Tuesday, January 13, 2009

Some other strategy…?

Actually I got a kind of bored so decided to do a different approach to the problem of our markets. I will try to pin the markets on the charts so will take some help with them before I go on to my otherwise daily routine of day to day charts.charts The chart on to the left is an otherwise a 3year daily chart that I have clipped down to our area of interest only – let us say Dec 07/Jan08 the root of the trouble – the time we started really falling.

There are two possible scenarios that come out of these – Firstly the line that is sloping down with this trend and started from Jan onwards is the trend line that has proved itself as it has touched the bottom for three times. A lot of non believers also agree that a real trend can only be determined after the prices test it over a period of time. If that be true then we are in for a big big trouble. The support will then come only after we touch sub 2000 levels on nifty – and that is in present times – if that is the trend and we test it let us say after another few months then it will hover nearer to the 1500 levels – scary. How does this theory get the support? well the study in the middle is MACD and every time it has made a peak and the red line crossed below we have forgone the upswing and went on to lower levels. In times like the present ones the MACD has definitely touched 200 levels and that is almost a 900 odd point drop. If – let me say if we have to take support with this trend line then DOOM is the word for it.

Well if this is scenario one then there is another possibility that you see by the flag being made by the second and the third trend line. As per this we take support at around 2719 levels and then start going up eventually breaking out in some direction. Let me say 60:40 – 60 to break out lower and 40 to break out higher. Like the first possibility is supported by the MACD – the second possibility is supported by the RSI. in another onslaught of 50-100 points over next few days we touch the 2719 support – RSI reaches 20 odd levels and we recover. It would be extremely interesting to see what gets played out finally. getImageFromSession.php

Asia did not do well with Nikkei closing 4.79% down, Hang Seng down 2.17% and Strait Times down 0.81%. Europe too closed red but not at the lowest of their day. FTSE closed 0.61% red, DAX down 1.75% and CAC down 1.49%. US opened flat with negative bias but remains indecisive so far with DOW in red by 0.01%, Nasdaq green 0.84% and S&P green 0.34%. A long way before it closes and can swing anywhere. The violations of the Bollinger band by nifty goes forward as expected yesterday. 5 EMA is now hopelessly below the 20 EMA – bearish, ADX is bearish, MACD is bearish with increasing divergence. RSI bearish, Slow Stochastics bearish but entered the oversold territory and TRIX bearish and looking down. Volumes were 91% of the last 50 day average.

daily 13 Jan 09See how beautifully the day got played between the pivot and the Support 1. Traders can make use of these levels and make their daily killings. The Pivot data for tomorrow is as under: -

R3 2884 against 2990 on Friday
R2 2837
R1 2790
Pivot 2755 against 2796 on Friday
S1 2708
S2 2673
S3 2626 against 2603 on Friday
Projected High Range 2773 to 2814
Projected Low Range 2790 to 2749
Fib Projected High 2824
Fib Projected Low 2697.

Best of luck for tomorrow.

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Uma said...

cheema, GREAT chart and analysis!
My strangle has a bullish bias (based on my entry level close to 2900) 3100 + 2600 but if it moves sharply down I can make money.
these just aren't the levels to do anything...

geniusjaggu said...

paaji,a very good mrng and happy lohri and makar sankranthi.

great analysis..good job :)

well destiny has something stored for the mkts...guess wat???let time tell us all...

meanwhile google "Kress cycles" :)

yours lovingly,

S S Cheema said...

Thanks Uma and Jaggu - always good morale boosting to have you around.

geniusjaggu said...

mention not paaji :)

Uma said...

today I saw tata steel at 214 and bought Reliance calls...if they can keep it there they can probably take it over 1167 and keep it in uptrend....if not then of course, 1066 will go straight out the window lol

S S Cheema said...

reliance almost 10% up - Hurray - good show Uma you deserve it. Hope your longs are intact!

Natasha said...

Hello Mr. Cheema,

Great to read your blogs :)

Meethe gud main mil gaya til, udi patang aur khil gaya dil, dil ki khushi te aapneya da pyar, Mubarak hove tone Lohri ka Tyohar!!

Best Wishes,

Uma said...

yep cheema, my longs are always intact...even when I'm not ROFL....
Happy Lohri

S S Cheema said...

Thanks Natasha and Uma
Happy Lohri to you too

Anonymous said...

You are very near to understand the great secret of supports :P .
Hint : Congestion bands !!!

S S Cheema said...

Thanks Pokrate - did a small google and got a fair idea