they may do so with more indicators entering the overbought zone.

I can't tell you how much I love the bulls. I wish everyone luck and tons of money. I'm still waiting for my January losses to be recovered. sob sob sob!


Monday, August 4, 2008

Black candle............ but still indecisive....

with every passing day more and more confusing signals are building up. Should I call at consolidation? Or should I stick with my retracement theory? Let us see.

Yesterday there was a rumour that a tropical storm is likely to distrupt the supplies of the Gulf of Mexico oil rigs. suddenly then another theory cropped up that this tropical storm is less likely to hit Gulf of Mexico and the oil prices dropped. So this is how the stocks and commodities behave. so don't be surprised about two totally opposite theories cropping up at the same time and markets and commodities taking a course of their own. All in all the Europe closed red three quarters of a per cent, US closed red -- Dow down .37%, NASDAQ down 1.1% and S&P 500 down .9%. It's hard to see Green in Europe and US nowadays Uh! In Asia Nikkei opened green, went red by a few points, climbed hundred plus points in green and now diving back towards red at the same pace. Straits Times opened flat and dived down red. With this kind of volatility in those markets it is hard to guess where they will be short of our opening. There is a chance however that the Nikkei is red, Strait TImes remains red and Hang Seng Opens deep red.

Three ADRs that have been flashing since morning on the idiot box and trailing in red the banking sector, the IT sector and the auto we cannot expect these sectors to be under pressure as we open. the candlestick pattern yesterday was inconclusive. It does not in real terms signal the death of the uptrend we had for last few days but not as it signal a continuation of the same. I had frankly expected a doji -- that would have given a clear downturn signal. with the yesterday's candle the MACD remains bullish but showing signs of wobbling, RSI remains bullish, TRIX still looks up, ADX is bullish and slow stochastic is bullish. On the other hand jaggu's TRIN says bearish and the StochRSI is in over bought condition -- this may put the RSI to hold. as far as I'm concerned 4525 remains to be the level I would wish the market to cross with force to be bullish. That also is incidentally the 61.8% retracement level.

With so many bullish indications we may open green or flat and remain volatile ending in red. How much in red will depend on the news flow during the trading hours. Our closing in green -- I'm a little circumspect. Best of luck to all.


We did it........... once again

we did it once again. While the rest of the world bled in red, we made our mark in green. Like I had written, the tweezers top had to be broken with force for us to go green-- and that it is exactly what we did. Initially the markets were in red but eventually we went green -- breaking the tweezers top. Why we really did it is a mystery to me. Asia was bleeding, Europe was bleeding and so did US later. so much so that Europe was down more than one per cent on an average and US close down are little more than half a per cent on an average. Today as we stepped into a new week the Asia opens in red and looks down. Where do we fit in all this? Are we strong enough to withstand yet another onslaught of the world markets? how many of our fundamentals have changed since last few days? But then who said the market follows fundamentals? I didn't! No don't get me wrong I used to think so but I no longer think so now. Markets have a life of their own and the follow their own mind.

All the indicators that I have been quoting for past few days remain to be bullish. RSI is good and green, MACD is bullish, TRIX is looking up and so is slow stochastic. ADX is bullish. And today the only word of caution comes from jaggu's TRIN apart from a red opening in the Asian markets. I have been shouting caution on so many past days that I am afraid to do so today -- but believe me even at the cost of repetition and feeling embarrassed for not being right I still maintain that the market might not sustain this uptrend till the time we've broken past 4525 levels on nifty and if that be so then 5000 may be achievable in the near term.

a red opening under the present circumstances of Asia opening deep red and maintaining red is a certainty. I feel that today we may open red and remain red for the session. I see no reasons for the recovery to continue beyond the present level. but then like I said markets don't really listen to me. Best of luck to all and remain on your toes.

One more thing - If we do cross the 4525 and remain above then the longs is the way to go and we may be 'out of the bear woods'


Friday, August 1, 2008

Tweezers....... caution ahead

Firstly let me apologise to all who did come to this blog last two days and found me missing.... Work pressure -- just did not have time to sit down and see the markets. I could leave just a line last time and was happy to have been right that time. Well - it is not that I have time today - but just got up early and wanted to fill in for today. Then for the weekend - will just sleep.

Before I talk about the world markets I would like to talk about the Nifty Candles. The candles have made a tweezers formation with jul 28 and jul 29 th. This formation if not broken with force then might act as a resistance and push the markets down. So I would per-force start with a word of caution. But apart from this most of the indications remain to be bullish. RSI is still bullish, MACD is bullish with the red line above the blue in the comfort zone. TRIX is still looking up - On the SlowStochastic the red line has yesterday managed to crossover into the positive territory and looks good. We have moved on to the upper side of the Bollinger band and that too is good news as long as we trail the upper edge. jaggu says that the TRIN is neutral - that is the second bell that rings in my mind.

The sob part of the story begins now. The data that has come out in US is again not encouraging and that made the US markets tank pretty badly. The Europe before that had closed flat - but the net effect on Asia is that it has opened deep red and is trailing down. So those who took good gains in the past few days rally may book to enjoy the weekend. And my view remains the same - if we do not break these two tweezers then we too are going down in red taking all the bullish indicators for a swim. The fact remains that by the time the trailing indicators start showing red we would be swimming in the Red Sea upside down. Had I been you - I would remain short - or atleast hedged for next few days.

Best of luck to all.