Tuesday, September 16, 2008

knock knock...... who's there?......... opportunity.......... for what?

0542 hrs: AIG provided a 85 Billion dollars loan, Fed keeps the interest rate unchanged, US ends in green Dow +1.3%, Nasdaq up 1.28% and S&P up 1.75%. So a strong possibility of green opening as had written yesterday.

2249 hrs: The US markets oscillating around the flat line waiting for the Fed decision to cut or maintain the Rates.

2102 hrs: I believe there is opportunity hiding in every nook and corner. But the problem is that it is we who fail to see it. I too am a culprit on this account -- I see the charts, I see their magic, I do not have the guts to take cognizance and then I spend time in repentance. Well, I believe, that is the part of the game.

Just to keep my minds off these crazy markets I am trying to read about the markets, and one of the books that I've picked up has wonderful interesting notes and quotations. Today, before I go ahead, I would like to quote a few of these quotations-

" no matter what information you have, no matter what you're doing, you can be wrong"
" sellers of greed and buyers of fear -- the contrarians mantra: sell what the crowd wants to buy and buy what the crowd shuns."
"insanity is doing the same thing over and over while expecting different results."

So, if you are wise enough now after reading the above let us start with today's analyses. before I talk about the markets in proper I would like to share some information about Lehman Bros. When Lehman Bros filed for bankruptcy on Monday, it became the latest but surely not the last victim of sub-prime mortgage collapse. Lehmon owned more than $ 600 billion in assets. Financial institutions around the world have already reported more than half a trillion USD worth of mortgage related losses, and that figure will most likely double or triple before the crisis itself gets exhausted. But there is a bigger potential failure lurking in the background -- the American International group, the insurance giant. It poses a much larger threat to the financial systems than Lehman Bros ever did, because it plays an integral role in several key markets: credit derivatives, mortgages, corporate loans and hedge funds. There is a substantial possibility that American International group, will not be able to meet its obligations and will also be forced into liquidation. A side-effect - its collapse would be as close to an extinction level event as the financial markets have ever seen since the great depression. AIG does business with virtually every financial institution in the world. Nobody knows this market size for real. Who owes what to whom, or from whom -- this is so because there is no central clearing house or a regulator for it. So, the exact effect that it will have on stock markets will only be known once this hits the fan.

The Asia was expected to be weak, and it came as no surprise when Asia opened well into red and thereafter showed no signs of recovery whatsoever. Nikkei finely ended 4.95% down, Hang Seng 5.44% down and straight times 1.01% down. As far as the day is concerned we out performed these markets. The nifty begin its journey from 4072 -- dropping till mid-afternoon to 3919 and finally closing two points in Green at 4090. what a run-up it had. More about it later. Europe too opened in red and has now traded almost the entire day to the closing in red. In fact, dropping a wee bit. FTSE is about to close and is trading 2.32% in red. DAX as trading 1.12% down. Cac is trading 0.82% in red. Considering what we now know about AIG, it was no surprise when US opened red. However, with some reassurance coming from the government for AIG, the stocks recovered and in fact, briefly went green. It is not yet midsession in US and there is a strong possibility that finally they end in green.

On our candlesticks -- are charts are looking exciting for a number of reasons. Firstly, the Bollinger bands have been violated on the lower side and there is a Doji on the candles. It is a dragonfly Doji. it spells a strong reversal to the black candles that we have been having for last five days now. So expect a session, where we bounce back, and cover some of our losses in the recent times. The volumes to were a shade higher than yesterday. On MACD the gloom remains with the red line below the blue line, and divergences increasing. Slow stochastic, the Red Line has crossed above the blue line and is well poised to cross the 20 marker, giving a buy signal. The TRIX is looking down, falling below one marker. The mass index too does not look good, with the line now touching 25 marker. The RSI has stopped dropping, and now runs parallel to 30 marker - not really encouraging. All in all we have two bullish indicators, and all the rest indicators are beer-ish or at the maximum neutral.

The crude oil is at USD 92.51 a barrel. Taking help of the global indications that I hope to be positive tomorrow, the crude oil price and the few bullish indicators that we have - I feel that we should open green and recover some of the losses that we have been having at last few days. I am at the moment, neither bearish now bullish. Because, though the indications are bearish -- I'm a bull at heart. So best of luck for tomorrow and I will try to update the blog in the morning if I have time.



Anonymous said...

dow down nearly 300...oh my god.....where are we going....where do we go from here....3800 worst come worst or 3600....or even bad...


S S Cheema said...

c.m. don't scare me yaar - I have nothing left now to give to the FIIs now.