Tuesday, January 20, 2009

Sick of this non directional trading… Update for 21 Jan 09

So the Obama magic does not seem to be working – the markets are weak. What happened today was not really expected – but then I suppose that we are used to these indecisive moves. In these times the option writers seem to be having a ball of a time. But wait – you just try to do the same and the markets will trend so strongly in some direction that it will mow down your positions like the tanks are doing in Gaza. Actually if the markets are not paying regards to Obama – what the hell were we really expecting by his taking office? Miracles ? forget it… I too fell for it… the Obama swearing in factor @@#$#. I will take time to set it aside and go ahead with the times. We had a fairly good rally going on when Raju spoiled the day – and there is nothing that is now convincing the bull to wake up and bears to let go of the half dead bulls.

The markets everywhere are a shade of red. Asia closed with Nikkei down 2.31%, Hang Seng closed down 2.85% and Strait Times down 1.35%. Europe also closed down – FTSE down 0.42%, Dax down 1.77% and CAC down 2.15%. Europe went down even after showing a good chance of remaining green or flat. The US tilted the Europe closing in favour of red. It is mid session in US and they too are red. Dow down 1.66%, Nasdaq down 2.88% and S&P down 2.42%. They were off their lows for some time but are again trailing down around the days lows. Hope like hell that they recover.

It is confusing to say the least – the markets have actually fallen on fairly low volumes. daily charts 20 Jan 09 The candle has not really pierced the day before’s white candle as as I see it – it does not threaten the swing up for whatever it is or it was worth. The red candle today was not strong enough to spell the change in trend. 5 EMA is lower than 20 EMA is lower than 50 EMA. there has to be some crossover of higher EMA by lower period EMA to say that we have a chance of going up. Noticed that the entire trading was in a narrow band of 50 on Nifty? crazily narrow to say the least. ADX again has the DI – line above the DI + but the trend is weak so that is where I am hoping for the recovery as the bear trend too is not being supported by it. The MACD is still with negative divergence but has reduced somewhat. RSI is bad and bearish – also falling down. Slow Stochastic red line is above the blue line and is fast heading towards overbought zone. If with the markets virtually standing still the MACD is going overbought then GOD only knows what will happen when the selling starts. TRIX still looks down only.

Let us now see how the day panned out in the markets today.daily 20 jan 09 The markets dropped below the Support 3 but could not sustain at those levels. Then it spent the rest of the day in a very narrow 20-25 point range finally deciding to test the support 2. Once again it could not sustain at levels above the Support 2 but gracefully or let us say thankfully ended at those levels itself.

The pivot data for tomorrow is as under: -

R3 2926 against 2917 yesterday
R2 2882
R1 2839
Pivot 2798 against 2844 yesterday
S1 2755
S2 2714
S3 2671 against 2771 yesterday
Projected High Range 2819 to 2861
Projected Low Range 2823 to 2781
Fib Projected High 2864
Fib Projected Low 2735

Okay the figures I take to calculate the pivot data are from the NSE website only but take for example today the high levels give are 2842. These were the levels where the Nifty opened and hardly stayed there for a few seconds before dropping like a hot brick – so I really do not know how to compensate for such data. All the same this is all I have and please do not ask me the direction – don’t know – and I will be surprised if anyone knows. Best of luck…



Uma said...

so...I made a tidy sum with my Educomp short (just 10 shares)....
sold 1846 covered 1585

S S Cheema said...

congratulations Uma - I think we all deserve victories - but you deserve most of all.

Uma said...

thanks cheema...By the way I read some incredible predictions about the market by Michael Alexander in the book "Stock Cycles: Why stocks won't beat money markets over the next 20 years". He predicted in 2001 (dot com bust days) that we're unlikely to form a new top on Dow Jones over the next 20 years. We did (going from the dot com top of 11,000 to 14,000+ on Dow) but here we are, trading once again below 8,000 on Dow. And if this is likely to continue for another 18 odd years...brace yourself pal...your stable job will soon be the hottest thing around.
Now...I can't say how much it applies to Indian markets...We're not in the same economic cycle as the US....Which is also why, from a historical perspective we're doing way better. We're most likely to have a rocky market as compared to US markets because most of the stock market play in India is speculative, rather than investor wealth.

Uma said...

One more thing he said is that bull markets last roughly 15 years and bear markets last roughly 18 years. So yep....the next bull market will start when your kids are in college...ask them what stocks to invest in and they will make daddy rich ;)

S S Cheema said...

What a fearful scenario...
The problem with these theories is that they have hardly been tested over a meaningful period of time so the applicability for the large period cycles are a suspect. It may be so - it may not be - but then a lot of people have to survive within what is available to them really...