Thursday, October 9, 2008

Thought I would write after............ I see some green

0300 hrs 10 Oct 08: My dog woke me up and I decided to check the US closing - here is what I found - Dow below 900. Dow closed losing more than 7.33% or 678 points down to close at 8579. Shucks - had my dog not woken me up - I would have slept peacefully for another 3 hours....

09 Oct 08: Well all the talk about the actions of the major economies to do something about the present state of affairs has come and gone - the net effect - a cautious approach to recovery. Cautious - because I am sure that the marketeers are now divided into the following groups. First the ones who have lost so much that they will go to asylum or commit suicide. Second are the ones who will wait for the opportunity to get out at every step the market recovers. Third will be who will create shorts with every bit of the markets going up. A small group of people will still deem it fit to keep investing. Who will benefit out of their strategy? Well no one knows - it is based on perceptions and the end result where we finally land up economically. Do we survive or be the part of the recession the world is fast slipping into.

A long time back I remember a story of a Russian Nuclear Submarine that went under the ocean and never came up. Russians gave up the submarine and the US wanted it badly to study and make their assessments. Well the US recovered it and after they had done what they wanted to do - in a reply to one of the questions - the US representative said - "If you throw enough money and resource at a problem - there is nothing that cannot be done" - Well they have lived by this principle and it has actually worked for a long time. I am sure that they are in trouble but do not write them away - nature has a way to spring surprises. And as seen by the majority of the world this has suddenly become everyone's problem and not of US alone anymore. So - let's see what happens eventually....

The markets after series of rate cuts by everyone did not react the way they were expected - again closing in red. New measures have sprung up and slowly the markets are trying to limp to normalcy. Asia was somewhat bullish after a basically flat opening. Hang Seng and Strait Times ended 3.31% and 3.4% in green respectively. However Nikkei did not support the trend and after trading in green for a long time went red and closed 0.5% down. Europe opened flat with green bias - went up well into green and now - close to the opening is not looking very convincing - whether it can remain green. Some time still to go - and it is trying to take confused cues from US. All the same FTSE is 1.48% up, Dax 1.19% up and Cac is 2.32% up. US opened higher in green and then almost immediately dived down. Dow as of now is 0.06% green - loosing almost 100 points since opening, Nasdaq is 0.54% green and S&P has slipped into red by 0.1%. Anyway - it is too early to tell - there is a long session ahead of US still.

Well another reversal pattern in on our charts - The Hammer. It is actually a textbook Hammer. Only thing that I would have wanted was a white body - but do not take black body of the hammer to be any less forceful signal for a reversal. Okay a error in my interpretation of the Bollinger Bands yesterday. I said that if the Bollinger band is voilated then it is sign of a recovery - well the consensus is that if the Bollinger band is voilated then it is a sign of continuation. Well other than the hammer - the lower band has again been voilated. The volumes we same as of the previous day. MACD divergence has also increased and red line is still way below the Blue line. Mass Index is above the 26.5 - 27 band heading towards 28. Slow Stochastic and RSI are oversold. TRIX is still looking down. So all in all there are now three indicators that are suggesting a reversal up from one a few days back. If the global indications support us then a small rally may be in the offing.

Okay as I close the article the US is slipping with all three indices red now. Best of luck and hope a good day tomorrow.

Nuclear deal is signed. Crude at 88 $ something. Dollar a bit stronger. Tata in Gujarat. All the major economies pledge to fight the present economic crisis incl India. Our growth rate likely to fall to 7% (believe me it is healthy enough). Chandrayaan to moon on 22nd Oct.

Anyone interested in Pivot points - just let me know so that I know to continue with them or not...



Amitbhai said...

Good Morning,

S S Cheema said...

Morning - Good part was taken away by Sensex

CRR cut by 1.5% by RBI

Uma said...

cheema: Hang Seng had closed 3% up yesterday but today's drop is steep (7%). I wish they had closed in green. The drop over last 2 sessions is 4%. I think it's more reliable than our Nifty cause they trade 10 times the Nifty turnover.
(as per my calculations)
cheema, I hope you're not in naked longs or anything. I think we're likely to see some decent retracement if 3200 holds out.
Man, I understand the part about Nifty making 2-yr lows but stocks such as tata Steel and ACC were trading over these levels around 5 years ago, if memory serves me right!

Uma said...

What have you done I just read your comment about the naked longs. Arre, maut ko gale lagana hai toh border par lagao, market mein nahi! You could have easily converted those longs into calls.
Then your losses would be capped.
Please cheema, don't be reckless with your money. I want to see you making money.