Wednesday, October 15, 2008

Welcome to the Bear country....

0515 hrs 16 Oct: Okay the US has closed and the news as expected is not a good one - US closed down deep red - Dow 7.87%, Nasdaq 8.47% and S&P down 9.03%. Cannot even say best of luck... really.

15 Oct 08: Oh! the Heading? I did not mean US - I meant us (India). I am sure that the so called recession will not have as wide ranging effect on us as US or Europe - but till everyone realise it - for all practicle purposes we are as deep down in trouble as anyone else. I am happy for one thing in spite of loosing so much for so long - I am happy because now - that one man - (guess who) is not able to sway the markets with one statement of his. If I do not make money by his swings - neither should he! In the past he used to sway the markets on his whims so many times.

I will be en-cryptic in my blog update as my engagements here are still hardly giving me time at all. In asia only Nikkei closed in green up 1.06% rest hang Seng and Strait times were down 4.96% and 3.24% respectfully. Europe took on the tasks to prove the bears point of view regarding the state of economies and FTSE plunged 7.16%, Dax down 6.49% and Cac down 6.82%. The disappointment in US continues as the DOW has once again slipped below the 9,000 mark and is now 3.65% in red, Nasdaq down 3.82% and S&P 500 down 4.39 percent - and they are just in the mid session - where they go from here is anybody's guess - but Red is most likely.

As far as the candles are concerned - we are back to the square one - Bollinger bands widening - giving strength to the down trend, candles once again hugging the lower portion of the band, Low volumes, MACD divergence increasing a wee bit with the red line still way below the blue line. Mass Index now looking down towards the 27 mark, RSI going back to the oversold territory and TRIX still looking down. All in all there is not even one indication that gives us hope. so here we are - at the mercy of the bears. Bears will test recent lows? maybe but if 3200 does not hold then we have 2500..... Yeah that is way down but then this is what it is. In all probability though the majority of the voices say that we will not voilate 3200 levels. All the best to everyone. May the month end bring your positions in profit.

Listen - Crude is now 75$ a barrel - do not take the drop lightly - a fuel rate cuts may bring cheer to our economy and turn out to be a pleasant surprise.



Uma said...

Naah...there's a whole other psychology doing the rounds. Shortages and inflation are good for economy, but surpluses and deflation (lack of demand) is bad. That's why inflation has always coincided with bull markets (remember Greenspan hiking rates and Chidu hiking rates in bull run days)? Bring on da inflation baby!
My folks are laughing at me cause I keep saying sugar is going to Rs40/Kg and housing prices are going to halve and stuff like that, as if I'm Nostradamus. rofl.

preet said...

Uma: your logic is generally unbeatable. The price of the crude is going down because they see lack of demand- that results from a stagnated economy etc. But then there will be a point when where this low price of fuel / power will give rise to a greater demand and lowering of prices and stablisation of economy - It has to balance out itself at some point. Forces of nature at work - not man's.

Uma said...

cheema: I've already explained to you with calculations how hedging works and written a bunch of articles on how straddles and strangles etc work. The bottomline is, you have to decide how much of this info you need/ want to use and do your own trading.
I can't answer further questions based on day-to-day market levels.

Please don't be offended, but this is the stock market - it makes its own mind and you make up your own. It is IMPOSSIBLE for me to think with three minds - what's the market gonna do, how cheema is gonna react...and what about me, what should I do? No way I'm ever going to manage all of this.

I trade for myself, I write for myself and I don't want anything from anyone.

Uma said...

Thank you for the call! Looks like some pullback on cards...we'll see. I'm going to pick up puts around 3700 level if we ever get there.