Monday, March 30, 2009

Update for 31 Mar 09

Okay guys (and gals ofcourse) I have some very important job to do tomorrow – that I have not done so far ever. Wify being out of the town – I have to go and pick my results of my kidoos from the school. To be on the safer side – I have prepared myself well. I have taken time to ask my kids the class and section so that I reach the right place and ask the results from the right teachers. Already having jitters and I know that the night will turn out to be as awful. I am sure no one will recognise me as their father as this is the first time. How I miss my wify. Okay here goes another round of practice to pick up results of my kidoos – straight face, don’t look bewildered, try to remain calm, the hand that shakes the most should remain in the pocket and ask for the class… walk confidently, smile at the teacher and don’t look at the report card in front of the teacher lest I do or say some thing stupid or act smart. daily 30 Mar 09

Well here I am – ready to give you another dose of technicals’.  The day today was like that should have been accepted after a virtually nonstop rally of the markets for 11 straight days of rally. The force down was a kind of anticipated and everyone seems to have rushed for taking home the profits. Typical – of what was expected when the run down was expected to start. No one really knows for sure whether this will turn out to be a “Sucker's rally” – so no one is really taking a chance. Please do digest it that we have fallen on seemingly a lower volume. I mean today the volumes have been 117% of the last 50 day average. We have been clocking almost 150% last few days. Frankly even if we just set aside these and see the global cues we will get another good observation. We have fallen exactly in line with the global cues we got from the Asia. Over the week end I had already written that the US closed weak. The Asia also too the cues and opened weak – that became a stampede for the profits to be taken home rally and closed the Asian Indices 4% lower. Nikkei ended 4.53% in red, Hang Seng was down 4.7% and Strait Times down 4.15%. We closed 4.2% down on nifty and that is in line with the Asian Markets. The Europe is still open and presently in red. Past the mid session we see them around 3% down with no chance so far to move into red. FTSE is down 2.35%, Dax is down 3.5% and CAC is down 3.07%. US too has opened and has started the day firmly in red. Dow down 2.73%, Nasdaq down 2.77% in red and S&P down 2.76% in red. Too long a period for US to remain open so I will not try to predict where it will close but closing red is a fair bet especially with the news flow coming regarding the GM and blah blah…

Coming to our candles, we see a tall black candle that has really had the audacity of eating away 2 days of gains in a go. The Bollinger bands too have widened quite a bit. I will say again at the cost or repetition that We are still in the Narrow trading range and there has been no break out. The 5 EMA is trying to go below the 100 EMA and that would signal end of the road up for the short term. 20 EMA had just about crossed over the 50 EMA two days back and is still above it. The volumes are lower as I mentioned earlier. ADX trying to look down. MACD is still bullish but the divergence has reduced. The RSI has moved down from the overbought position and looks down – some would actually use this indication to sell and hold shorts. Slow Stochastic red line has come below the 80 line but the %D line is still in the overbought zone. Once again some would use this condition to sell and wait with the shorts. TRIX is still looking up and is around the highest we have seen in this bear markets so expect it to retract down taking the markets alongwith.

Let us see the Pivot data before I pack up and call it a day…

R3 3258 against 3191 yesterday
R2 3164
R1 3071
Pivot 3016 against 3095 yesterday
S1 2923
S2 2868
S3 2775 against 2999 yesterday
Projected High Range 3044 to 3118
Projected Low Range 3102 to 3028
Fib Projected High 3150
Fib Projected Low 2921

Next inevitable question is where do we go from here. I will lay it all bare for you to pick and choose.

  1. 38.2% Fibonacci retracement is at 2903 and 50% Fibonacci retracement is at 2840. So in the coming week we should see the markets touching atleast these points.
  2. The middle of Bollinger band is around the 2725. That can be the next place where we stop.
  3. Going purely by the trading range – 2611 should be the lowest point if we do not make fresh lows.

So very frankly looks like we are going down for some time. Best of luck to all who have been short – and I think you will have some more time before you should square off your positions.


Sunday, March 29, 2009

Another costly lesson learn’t… Update for 30 Mar 09

… costly because every time I go wrong I stake the greatest asset of mine – the reputation. I would not have suffered so badly had I not started the blog and contribution to two three other sites. But now that I do it – the pressure of accuracy weighs heavy. It is not that this rally was not anticipated – nor were the levels we are jumping to every day now. I had mentioned that this can be a surprise rally taking us to 3400 levels and higher. What I obviously did not get that the rally will be with so much vigour and non stop. Ever since I saw the first indicator go overbought – I anticipated the markets to take a breather – stay there for a day or so or perhaps come down on a 50% retracement – and that has not happened. As of now we have three indicators I study are either deeply overbought or just about there. There has been no recent precedent of these indicators wherein we have stayed for so long in these conditions. Now seeing these indicators overbought I ignored a very important indicator – the violation of the Bollinger band. When the upper Bollinger band was violated – I should have taken this as a strong indication of the trend continuation and if we see the charts now we see that the violations continue even now. All the same the lesson is that – do not oppose the trend – do not over anticipate the happening and do not read the charts with preconceived ideas as to where we are heading. In due course the charts tell were we they intend going.5 year chart

Where are we going now? We have also violated the 100 EMA that was attempted to be taken out in April end, May end, Aug and Sep. This time however we have crossed the 100 EMA more than any of the earlier attempts. The volumes continue to be marginally better than before. So? is the worst over – It may be for the time being atleast. We may correct some and then continue our journey upper – the pitfalls? elections! - markets do not like the uncertainty – and that is close at hands. okay before I finish with the 100 EMA – let us see the last 5 year charts. see the blue EMA line trailing across the chart – see the 100 EMA has remained well above the markets and this time we are above. If this is the continuation of the bear market then expect a sharp fall. see every time it has retracted it has done so with vengeance. if it does not – then a slow journey north wards can begin.

Before I come down to the charts – once again I think we should look at the Global cues. Asia is showing reluctance in carrying forward this rally – Nikkei was down 0.11% and Hang Seng up marginally 0.07% and Strait Times down 0.75%. Europe was all red inspite of opening flat. FTSE  was red 0.67%, Dax down 1.31% and CAC down 1.78%. US markets have overall surged forward 6% plus this week even after ending the week with a small correction. Dow was down 1.87%, Nasdaq down 2.63% and S&P 500 2.03%.Daily 27 Mar 09

The daily charts show the Bollinger band upper limit being violated by the candles. That has broadened the Bollinger bands also. You can see Put call ratioin this chart once again that the 100 EMA is now below the 5 EMA and that has been quite an achievement. Infact the other landmark has been the crossover of 50 EMA by the 20 EMA. These definitely signal a short term run up. Volumes were 142% the last 50 day average. ADX is giving strength to run up. MACD is bullish like hell. RSI is overbought and so is Slow Stochastic. Most important of all we have violated the upper band drawn and if we continue to sustain up then there woption painill be a fresh band to define. All in all? in immediate future – we are overbought and a correction is due. considering a few weeks period we are bullish and in mid term we are again bearish or so I think.

Seeing the Put Call ratio – the puts are nearly twice that of calls, the option pain is also showing interesting chart have a look below. Option writers are in trouble this time over as the call writing below the bottom most point (2900) and put writing above the 2900 mark is quite hefty. Going from the present reading of the option pain – we should have the session finishing around 2850 - 2950 level but this graph changes rapidly and calculation of monthly ending in beginning of the month by seeing option pain is not proven fact scientifically though it has happened in the past.  

38.2% Fibonacci retracement is at 2903 and 50% Fibonacci retracement is at 2840. So in the coming week we should see the markets touching atleast these points.

To end this session let us see the Pivot data for tomorrow.

R3 3191
R2 3163
R1 3135
Pivot 3095
S1 3067
S2 3027
S3 2999
Projected High Range 3115 to 3149
Projected Low Range 3096 to 3062
Fib Projected High 3141
Fib Projected Low 3036

Hope that all of you make a tons of money.


Wednesday, March 25, 2009

Not yet broken out of the trading range… update for 26 Mar 09

… and suddenly the air around me is filled with positive talk and that is all. The new mantra is – “there is no question of making fresh lows – infact we will now go on to make fresh highs” – come on guys – exactly 8 days back we were being told that fresh lows after we breach the Oct lows are very much on the market agenda – and what happened over these 8 days – am I missing something? Are you missing something – are turn around made over a period of 8 bloody days? Don’t fall for the trap at these levels. They trapped people to take positions when markets were hovering at 2600 levels and bombarding everyone with worst possible scenario and now there is a hype being build up at these levels to entice you to enter. I would suggest patience and there is no alternative to it really. Look at the chart below – we are well within the range that has been set and yet to break range Yes I do admit that the rules of the game are ever changing and look at the data of FIIs – Earlier FIIs were selling and DIIs were buying – then FIIs started buying and DIIs started selling – now I believe the DIIs have alos lost it all yet again – they are on the sidelines – not buying – not selling. Take today’s data for example: – FII s bought 348.65 Cr worth and DII s also bought a meagre 8.92 Cr worth. 3087 is the next target being looked at now.

Any way let us first see the global cues. Nikkei closed flat at 0.10% down in red, this was after spending the majority of the day in red only, Hang Seng ended with the maximum losses – down 2.07% and Strait Times down 0.86%. Europe has not closed as yet and it is trading mixed with positive bias perhaps. FTSE is down just 0.10%, DAX is up 1.22% and CAC is up 0.94%. In US there is a report of new home sales report that is second-worst but shows some rebound so markets are green DOW is up 2.02%, Nasdaq up 1.55% and S&P up 1.78%. It is not even mid session there as I have sat down earlier for updating the report and there is the entire day to go for knowing the final US closing figures.daily 24 Mar 09

As far as the charts are concerned – we had a good white candle today and we are trailing comfortably along the upper edge of the Bollinger band and that give strength to this momentum. 5 EMA is above the 20 and 50 EMA but the 20 EMA is yet to crossover the 50EMA. Volumes were slightly less than yesterday – 127% of the last 50 day average precisely. ADX is merrily swinging up giving strength to the bulls. MACD is bullish and RSI is at 66.46 – just 4 odd points below being declared overbought. TRIX is looking up and Slow Stochastic are spending another day in overbought condition. All in all we have entered a short term upswing but are now dangerously overbought so exercise extreme caution entering at these levels.

Tomorrow being expiry will rock the market both up and down and where it finally goes will be interesting to note. More interesting will be where we go next month with our elections around the corner and the crude looking upwards. I will now end with posting the Pivot data…

Let us see the Pivot data for tomorrow.

R3 3069 against 3120 yesterday
R2 3040
R1 3012
Pivot 2967 against 2856 yesterday
S1 2939
S2 2894
S3 2866 against 2792 yesterday
Projected High Range 2990 to 3026
Projected Low Range 2965 to 2929
Fib Projected High 3015
Fib Projected Low 2903

There is not too much change in put and call ratio so I am skipping posting that data. Best of luck with the trading.


Tuesday, March 24, 2009

May Day! May Day!… Gravestone Doji ahead! Update for 25 Mar 09

It would have been otherwise a fairly good day, after all the global cues all green again for some reason as we move across 3000 which would not sustain their and started to lose ground. The market ended up fairly bearish after a bout of profit booking. However the banks related to the ADR performance were up HDFC 2.33% ICICI bank up 2.44% and HDFC bank 6.31%. And can you beat it FIIs provisionally bought 501.76 Cr worth and the DIIs sold 192.99 worth.

The global markets are with Asia, closing all in green, Nikkei up 3.32%, Hang Seng up 3.44% and Straits Times after 2.54%. It was Europe that doubted this upswing, did not have the trust enough. So, after opening in green, it slipped down towards the flat line with FTSE ending 1.05% in red, Dax just 0.26% green and CAC 0.17% green. The US started its day, deep in red, but is showing signs of recovery. The US markets are asked. The midsession, and as of now, Dow is 0.27% down. NASDAQ, 1.12% in red and S&P 500 0.44% in red.Dail 24 Mar 09

The way the day started -- it could have been another day that could have ended with 100 points upswing. But that was not the way it was forced to be the markets thereafter started falling almost ending at the flat line. Ideally I would have defined this candlestick as a gravestone doji. Why I hold back classifying it as a perfect Doji is the fact that the closing on adjustment basis has been a few points worth of white body. In any case as of now we are trailing the upper Bollinger band. The five EMA has crossed over both the 20 Ema and the 50 Ema. Frankly, I would have given a few days worth of time more for this to happen. But then, like I always say the markets never asked me or asked for my opinion. The volumes have been high -- 134% of last 50 day average. The ADX has suddenly turned sides, and I do not speak with any doubt now that it is on the side of the bulls. The MA CD is bullish, with a good healthy bullish divergence. The RSI, though, looking bullish, has stopped its further climb. The slow stochastics are where they were yesterday and day before and day to day before – overbought. The TRIX is looking up.

Let us see the Pivot data for tomorrow.

R3 3120 against 3091 yesterday
R2 3059
R1 2998
Pivot 2856 against 2898 yesterday
S1 2895
S2 2853
S3 2792 against 2705 yesterday
Projected High Range 2977 to 3029
Projected Low Range 3005 to 2953
Fib Projected High 3045
Fib Projected Low 2885

The markets are surprising everyone so the next level that I would watch out for is 3081 that as per me is the upper band and I really do not expect a breakout above this level for the time being – but then who can tell. If we fail to reach that level and start a downward journey then we are going back below 2600 level for sure.

Take a look at the option data and you will do well to go on to compare the charts with that posted on 23 Mar 09.put ratio option pain


Monday, March 23, 2009

And the market continues to surge forward… Update for 24 Mar 09

AirShowDeolali This is one photograph that I clicked today during Surya Kiran’s display in Nashik today morning. I will be uploading some more photographs in the Army Aviation site later. It reminded my days of flying fixed wings during my basic training and during the Instructor’s course.

The markets have surged forward on boosters. It did not give a damn to being over bought or all the tons of indicators. In any case other than a handful of indicators that lead or the oscillators showing overbought condition – all the rest are trailing and have turned around to say – we are bullish. I am a man with my feet in two boats – as usually all analysts – or those who call themselves analysts are. Remember my past few posts and in particular the one written on 15 March – I quote “The highest expected is 3800 on Nifty – and please for GOD’s sake do not brush this away – it has  a substance. The second level that is being talked about is 3400 – and finally the last level that is being talked about is the 2900 level.” My! My! if that call of mine is getting so close to be true then what bugs me? What makes me think that I am on two boats? While yes it is true that we are beating one resistance after another to climb higher – I am very sure in my mind that there have to be times and levels where we stop/think/consolidate as we move on. My biggest worry stems from the fact that if we are still in bear market and this is indeed a bear rally then we are in for a trouble. Such bursts of euphoria generally tend to die down extremely harshly, especially if the rate of going up is 200-300 points on nifty every week. So though I did say that we can have a surprise rally in our hands – the present upswing can be a dangerous time to lay bets. All the same – the markets do know what they are doing and I am also sure I will tread this path with extreme caution. Jaggu in his blog says that the bull rally will start when we cross the 200 EMA. I agree with him – because I am sure that he is right. (you can reach his blog by clicking his name). I have included the 200 EMA line in the chart today and you can see where it trails – up at 3400 levels.Daily 23 Mar 09

The global cues continue to rock. Asia opened green and never looked back – closing at the highest levels for the day – Nikkei up 3.39%, Hang Seng up 4.78% and Strait Times up 4.21%. Europe too opened green and then tried to dip towards the zero line – but finally closing – FTSE up 3.17%, DAX up 2.81% and CAC up 2.79%. US sees green in the midsession of four and a half percentage point. It would be interesting to see where the US ends.

Our candles meanwhile – the candle today was exceptionally strong, tall and white one. It comes after four day of the markets deli dallying – and it has in one go violated the upper bollinger band. I had not expected it at all. The volumes are 101% of last 50 day average. ADX looks up and confuses me – so this is the second day I will not try to read into the ADX and keep it aside. RSI is bullish as hell and like I explained in my study of markets for last two years – it is trailing above average – and may not stay at these levels if we still call ourselves in a bear markets. Slow Stochastic is extremely overbought and the last time we saw it at these levels for so long was when we saw an attempt to rally in may and Dec last year. Incidentally the RSI was also at these levels and the ADX was showing greater strength at those two times.

Let us see the Pivot data for tomorrow.

R3 3091 against 2859 yesterday
R2 3040
R1 2989
Pivot 2898 against 2798 yesterday
S1 2847
S2 2756
S3 2705 against 2738 yesterday
Projected High Range 2944 to 3015
Projected Low Range 2883 to 2812
Fib Projected High 2987
Fib Projected Low 2768

Notice the R3 shoot up with the S3 virtually at the same level? May signal volatility in tomorrow’s session.

And Oh! before I pen off – thanks to 117 people who read my blog and article at yesterday. Thanks as not one had the courtesy to rate my blog except of course my father – now that I know where we stand in our attempt for a respectful, self meaning relationship…


Sunday, March 22, 2009

We have beaten the odds… Update for 23 Mar 09

We have beaten the records as far as the present – remaining in overbought zone for more than expected time, RSI has remained above 50 for more time than expected. This can mean two things only – one that we are out of the worst that we would see and second is that the markets may take baby steps to recovery. What would have I done personally at this point? well I would have sold Nifty. There is a strong possibility of the markets moving lower over next few sessions. Though we may eventually go up – but that immediate euphoria should end now and we should ideally come back to mother earth. I have been reading, seeing and observing… I feel that frankly the kind of growth that we saw in the last decade will not be reproduced in a hurry – may be not in my generations life time. The west including US will undergo a radical change in their thinking and the period with the kind of spending with rolling credit cards is over for now. Firstly – whether they like it or now – the generation will wake up to the fact that savings is necessary, living off rolling credit is not an option and on the other hand the banks will come under a lot of scrutiny with the govt meddling with their affairs. The dishing out of credit cards and loans by touts standing on the road side will not happen. The banks will study their clients more carefully. The real estate will not run away like it did for some time now. That having said about west and the US – here is the caveat – this will be forgotten by everyone over next few years and this same stunt of living off credit and making the same mistakes will be next done by us – the developing world – India and China specifically. It is the vested interest of the developed nation that will propel towards it. day 20 Mar 09

Got carried away – back to the immediate task at hand. Let me start with the global cues. The run-up that we saw for last few days is running out of steam but like I said we may be in short term upswing so till some time to come do buy during when the markets are oversold rather than selling blindly during upswings. Asia was mixed with Nikkei down 0.33%, Hang Seng down 2.26% and Strait Times up 0.76%.  The Europe started red and then oscillated red and green to finally end green. Green yes but less than a percent so. FTSE was up 0.68%, DAX up 0.63% and CAC up 0.51%. The US on other hand started flat/green and ended with losses of almost two percent. DOW was down 1.65%, Nasdaq down 1.77% and S&P down 1.98%.

The candle on Friday made a doji. Well during the days I did not update the blog – the markets crossed the immediate resistance near the middle of the Bollinger bands and headed higher towards the upper edge. Unfortunately the markets have lost steam just short of reaching the upper edge. Here we are overbought so we will take a breather – or go down. If we go towards the2650 mark now – then we are still in the lower bottom and lower tops – on the other hand if we spend some time around here and go higher than 2953 by about 50 points then we are into short/mid term recovery. So have patience the markets will tell their direction in due course of time. 5 EMA is above the 20 EMA and what a relief it has been. It is definitely trying to attempt a crossover of 50 EMA but I am not sure if that would happen in a hurry. Volumes dropped. I could not decipher what ADX wanted to tell me so I will leave it aside for some time. RSI is good and bullish but if we take this as bear rally then it is at its peak and might correct downwards. Slow Stochastic has been in overbought territory for some time now – expect it to come southwards – and it will carry the index alongwith. MACD as of now is bullish.

Let us see the Pivot data for tomorrow.

R3 2859
R2 2841
R1 2824
Pivot 2798
S1 2781
S2 2755
S3 2738
Projected High Range 2811 to 2833
Projected Low Range 2799 to 2777
Fib Projected High 2827
Fib Projected Low 2761

Okay before I pen off see the option data of nifty – there is a huge build up of puts and perhaps that is preventing us to go down?

Another small appeal before I pen off – there is a independent blog critics who have rated this blog 6 out of ten. The rating was without my asking for – now I have a request – if you have time please click the blogged icon on the left and write a review and  rate the blog – just for getting kicks sake -- cheers



Put call ratio 20 mar

Option pain 20 mar


Tuesday, March 17, 2009


I am traveling and will not be able to update my blog for two days. Hope markets show mercy on all of us...


Another day of good markets…. Update for 17 Mar 09

Before I start let me share the wonder of night with you. Well it is 1:30 AM and the moon is up. The weather is beautiful and romantic to say the least. The moonlight and smell of distant rain, the vast open space of the airport can make any one a poet at this time of the day. Standing out I relive my time as a college student – that running out of the house after midnight and roaming the streets of Chandigarh. The beauty of life, the beauty of GOD’s creating – WOW. I came back to the office and started off with writing this article – and as I pen down these words – I get distracted off and on to take a small stroll out. What am I doing up at this time? well I have a sortie and that is scheduled at 0300 hrs and I am waiting my turn. Another one and a half hours to go.daily 16 Mar 09

The markets were beautiful and the predicted third white candle is standing tall inspite of a negative predictions by many. Well frankly – given a chance I would have happily skipped today’s update as the indications now are so conflicting that to take a call for tomorrow may be more like flipping a coin than anything else. More of it when I come to the candles. The Global cues meanwhile are also giving signs of taking a breather. In Asia the Nikkei closed up 1.78%, Hang Seng up 3.6% and Strait Times up 0.56%. The Europe too kept the steam and spirits up by FTSE clocking 2.94% up, DAX 2.3% up and CAC 3.18% up in green. It is US that has shown the signs of the upswing tapering off – DOW opened flat – immediately starting climbing and continued its rally to impressive almost 200 point up then after the mid session came tumbling down to close 0.10% in red. Nasdaq too closed 1.92% in red and S&P closed 0.35% in red. It would be interesting to see the opening of Asia in few hours as it is likely to dictate where we open and how we behave.

As far as the candle are concerned – ideally three strong standing white candles do signal the continuation of the uptrend. This uptrend has actually already taken us above the mid way of Bollinger bands. The Bolliner Bands have started contracting and if we go on to the upper edge of the Bollinger bands then we hit somewhere just short of the 2900 mark – that is if all go well. The volumes were ditto of day before. on ADX DI+ has gone above the DI- but the red flag is the DX line turning down. If it continues this way then there is a danger of negative divergence building up. 5 EMA is just short of crossing over 20 EMA and I am keeping my fingers crossed. IF we do cross this then definitely the 5 EMA will attempt kissing the 50 EMA also. MACD is showing a positive divergence. RSI looks up. The %K line of Slow Stochastics (for the analysts)/red line for others has already reached the overbought zone. As the medium term trend is still down – we may see the markets green only for one odd day more before the trend reverses or the market consolidates. The TRIX has started to look up and that is a good development to say the least.

As far as the markets trending today was concerned – let us see the charts.Picture1 the day started somewhere in middle of Pivot and the R1. Markets opened flat with Negative bias, dipped down once where in everyone would have held their breath and then recovered going on to cross the R1 and closing comfortably above it. The projected high range was 2722 to 2777 and you can see the opening and closing – the opening was within 4-6 points and closing bang on – 2777.

The levels for tomorrow are: -

R3 2861 as compared to 2718 yesterday
R2 2833
R1 2805
Pivot 2753 as compared to 2612 yesterday
S1 2725
S2 2673
S3 2645 as compared to 2506 yesterday
Projected High Range 2779 to 2819
Projected Low Range 2743 to 2703
Fib Projected High 2802
Fib Projected Low 2679

Its time for me to go for flying and I will pen off now. and before I go here are the options data. See the build up of puts…

Put-call ratio Option Pain


Sunday, March 15, 2009

So we closed at the best levels… Update for 16 Mar 09

Yes – as we had expected and I had written about in the last update on my blog – we did close at the highest point for the day. Yes there was a strong apprehension in my mind that being a Friday we may have a closing that might pull us down – but like I had expected some time ago – that the recovery – whenever it comes will be forceful. How long or how high is open to speculation. The highest expected is 3800 on Nifty – and please for GOD’s sake do not brush this away – it has  a substance. The second level that is being talked about is 3400 – and finally the last level that is being talked about is the 2900 level. Whichever level we go too – remember the level yet to be crossed will most likely to be a resistance and once crossed – a support. Daily 13 mar 09

Let us now move away from the dream world and see the near future. On the Global cues – Asia celebrated the continued rise of US indices and Nikkei closed 5.15% up, Hang Seng up 4.37% and Strait Times up 5.62%. Europe opened well and tried to test higher highs – but was some how not confident – finally ending mixed to flat with a upward bias. FTSE was 1.12% up, DAX 0.07% in red and CAC up 0.42%. US too was indecisive really – opening flat, going green and dropping red and finally ending green. DOW closed up 0.75%, Nasdaq up 0.38% and S&P up 0.77%. The markets in US have rallied on an average 10% and that is a great bloody thing. The markets had turned oversold.

Coming to the candles, the candle that was formed on Friday was white and actually beautiful. It has been so long since we have seen a candle this beautiful.Another white candle on Monday can change the short term outlook – but the point is IF we close green. We are still not the middle of the Bollinger bands and that is the reason I am confident that we have a chance with this kind of momentum. 2765 is the next resistance that I expect to be touched but not breached.That level also corresponds to somewhere the middle of Bollinger bands – and that is where ideally we should take a breather – a couple of days. 5 EMA is trying to look up and cross the 20 EMA and that is good news. Volumes were – let us say average. ADX down swing has lost strength. But mind you it still favours the bears. The MACD divergence has reduced significantly. RSI – going by what I explained in the presentation day before – will give us a day or so of upswing. It looks good at the moment. Slow Stochastic are oscillating in favour of the bulls. TRIX is flat – that is good in the sense that it is an leading indicator and gives us some relief.

Let us lee the pivot levels for tomorrow ;-)

R3 2836 as compared to 2718 on Friday 
R2 2797
R1 2758
Pivot 2687 as compared to 2612 on Friday
S1 2648
S2 2577
S3 2538 as compared to 2506 on Friday
Projected High Range 2722 to 2777
Projected Low Range 2674 to 2619
Fib Projected High 2755
Fib Projected Low 2586

I wish all the best for the trading on Monday and am sure that those who had kept the longs will benefit. Hedge your longs and do not throw them away – you just don’t know how long or how much up this swing will take us.

I have lately started relying on the options data also so here we go…

put call ratio

Option Pain


Friday, March 13, 2009

Do we belong here in dumps? Update for 13 Mar 09

May be  and may be not. It is a matter of perception really. I feel that we do not belong here at this moment atleast but then that is all to it and I have been contradicted everyone everywhere. All well. We are function of a marketplace that is regulated by greed and fear. It was greed a year back and it is fear now. All the same the same question haunts me over and over again – do we belong here with US and Europe. Actually we Indians are stupidly proudy people. Nations win hundreds of medals in Olympics and after we win a single we are ready to pee on anyone’s head. We are the economic tomorrow but as of now there are dozens of nations that can dwarf our economy by their sectoral budget. And that is where we are linked to the world by consuming some produced elsewhere and producing some that has to be consumed somewhere else. The markets everywhere have become jittery and to a large extent connected. Why we do are not doing well is because there remains an substantial exposure by FIIs in our markets. If we were to defy the world and start going up then as the water flows from higher level to lower levels the money will flow out. It is not that now it is not flowing out – it would then flow out at un-naturally high rates from here.

We made a white candle today and once again we have got caught up in the last three candle’s body. If this white candle is not good then what will I call good? well a close above 2646 on nifty and ultimately the next resistance that is dictated by a strong candle – 2765. If we do manage above these levels then there are chances of us rallying to the next candlestick resistance of 2854 and 2948. Am I seeing the forbidden? Well not really – I feel that good global cues will take us to atleast these levels – and they unfortunately will satisfy the bear market golden rule of lower tops and lower bottoms. So Bears fear not – even at around 2900 levels we are trapped in bear hug.

Coming one to the Global cues. Asia – except us ofcourse had the fear factor in their minds and it seemed that they are not yet ready to believe in the US rally as of now. Nikkei ended 2.41% in red and Strait Times 0.80% in red. Hang Seng showed some resilience by opening green and recovering from deep red nearing close. Europe opened red and then went deeper down – but as the US recovered so did the European markets and finally ended – FTSE up 0.49%, Dax up 1.08% and CAC up 0.75%. daily 12 Mar 09Us is in its mid session – as always when I am writing the blog – but the good news is that Dow is up 2.62%, Nasdaq up 2.53% and S&P up 2.96%. Believe me it is quite an achievement to be at these levels – when they have been rallying for last three-four days. The news for this upswing – I guess everyone expected the ratings of GE’s financial arm to be cut – chopped and buried and the rating cut did happen but was not as bad as expected. “Andhe mein Kana Raja”

On the candles – the pure candle aspect I have already discussed. The volumes day before on Mar 06th were little less than average, and it was a white candle – the volumes with the next black candles were just 3/4th of that white candle and once again – with a white candle today the volumes have improved. So far so good. We have moved away from the bottom of the Bollinger bands and the middle is above 2700 – so that is the level that we should definitely see. ADX has not really showing loosing strength of bears but have seemed to pleatue off. The MACD divergence has definitely reduced. RSI seems to be showing some strength. TRIX unfortunately still looks down. So that is all – no wait – the Slow Stochastics – they are out of the oversold zone but can give us two – three day of run up till they reach the overbought zone.

So – let us lee the pivot levels for tomorrow ;-)

R3 2718 as compared to 2687 yesterday
R2 2684
R1 2650
Pivot 2612 as compared to 2583 yesterday
S1 2578
S2 2540
S3 2506 as compared to 2479 yesterday
Projected High Range 2631 to 2667
Projected Low Range 2624 to 2588
Fib Projected High 2665
Fib Projected Low 2554

Best of luck for tomorrow – may we have another good run up tomorrow. And if you have time to spare see the flash presentation below and leave some comments.


Thursday, March 12, 2009

Presentation on Technical Analysis


Have we seen the bottom? Update for 12 Mar 09

Before I start – I had prepared a ride up for Monday but could not upload it as the net was down. And mind you am not talking about a singular connection -- I believe in redundancy, I have broadband at home, broadband in office, a data card and GPRS on my mobile. It has to be something that none of them worked, or I was not destined to write for the day. Leave that aside – what a waste we had because of the two holidays. For the first time I was wishing – Wishing that markets were open or we did not have these holidays. What a day of trade we could have had, seen the reaction in US and in Asia? On an average the indices were up 5%. The rally has continued to some extent but that trust which we could have got on Tuesday or Wednesday is all finished. The Asia had continued the run-up seen in US and the  closing was – Nikkei up 4.55%, Hang Seng up 2.02% and the Straits Times up 1.33%. The Europe had its doubts whether US can sustain this upswing and closed -- FTSE down 0.55%, DAX up 0.72% and CAC up 0.17%. The US did make a fair attempt to hold on to the gains it had made day before but by the mid-session trading - DOW is down 0.35%, NASDAQ is up near 4.72 points - 0.36% and S&P 500 is 0.09% in red. There is still a lot of time to go and the markets can definitely closed better but will they? I will bet on their closing green. The times in which we are living now -- the profit booking comes so naturally, and not too expected after more than 5% jump in indices and I understand that my asking the US to close green is actually asking for too much – but I still feel that US will end in green.Daily 09 Mar 09

We had many debates on the future of Indian economy in next few months to come and at least on the idiot box everyone was positive that it is just a matter of few months that will be up and running. Though I'm inclined to agree, the short-term indicators do not think so – they point downwards only.

The candle last friday was a white one and could have been taken for a bullish harami – but then we have a black candle on monday. Well since the black candle did not meaningfully break below the black candle of 5th Mar – I will not give it points to be a bear signal. I would rather go with the bullish harami. The ADX on the other hand still give strength to the downswing only. The MACD is too bearish and the RSI is looking down – but very near to be classified as oversold. The Slow Stochastic is oversold – one and secondly the red line is above blue line – that can give us a day or two worth of upswing. The TRIX continues to look down. The 5 EMA is far below the 20 EMA and 20 EMA is far below the 50 EMA so there is no support there.

At the end of it – I feel our upswing will be because of the rally we missed when the world was fully green. Secondly the US may extend its gains somewhat and thirdly we have indicators in oversold territory. So brace up boys and girls – even if it will be for a day.

So – let us lee the pivot levels for tomorrow ;-)

R3 2687
R2 2649
R1 2611
Pivot 2583
S1 2545
S2 2517
S3 2479
Projected High Range 2597 to 2630
Projected Low Range 2612 to 2579
Fib Projected High 2638
Fib Projected Low 2537

Best of luck for tomorrow.


Wednesday, March 11, 2009

Happy Holi !

May Lord make you forget all your worries for today and May you have a Holi blast.

The way things are – we may see a few good days.




Friday, March 6, 2009

Is it well Or a Ravine? Update for 6 March 2009

I have been having a busy schedule in flying and that has kept me away from monitoring the markets for the last few days. Have I missed anything -- not really. Being a true Indian my idea about investments remains to be buying and keeping an asset in my hand. By nature like so many others the ultimate meaning for me to invest in the stock market is to buy, and not to sell. So as the market falls and the technical indicators point only towards sell, the market stop having any meaning for me. I will wait patiently till indicators go oversold and then I will take my pick. That by no means will be the end of woes but for once I would have scooped the stocks of my choice at the very bottom. There will be the times when we might test these bottoms again or there may not be such a time all the same I will buy in a short time to come. The second problem that comes to my mind is the choice of sectors. I would definitely spend some time over the next weekend and see what I desire. My choice may be wrong but I would rather live with that than to take the pick which is being given by the so-called market analysts. The yesterday Indian banking was the sector, today the same people are saying that it is the weakest sector one can ever think of in the present conditions.daily 04 Mar 09

Asia was not very bad when it started in the morning. There was a fair sprinkling of green in all the markets. We opened -- spent a few moments in the green and then fell to red never to look up again. Nikkei closed to the strongest up 1.95%, Hang Seng closed down 0.97% in red and the Straits Times closed down 1.66% in red. Europe had one of the worst days today. FTSE closed down 3.18% in red, Dax down 5.02% in red and CAC down 3.96% in red. US had opened in red and as of now shows no sign whatsoever of even looking up. It is the midsession now. DOW down 3.14%, NASDAQ down 2.92% and S&P 500 down 3.57%. If these are the global cues we are to open tomorrow with then I'm afraid the technicals will not matter too much in any case.

As far as the candles are concerned today was a huge black candle. It in the past the entire body of the white candle yesterday, so it can be technically taken as the third candle of ‘ three black crow pattern’. The Bollinger bands are expanding giving way for the fall to continue. 5 EMA is below the 20 E MA which is trailing well below the 50 EMA. Nothing bullish at all. The volumes were wee bit more than yesterday. The ADX is showing good strength to this downfall. On MACD the divergences on the negative side has increased. RSI is the Bearish. The only solace is that slow Stochastic has both red and blue line in the oversold territory. Mind you it has the capacity to stay here for another one to two sessions. So be prepared off another day or so of sell-off before we have any sort of relief.

Picture1Let us see how the day fared. The markets opened at the pivot levels – dropped on opening, tried to recover but could not. They did take support of the Support 1 and tried once again to recover but once again were in trouble as they could not even sustain S1. They dropped down to S2 and thankfully S2 held. It was here around these levels that the markets finished. See how supports work in form the part in this otherwise seemingly random happenings?

So – let us lee the pivot levels for tomorrow ;-)

R3 2762 was 2765 yesterday 
R2 2700
R1 2638
Pivot 2601 was 2640 yesterday
S1 2539
S2 2502
S3 2440 was 2515 yesterday
Projected High Range 2619 to 2669
Projected Low Range 2657 to 2607
Fib Projected High 2689
Fib Projected Low 2537

Two more charts before I pen off. One is the Put call ratio in Nifty and second is the option pain for this month.put call ratio

Option pain


Thursday, March 5, 2009

Update 05 Mar 09

I will rush through the update. Firstly China has taken steps to wake up the economy and RBI has taken steps here by cutting reppo to 5% and reverse repo to 3.5%.
On candle sticks the white candle yesterday tried to pierce the black candle of day before and was exactly in the middle of the black candle. That is a meek attempt at challenging the bears and it has to be substantiated today to reach anywhere.

Good news. We are very close to getting oversold. RSI has looked up a wee bit.

Rest all indicators are as bad as yesterday.


Wednesday, March 4, 2009

Saint and the three wishes…. Update for 04 Mar 09

I just finished watching a movie on the idiot box – Saint. That is the best thing to do I believe in these times. There in that fantastically paced movie the Saint makes three wishes for miracles. I too have my three wishes for the miracles also. The first – please improve the markets, second please improve the markets and the third please improve the markets. Am I asking for too much? In the present situation – perhaps. The Auto sales, home sales, manufacturing data and ofcourse the topping – Financial sector is bringing out one bad news after the other in US. The FIIs have provisionally sold 741 Cr worth and the DIIs lapped up 523 Cr worth. I still believe that we will live another day to find the bottom but the rate at which US is going down is worse. Their rating agencies are scoring off one nation/one investment idea after another – where do they think they will put their money in? Any way we have our own problems and they have their own. let us deal with our problems and they with theirs. Frankly we are neither a communist state nor a fanatically economy driven capitalist state. We are still somewhere in between. The communism has proved to be a failure – the capitalism is proving to be a failure so. I feel this middle path gives us the best of both the worlds. I have on a number of occasions in the past said categorically – if we were totally in communist grip – we have already seen the taste of the Babu Raj, on the other hand pure capitalism without checks in place will sell your mother-in-law to you at a price point where keeping or throwing her away are both out of question. Ask those who have stuck deals in property at the peak price points a few months back.Daily 03 Mar 09

Sorry to waste everyone time on this bull. It will never come to an end. There will always be something worse. The tumble down is just not stopping at the moment. After a red Asia the Europe too closed red – the only solace that it was that losses were mixed ranging from –3.14% FTSE, Dax down 0.52% and CAC down 1.04%. This is after most of the indices oscillating green off and on. US too started green – went red – green again and finally ended red but losses were somewhat modest. Dow down 0.55%, Nasdaq down 0.14% and S&P down 0.64%.Picture1

The Nifty showed a second black candle and if we have another black candle today then it completes the third black candle – the “Three Black Crows” The future is not good if it is so – so let us pray. The volumes were below average. ADX is strengthening the downside trend. MACD negative divergence is increasing. RSI shows weakness – it is bearish. Slow stochastic  red line is below blue line and – no it is not oversold – so I do not see hope on that context.

The markets yesterday was around the Pivot line only but during the last hour the markets could not hold the pivot broke below with momentum actually breaking the S 1 also. Not good is the only thing that I can say.

The pivot levels for tomorrow are as under…

R3 2765 was 2869 yesterday 
R2 2717
R1 2669
Pivot 2640 was 2699 yesterday
S1 2592
S2 2563
S3 2515 was 2529 yesterday
Projected High Range 2655 to 2693
Projected Low Range 2684 to 2644
Fib Projected High 2708
Fib Projected Low 2590

icici bank 03 MarI am also attaching the chart for ICICI bank alongwith for those who care. It seems oversold

This is all that I have for today. Best of luck to everyone.


Monday, March 2, 2009

Am I in a denial mode? Update for 03 Mar 09

Yes of course – bloody market is falling as hell and I am writing and willing it to keep going up. Did I get it so wrong? When and where do we go from here? Not too much lower – is my belief as always. I am perhaps hardwired to remain in a perpetual state of bullishness – not good at the moment but see we were holding the supports – weren't we? Imagine all indicators shouting Bear Bear and I take one bullish and I say bulls! bulls!

Now I have another bloody problem in my hand – see the markets have dropped and are now at another strong support level – 2660. What do I say? take a plunge by saying and crying that we go down and drop? Or we go up to some saner levels? Okay I will try and refrain till we see some charts and whatever I do see everyday…

The markets are simply blood red. If anyone spots green please do pm me – I am dying to get my eyes see green. Asia was – well red. Nikkei down 3.81%, Hang Seng down 3.86% and Strait Times down 3.85%. I assume you all know where we (our stalwarts ended). Europe is still blinking – red I meant. Though the markets have still not ended – I do not see any future for all of them. FTSE down 3.95%, DAX down 2.59% and CAC down 3.1%. We will see where they finally end – it will not be green I can assure you. US is breaking a lot of low records. Dow has broken the 7000 mark and is presently at 2.43% in red and looking down. Nasdaq is down 1.92% and S&P is down 2.59%. I refuse to take a call on where the markets will end. Daily 02 Mar 09

Before I see the candles – the election dates have been announced and if we do not have some package now –there never will be till after the elections. The candle today was long and black. Only saving grace – stopped at 2660 low of Jan 23rd. Do we see it as a test of that low and get some support – or do we continue our journey downwards - only time will tell. The EMAs – 5 lower than 20, 20 lower than 50. Nothing seems to have changed. We are now hugging the lower of the Bollinger bands. Volumes are low, lower than yesterday – 69% of 50 Day average. ADX is showing that the fall today / or the negativity is gathering strength. MACD negative divergence has increased. RSI is bearish and Slow Stochastic has the red line going below the blue line. Bearish – so here I go today – nothing at all to support bullish theory for today.


See the day today? we started off below the S1 and then traded steadily above and around the 2700 levels. The selling that came around the last half an hour or so dropped the markets viciously below the 2660 level. It corrected – and helped with that adjustment at closing that helped to get the closing figure above the S2.

The S1 is at top of the chart at 2718 level. Still some signs of sanity that supports and resistances work?

The pivot levels for tomorrow are as under…

R3 2869 was 2866 yesterday 
R2 2804
R1 2739
Pivot 2699 was 2752 yesterday
S1 2634
S2 2594
S3 2529 was 2639 yesterday
Projected High Range 2719 to 2771
Projected Low Range 2756 to 2704
Fib Projected High 2792
Fib Projected Low 2630

Please do take a pick as to where we are heading.

Okay I posted the charts of the Call build up in ICICI bank. Infact I kept running the software to see the options build up and in so many of the stocks (let us say 90% that I saw) there were only calls building up. I searched for an answer that was partially answered by Jaggu and partially by Wiki. Unfortunately I lost the page where I read it so I am conveying what I remember from my reading in the morning. To start with Wiki said that it is historically proven that 90% of  the people who buy options are losers and the winners are generally the option writers. Now if  that be so then the assumption is that the chances are extremely bright that the call writers are smarter. So when there is hope among the option (call/put) buyer for the market to take a particular direction – the market moves generally in the opposite direction. It means that I was wrong in assuming that since there are only call being written and traded in ICICI bank means that there is support at that level – infact it is exactly opposite of that and it was proved the way the ICICI bank fell by the closing. Well I learnt an important lesson today. It will prove handy in the times to come. you got it? Jaggu also said the same thing but in a more civilised manner really. Hell of a lesson for one day!

Best of luck to all for tomorrow’s trade. And before I pen off the results of the vote I conducted are as under: -

Where do we go from here?

Up- to 3300 levels – 2/35 vote

Remain more or less here only  - 2/35

Down to 2500 levels – 6/35

Our Graves – 25/35

Okay another indication for anyone who cares – extreme pessimism is a sign of bottoming out. Ha! atleast one positive sentence in the entire write up.


The Whole Damn Sham ... A Must read article by Jason Kelly

February 27, 2009
As governments around the world mortgage the future to save the financial system, do you ever wonder what's so worth saving? If a bunch of deadbeats failing to pay their mortgages in the U.S. takes down the global economy, I say we need a new system.

What a fiction the whole thing turned out to be! All those slogans, all those logos, all those buildings, and all those brains that could have been put to something useful were instead wasted on financial engineering. At its most basic, banking is not complicated. You lend money to people who show a reasonable ability to pay it back. They benefit because they end up with something more valuable than the sum of principal and payments on the loan; the bank benefits by getting interest.

Banks did it well for a long time. Then, in the mad rush for more, more, more profits in any way possible, loans were packaged and repackaged and distributed around the planet until nobody knew who owed what to whom. When the payment didn't come through, the whole line collapsed. Poof! Just like that.

And we're spending trillions to get back to it!

Those who never mismanaged their finances are doing fine these days. With no debt on credit cards, no outsize debt on property, and no auto loans, it's hard to get in hot water. Unreasonable? Not to me, not to many others who've emailed me, and not to our grandparents. Read any book on financial planning or pay attention to literature and you'll run across the evils of debt. From my stock book:
Debt and death sound a lot alike, and that's no coincidence. You don't even need a finance book to arrive at this conclusion, all you need is a good literature class. Emerson wrote in May-Day and Other Pieces, "Wilt thou seal up the avenues of ill? Pay every debt, as if God wrote the bill."
Whenever I'm in Los Angeles and see some shaved-headed punk driving a sparkly new SUV that cost more than $50,000, I always think, "Yeah, that's paid for." Look at any busy road and ask how many of the cars are paid off. Not many.

Most people's financial lives are a complete mess, and there's no excuse. I'm tired of hearing that financial planning is not taught in school, that our parents didn't teach us, that it's too complicated. Those of us who managed to discover the ills of debt went to those same schools, grew up with imperfect parents, and were able to grasp the oh-so-complicated idea that paying 18% interest on a pair of sneakers isn't good math.

Financially stupid people are America's most toxic asset.

It wasn't just the bankers, after all. The people offering senseless loans had to find people financially senseless enough to sign on to them. Did you fall for a loan you couldn't repay? I didn't. Are you making payments on a depreciating automobile? I'm not. Have you ever borrowed money for anything that didn't end up being worth more than what you borrowed? I haven't. Have you ever carried a balance on a credit card? I haven't.

After voluntarily shackling themselves to a life of debt, people complain about their lack of financial freedom. "I hate my job, but I need the money," they say. "I can't get ahead because my house payment and car payment are so high that I have to pay for everything else on credit cards, and the tab just keeps climbing."

Yet, some of us were able to figure it out. The people angriest right now are not the poor or the rich, but the ones from any class who bettered their situation through their own hard work and sacrifice.

I am not from a rich family. When I attended the University of Colorado, I paid my own way. I was surrounded by rich kids from California with credit cards from their parents. The bills went straight to California so the kids never even saw them. They went skiing on weekends; I went to my part-time job delivering sandwiches. They partied; I studied. They made fun of my beat-up old car; I was just glad to keep it running on meager wages.

When I was a senior, I applied to work at IBM. The company invited me to its Silicon Valley Laboratory in San Jose, California. I told the human resources manager that I didn't think I could afford to get there, and asked if I could interview instead at the local Boulder plant. There was a pause, then he said that IBM would pay for my transportation. I thanked him profusely, bought the best suit I could afford, and flew to the Silicon Valley Laboratory for a test and series of interviews, and IBM offered me a job as a technical writer. I was elated. I will always have a special place in my heart for Big Blue because of that break. It was the only company that believed in me. I never knew the meaning of the term "competing offer."

When I graduated, I did so with student loan debt and it drove me crazy. I barely made the trip to California in that beat-up car of mine, found the cheapest apartment near the lab, and lived the life of a pauper until those student loans were paid in full. I clamored to a zero balance within a year, driving that same old car the whole time. I parked it on the far edge of the IBM lot, in the shadows of trees.

Once I got to zero, I kept the spartan lifestyle going and saved a nest egg to start investing. It hit $1,000 then $5,000 then $20,000 and in less than four years of aggressive saving and the strong stock market of the 1990s, it topped $100,000. Life on top of a $100,000 stash of cash is very different than life at -$50,000 or -$10,000 or even $0. There's freedom. Freedom to quit things, freedom to start things, freedom to go places, freedom to meet people.

I rewarded myself with a -- no, not a new car -- a newer used car. With all due respect, I bid adieu to IBM because I knew within two weeks of my arrival that corporate life was not for me when a senior writer said, "If you want to know where you'll be in ten years, just look at someone who's been here ten years longer than you." I did so, and promised myself I'd never make it past five.

IBM was the only "real" job I've ever had. I started my own company after leaving, and never looked back. In running one's own company, financial management becomes even more important. My company has never spent one day in debt. All new ventures are financed with positive cash flow. All mistakes I pay for myself. All profits I use to grow and try new things. It's not credit cards that make it possible, it's not a bank, it's smart financial management.

So, when all those former classmates with their credit cards and their children with their credit cards reward themselves for nothing by getting in hock up to their ears, I have little sympathy. I don't think they deserve to stay in their homes just because they're in them. I think they deserve to stay where they can afford to stay. If they want to stay somewhere nicer, they should work harder or save more carefully. There are lots of used cars to drive. There are lots of cheap places to buy clothing. There are plenty of ways to have fun that don't involve shopping.

Which brings us to the whole damn sham. Rather than seeing this as a chance to encourage a more responsible lifestyle, the government is using my tax dollars and yours to get the credit cards sliding again, the oil flowing again, and people in hock on new cars again. Consumption, consumption, consumption is the rallying cry of business, and the business of America is business, so the government is on it.

For what, after all, is the stimulus package attempting to stimulate? A restrained life of living within our means? No. It's stimulating consumption. All the big talk of get the credit markets moving again, banks healthy again, balance sheets strong again comes down to this: we need little Susie to get a loan for a really cool new car she can live without, drive it to a shopping mall to buy crap she doesn't need with a credit card she shouldn't have, and return to a home mortgaged at a price higher than she can afford. That way, when she can't keep up with all of it, she'll have to fall back on other credit cards, and bank balance sheets will be strong again. Great!

The system was shot to begin with, so let's let it fall to pieces, let everybody who deserves to be broke go broke, let the dire collapse the government keeps warning about take place before our very eyes...and then start fresh with lessons learned.

Nothing will pound financial sense into somebody better than going broke. So let the pounding begin.

The link to Kelly's Page Click Me


Sunday, March 1, 2009

Stage set for another topsy turvy week… Update for 02 Mar 09

Okay – we had a major bad news last week where the GDP growth showed a sharp drop. Was it expected to be below 6%? Frankly I had not expected it and it came as a shocker. Did the market accept it? well the way the market showed resilience I might not be able to place a bet but somehow the markets seemed to show that they had catered for such a contraction otherwise the fall would have been much more severe. – That is what I feel. 5.3% growth is below the expectation and it should shake me up from the denial mode that we are well off with the world in recession. What still holds out is the only fact that this is still growth and there are sectors that were expected to be weak and have survived the so called onslaught of recession. Another thing that comes to my mind is that the DII’s have been constant buyers at these levels. Are they propping up the markets to keep it stable on someone’s dictum awaiting elections or they are buying because they see these as sustainable levels? A difficult question really with no simple answer but the way I see is is that the economic compulsions have become too big to be dancing on someone else’s tune – so I feel that they see these levels as fairly good entry levels. The second thing that I notice is that the buying is kept a little bit below the FIIs sale figures – who laps up the balance? We the retail? I would be grateful if someone could do some number crunching and share the thoughts. Leave that aside for some time and let us see the fireworks created by the news about the RPL and reliance merger. This will remain the eye of the storm for some time till the dust settles down but give it a due thought. This alone if taken in the correct light – can propel the markets up for some time. Next is the inflation numbers that are coming out as per the expectations of the govt. Lastly there is another controversy of sorts created by the govt claiming that the growth for 2009 should be 7% with the Moody’s putting it to below 5% for the first half of 2009. I side with the govt because of the only reason because our economists are actually world class and whatever their reasoning – should hold in good stead. In any case I have starting taking these US rating agencies with a pinch of salt. Their compulsions are too many and they too are in deep trouble themselves – let aside deciding the ratings for others.

Daily 27 Mar 09Asia was mixed with Nikkei up 1.48%, Hang Seng down 0.65% and Strait Times down 1.4%. Europe was bad – traded in red through out – went down deeper red but recovered somewhat near the close but still way down. FTSE was 2.18%, DAX down 2.51% and CAC down 1.54%. US tried to stage a comeback after opening red but could not cross and trade above the green line ending in red. Dow was down 1.66%, Nasdaq down 0.98% and S&P down 2.36%.Picture1

As far as the candles are concerned – we had a black candle. The pattern is that of a hammer – but has appeared a few days too late to give a bullish reversal. All the same there was a tussle between the bulls and the bears. The body of the hammer is black but I still feel that the bulls won this round and that they will have an upper hand tomorrow when we open. The 5 EMA line is inching confidently towards the 20 EMA and 20 EMA and 50 EMA are so far running parallel to each other. We are definately not trailing the lower Bollinger band at the moment so There is a bright chance that we will go on to touch the upper edge of the Bollinger band at the 2950/3000 levels. The MACD is still negative and bearish but the divergence has reduced. Slow Stochastic red line is fast approaching the overbought zone – minimum two days worth of uprun we can have now. RSI is bearish.On ADX the bears seems to be loosing grip – but the indication per se is still bearish. TRIX is mildly bearish – draw whatever conclusions you want to. Overall though we have all bearish indications – the bears seems to have lost the momentum they would have liked to break to lower levels. See the next chart We are taking support at the lower trend line drawn and should now act as a good support. The volumes are still low – 79% of last 50 day average to be precise.

Let us see the Pivot levels.

R3 2866 was 2863 on Friday 
R2 2831
R1 2797
Pivot 2752 was 2771 on Friday
S1 2718
S2 2673
S3 2639 was 2679 on Friday
Projected High Range 2775 to 2814
Projected Low Range 2759 to 2720
Fib Projected High 2808
Fib Projected Low 2686

I feel that we should see atleast the R1 to R2 levels once in the trading session atleast. There are some stimulus schemes in GOvt’s mind or so it seems that may be unveiled this coming week.

Before I end I am inserting the charts of ICICI bank Picture1that to my mind has touched the support at the lower levels multiple times and sustained it. When I try to study the options the graphs of options pain and the call / put ratio is as depicted by the following charts. As we go up the calls should reduce and the puts should start building up. But as of now there seems to be a build up of calls only – so should we see the stock going up? I would love if I could have your views on this as I am new to options and still in the studying phase only.

Also I just saw Jaggu’s Blog and he has some good explanation of where we go from here. Do take a look on his blog too. The link is here – Click Me