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.