Friday, July 31, 2009

Update for 31 Jul 09…

image We have ended the July expiry and will be ending the month too today and the undercurrent against a majority of expectations remains to be buyout and going forward leaving scores of bears on the wrong side. Yesterdays run up just short of the day end did more than just giving a white candle – it showed that the bulls still rule the roost so as to say. image However if the FIIs and the DII activity data (provisional) is to be believed then one can see that the DIIs for the past few days are as convinced as many others that the time is ripe for a correction for whatever it is worth. With each passing day it has become more and more difficult to take positions as the trend has reached a time where it can break out either side – bullish or bearish – but in the same breath let me also add that there is nothing that indicates that the bullish run up is over so far. With the expiry behind us – the markets will take a stance that will show out in next few days. Once the trend is certain then we will take positions. But till then it is always good to see others – making money perhaps some time and loosing other times.

The Global cues are rocking to say the least. Asia yesterday was green with Nikkei 0.51%, Hang Seng up 0.49% and Strait Times up 1.23%. Europe opened flat to negative and then started climbing – never to look back. It finally ended at extremely good levels. The reasons were two fold. Firstly the results have been good there for past few days and secondly the US played its part. FTSE was up 1.85%, DAX up 1.71% and CAC was up 2.08%. US too opened green and then went on to touch the best levels for the year before sobering down a bit before closing. Green neverthless. Dow was up 0.92%, Nasdaq up 0.84% and S&P up 1.19%. The reason for this performance was better than expected earnings, lack of negative head lines. Ofcourse the Asia is likely to open green after all this. Nikkei has started the session 1.07% up.

Option pain 30 jul 09 put call ratio 30 Jul 09 The technicals that I follow are like this… Candle is white and the highest day before was 4574 and the highest yesterday was 4571. So practically the top has not been taken out. The body of the candle however engulfs the day before’s black candle and that by itself is bullish. We are still nowhere the top edge of the Bollinger bands and it may be a while reaching there if at all. 3 EMA is above the 15 EMA and ideally according to this would be to hold longs. The volumes were 97% of last 50 day average. Now here is a surprise. ADX line has gone down instead of going up. The +DI has also dropped down. ADX is bullish but loosing strength all the same. ADX is at 17 and that is extremely trendless. The MACD is bullish but the divergence has reduced a bit. RSI is bullish and rocking. Slow Stochastic shows overbought and bearish so that is the lone indicator that I follow generating a sell.

icicibank put call 30 Jul 09 reliance put call 30 Jul 09 Here is the new months option data to start with. For the month of Aug the call build up of 4700 has the maximum open interest. (29.5 million), Then we have build up in 4000 puts, 4500 puts and 4400 puts (21.7, 20.9 and 18.9 million respectively) Finally we have an open interest of 18.7 million in 4500 call. Over all as seen from the put call ratio chart posted above the put build up is slightly more and that will in no way dictate the direction as of now. The levels to watch out for are 4700 and 4500 on the upside and the 4000, 4500 and 4400 on the downside. reliance – that is in a bearish trend on charts has extremely high call build up as seen in the chart and as far as ICICI bank is concerned the call put build up is almost the same with slight favour of calls.

So all in all we to summarise the Global cues are good and rocking. The candles showed a break in upswing might now resume the upswing and are bullish with exception of ADX (weak and trendless) and Stochastic (overbought and bearish) The option data is yet to build up to a level where there will be too much to read into it. Ideal strategy is to hold long with stoploss of 4475 and if short do not hold above above 4585 at closing.

Best of luck to everyone. If some one is interested in option data please do post a comment and will try to post it.


Wednesday, July 29, 2009


I have been posting many trading lessons on this site and my blog but over a period of time they got lost in the blog where I post daily updates for our markets. On suggestion of one of my colleague I have created a seperate blog for all the lessons taken in the past. I will shift all such articles there for everyone to see.

I really hope that you like the blog. The site address is http://technical-trading-less

Please do feel free to make suggestions.


The markets are going nowhere… Update for 29 Jul 09

image Like I have been saying for past so many days – the markets are not going anywhere in a hurry this expiry. The reason too has been listed as the open interest of the options. The data is simply to hard to refute. The markets will not go where there is exceptional pain for the option writers. That is what is happening every particular day – no it is not that it is sacrosanct that it will shape up this way – but as of now the fact is that the markets are being kept to make the options expire worthless while keeping that – I might still make it factor dangling in front of option buyers. The same story repeated over and over again. Another thing that I see over and over again is that Fiis and DIIs taking opposite stances at the same period of time – who makes money? FIIs or DIIs? GOD only knows. The news form the good news here, good news here.. has started dying down and we now have hints of bad news here… bad news here… popping off and on. monsoons remain deficient, it is now certain that Swine flu is not likely to leave us any time soon and the India’s tally rises to 475, the results remain mixed at the best, unemployment remains at pretty high levels.

daily 27 jul 09 The Global cues remain the same – neither here nor there variety. Asia had a mixed day with us and Nikkei flat and Hang Seng and Strait Times both up 1.84%. Europe started absolutely flat and then as the US opening came closer started loosing ground finally ending – red like in red. FTSE down 1.25%, DAX down 1.46% and CAC down 1.23%. US opened red – came to the flat line and then sunk again only to start a recovery close to the end session and Dow presently is just 0.29% in red. Nasdaq already in green and S&P 500 down 0.49%. the stocks had fallen on earnings and confidence data. It will be interesting how the US markets close tonight.

On the charts this is the second day of the Doji and it conveys extreme confusion still persisting. Every moment spent at these levels will only make the coming trend more stronger. The candles are no longer trailing the upper edge and the markets may require something extraordinary to continue going up. The volumes of nifty were 97% of the 50 day average. On ADX I have got totally confused as the data presented on iCharts is conflicting with the one on my software that I use. All the same the +DI line has definitely come down and the ADX line is still at 19 giving no credence to the present trend. The MACD remains to be bullish with exactly the same divergence. RSI is bullish but is now showing the signs of getting exhausted. Slow Stochastic is overbought but the %K line being above the %D line still trailing bullish. The TRIX too is looking up and seems in bullish mood.

I am not posting the put call options chart for nifty as it remains more or less there only. Only thing that I notice is that slowly and steadily the next month is mirroring this months doings in the sense that the Put build up is so far more than calls. If it continues like this only then the chances are that the markets will not have the expected fall in Aug. Any way that is some time away and we will see it when the time comes.

All in all the global cues are turning weak, the fundamentals are also tumbling. The technicals are bullish with exception of ADX being weak and Stochastic being overbought. Another dark cloud in the sky would be the appearance of two Dojis one after the another. The fall if it comes can be quite huge. The options data is the one preventing the markets from going down. Ideal strategy would be to come out of longs and wait for re-entry. For intraday do not hold long below 4521 and do not hold shorts above 4592. The range is constricting and the breakout can be vicious.


Tuesday, July 28, 2009

Update for 28 Jul 09…

image With the expiry around the corner it has become a fight of sorts – not to let the markets run up or fall – lest the markets end up at levels other than the present one. So it is again leading to a tango – one step forward and one step back. Perhaps if the global cues have not been what they are – the markets would have had been some other state of affairs – but that is not so. The DIIs are bearish and the FIIs seems to be supporting the markets as of now. How long this inflow will keep up might be interesting to see and certainly if they do continue then higher levels are well within the reach.

image The markets of Asia – baring us were good and green. Nikkei up 1.45%, Hang Seng up1.3% and Strait Times up 1.71%. Europe too started off well – dipped and then closed well off their highs – FTSE up 0.21%, DAX up 0.42% and CAC up 0.18%. US was hovering around the flat line only and DOw finally settled at 0.17% green, Nasdaq up just 0.1% and S&P up 0.30%. There was profit taking in US markets but the markets could just about shake off the effects with leadership in banking stocks there.

As far as purely technicals are concerned – the markets are still into their bullish mode. The Candle yesterday was quite close to a Doji with the body of just 3 points. That has the potential to call it a day for the bulls if the markets end lower today. The Bollinger Bands continue to expand and all lower EMAs are above the higher EMAs. The volumes were thin yesterday. ADX continues to be bullish with =DI above –DI but the ADX (14) still at the same place it was yesterday at 19 indicating the trend without too much of strength. MACD is bullish with positive divergence. RSI remains bullish. Slow Stochastic too remain bullish but as of now have spent six odd says in overbought territory.

put call 27 Jul 09 As far as the options data for this month Nifty is concerned the put call ratio stands at 1.6 and that should not permit the nifty to fall this expiry. The Put writers will be badly hurt if the markets were to fall so do expect the markets to end up around these or higher levels. After the results of reliance just see the call build up is still where it was – so I feel that there is more down side to the reliance purely from the put call ratio point of view. So it might not be a good idea toreliance put call 27 jul 09 enter Reliance yet. In any case the results that it has given are yet to be discounted to my mind.

All in all the markets remain bullish – Global cues are likely to act neutral, we are still technically not being indicated a  reversal to bearish undertones except for Doji and overbought Stochastics. ADX as shown in the charts should be taken with a pinch of salt. The option data in Nifty should ensure expiry around these levels or higher and not lower. Ideal strategy for positional holding is to hold long with absolute stoploss of 4450. For today go long above 4569 and short below 4480. If we break the 4480 level then may see the 4295 levels. Best of luck to everyone.


Sunday, July 26, 2009

Painful steps to rebirth… Update for 27 Jul 09…

image Let me put my life in the stock markets this way – I was an average Indian who got a job and was told that you must now save for the future. I did so – contributing some in Provident fund, other in FDs etc. This did not wet my appetite so I started of with the Stocks and those schemes of the yesteryears – double your money in six months. Well that six months – double your money schemes were outright steal so I took a chance – lost there then there were those schemes of Teak tree plantations… the list really goes on and on and they are endless. The stocks also had their ups and downs – Harshad Mehta, Parekh, IT Boom and 2008 were the other ups and downs that some times took money away and at other times gave some. In all the balance sheet was favourably tilted always in favour of FDs and Provident funds – but the lure of “Little More” made the money to be siphoned off from the safe to unsafe investments to stocks. Now it is not that I never made money from the stocks – I did make money when I bought the stocks – kept identifying and buying over a period of time and those accumulated stocks were kept with me  for a reasonable period of time. In the yesteryears – that was no problem – there were delivery of stocks that took months by a normal stock broker – then was the actual transfer of shares – transfer deeds – mis-matched signatures and to top it all postings to far flung areas with no brokers, no communications... and so forth. The stocks by default would be held for a long time – and many a times forgotten – to be discovered one day – either ten times the cost or – no longer being traded. But yes there was money to be made. Then came the change – online trading, penetration of the net, and demat accounts. – here the trigger was always in your hands. This in my mind – created far more problems – I could never keep the stocks long enough to make money. I did all the stupid things in the book to loose money. Then came the bigger caveat – futures and options – and that was the time that the lure of more made me loose more than what I saved.

image After travelling this full circle – I am educating myself as now how to make some more money the intelligent way. Frankly I might have not made much but at every stage I can look back and am ready to pull out some more out of the system – and this is my journey to the Painful rebirth. I am sure that any reasonable stock of reasonable Pedigree in your portfolio held for a reasonable period of time will mature and bear you fruits. The underline is Reasonable Stock, Reasonable Pedigree and Reasonable Period. No other investments can perhaps give you as much with as much ease. But all these reasonable assumptions have to be kept in mind.

The Markets at the moment are buoyant and everyone who is holding stock is basking in the glory of good returns. All the indicators are at the moment good except some of those that are ringing some bells of dissent. These are the ones in the overbought territory. The other is like the results of reliance that were not up to the mark. Poor infact, but to me what is likely to happen is that the reliance will loose grip over the market shakers and movers spot and will be replaced by someone else. It could be power, Infra, Oil and Gas sector. IT, Cement, Communication – their times are not as rocking. It would be good if someone can bet on the Dark horse today – and in the days to come as the turnover is about to happen. As far as the Global cues are concerned – Asia was rocking – Nikkei closed in green by 1.55%, Hang Seng up 0.83% and Strait Times up 1.92%. There were spots of weakness when it seemed that the markets that had opened green will not hold up but they did and closed comfortably green. As far as the Europe is concerned – FTSE was red – went green and lost ground again but still managed to hold its head above the water. It closed 0.37% in green. Dax closed in red – down 0.34% and so did CAC close – down in red 0.22%. US was a mixed bag with not so good cues – Dow up barely 0.26%, Nasdaq in red 0.39% and S&P in green 0.3%. The markets overall had a good week with the S&P closing the week up 4.1%.

As far as the candles are concerned the candles still are white they are just short of trailing the upper Bollinger bands and Bollinger Bands are expanding – the upswing can continue. Without exception the lower EMAs are above the Higher EMAs and the signs on this account too are bullish to say the least. The Volumes are 96% of the last 50 Day average. ADX is bullish and at a figure of 32.53. ADX at 19 indicating an extremely weak trend (the one going up that is!) so be careful on that account. MACD is bullish with increasing bullish divergence. RSI is bullish. Slow Stochastic is overbought but bullish. So all in all – most of the indicators are bullish with exception of ADX.

Nifty put call 23 jul 09 As far as the options are concerned the nifty put build up is so much that it would be extremely difficult for the nifty to fall this expiry without taking out a lot of put writers. So as far as the nifty options data is concerned there is a bright chance that the nifty will be kept range bound for this expiry and then the bulls will remove their hands from the markets after 02 Aug. Well that is my supposition and I also feel that if the markets do fall (because of the reliance results or whatever) then and the markets make the put writers run for cover then the fall will be extremely sharp and can surprise al lot out the bulls out of the present run up. reliance put call 23 jul 09 The put call ratio is to the tune of 1.5+ on the other hand the call build up in reliance is extremely high and the reverse should be true ideally. In these charts the blue is the calls and the red are the puts.The chart on the left is of nifty and right is the one of reliance. Now here is the dichotomy – does it not mean that if reliance falls – the entire markets too will fall. – so ideally if the put writers have to save themselves then they have to keep reliance at about these levels – if the reliance call writers have to protect themselves then they have to ensure that the reliance does not run up. What and interesting fight we are to see this coming week!

Overall the global cues may not be as supporting the bulls as in the past month. The technicals on the other hand remain fairly bullish with an eye on ADX and overbought Slow Stochastic. The options index data too supports bullish. Ideal strategy should be to hold longs. With stoploss of 4430 and those brave enough to be holding shorts till now – the absolute stoploss should be 4556 on closing basis. For intraday be short below 4497 and go long above it. Hope you have a good trading day on Monday.


Friday, July 24, 2009

Update for 24 Jul 09…

image The markets are in a frenzy – they are in no mood to stop – the so called breather lasted just two days and the markets are pointing to the higher skies once again. Once again I will not go into the how and whys of the markets are pointing upwards but then some things do intrigue me. Take ADX for example – the +DI has fallen sharply inspite of 130 odd point rally on the nifty. What has happened ofcourse is a repetition of history – so strong has been the desire of everyone for the markets to fall that the put build up has reached – like I said yesterday from a call heavy to put heavy. Every new levels the put build up increases and unlike a few days when the call build up was so that the bulls would have had to try hard to break resistances – the bears may now have to painfully take a point at a time to inch down. Does that really mean that the bear market is over – so as to say? Uh! ask my neighbour – I do not know.

Daily 23 Jul 09 As far as the global cues are concerned – the Europe was flatish just skipping – red at times and green at other times. They were actually waiting for the data that was expected out of US – and when the data came – the Existing home sales started showing the signs of recovery and the – Europe recovered along with US closing comfortably at the highest levels of the day. FTSE was up 1.47%, Dax up 2.45% and CAC up 2.08%. The US opened absolutely flat and then immediately climbed 2 to 2.5 percent in green, ending – Dow above 9000 up 2.12%, Nasdaq up 2.45% and S&P up 2.33%. The buying in US was broad based and shows the sentiments rocking there. As expected the Asia has opened in green – Nikkei up 1.3% and Strait Times up 1.34%. I have a feeling that the Asian markets are not really as excited as the US and Europe was yesterday – any ways the time will tell.

On to the candles now. The markets seem to have prematurely terminated the consolidation and have moved up with vigour. The Bollinger Bands have started expanding and if the candles trail the upper edge then they will take the markets higher. The volumes were a bit lesser than last few days at 84% of last 50 Day average. ADX remains to be bullish but like I said in the beginning – the +DI line is dropping. But all the same the upswing is gathering strength. MACD divergence is increasing and is bullish. RSI is bullish with no sell signal that I talked about yesterday. Slow Stochastic is the only signal that says bearish and is still overbought. But then if the markets are in a small bull run for whatever it is worth then it has the capability to remain in overbought state for a pretty long time. TRIX too is looking up and is bullish.

Put call 23 Jul 09 As far as the options data is concerned the Put build up is crazy and that alone may prevent a worthwhile fall this month’s expiry. The state remains same like a few days before – call build up in front-liner stocks and put build up in the Index. In terms of open interest the top six slots go to the puts in Nifty. The order of open interest in decreasing order is Put 4000, Put 4300, Put 3800, Put 3900, Put 4200, Put 4100.

All in all the global cues are good like in GOOD, Majority of the technicals are good and the Nifty options data should prevent a immediate fall. Ideal strategy remains is to remain long above 4449 and short below 4449 on nifty. Best of luck everyone.


Thursday, July 23, 2009

Update for 23 Jul 09…

clip_image002Every day in the stock markets is a new story. Perhaps this in is what attracts – us mortals to it. The intrigue of a romance with the unknown. The markets seems to be taking a breather. Now whether it is a breather by the bulls to gather for a fight of a tug of war by the bears – only time will tell but once again the dark clouds are gathering on the horizon for a showdown. One will win and other will loose. The DIIs are convinced that they should be shedding some and the provisional data is as shown above. FIIs – seem to be more on the sidelines.

As far as the global cues are concerned – the run up that we had seen for past few days seem to be petering out. Call is consolidation, call it point of reversal – the markets the world over are in a thinking mode. Europe yesterday was in green – but flatish is what I would call it. FTSE up 0.28%, DAX up 0.54% and CAC up 0.07%. US too can be called flatish with perhaps a negative bias. Dow down 0.39%, Nasdaq up 0.53% and S&P dow 0.05%. All in all these global cues will keep our markets crazy and indecisive. Nikkei in its opening moments today is volatile. Nikkei up just 0.08%.

Daily 22 Jul 09 As far as the charts are concerned – there was a second day of a black candle. The markets were confident and in an upswing – touched the upper Bollinger band and then dropped sharply. As far as the Bollinger bands are concerned. The mid points is 4262 and around that levels only lie 15 EMA at 4296, 20 EMA 4288 – so if it breaks this level downward decisively then we are back bearish – if it does not then we are bullish and we will bounce back. On the top we can say that we could not break the Jun 12th high of 4693. The volumes were 96% of the last 50 day average. The ADX remains bullish though the +DI  has started looking down. All the same – the trend is gathering strength. (Like many times before – the ADX data in the icharts seems to be bungled up – on the software that I have the ADX value is 19.) That would imply directionless at the best – would be the present state of markets. So please do take ADX with a pinch of salt and you may have to double confirm it yourself.  MACD is bullish and gave positive divergence even with last two days of black candles. The RSI has started to look down but is still bullish till it does a crossover below 50 when a sell will be generated by the RSI. Next the Slow Stochastics are still in overbought zone inspite of two days of black candles. The signal by itself is bearish. The TRIX is still bullish.

I am without broadband once again and to download options data takes too long on options oracle – so please bear with me. So all in all global cues are flatish, the indicators that I follow are mixed with a tip towards overbought and bearish so will remain careful with the longs – inspite of the fact that idealy I would be long as the 3 EMA is above the 15 EMA. For today on Nifty (intraday) ideal to stay long above 4399 and short below that level. Best of luck to everyone for today. As always the day will be interesting as it will fold out.


Tuesday, July 21, 2009

Hope… My left foot… Update for 22 Jul 09

image Firstly I will apologise for not updating the blog for past three days. Busy is not the right word for what I have gone through last few days. Spin, Tornado, Thunderstorm are probably the better words to describe it. All the same those days are behind me and I think I will be a regular again. Past few days I have seen the majority of people in the category that I have mentioned above – HOPEFULS. Let me explain. Firstly there are bears – my variety really - they were and are expecting the markets to crack and go to the last year’s lowest levels. Not that it might not do so in future – but the fact remains that it is not doing so and so the bears never entered markets – waiting it to go down – holding on to the shorts – praying that every new high that the market makes is the place the markets will turn around from. The next category are the jittery bulls – so when the markets went up a couple of hundred points – promptly sold off and are also waiting for the markets to correct – the markets are not correcting and they are still not entering. The third are pure – thoroughbred bulls and they and they alone have really taken full opportunity of this run up. Now the point is that hopefuls generally do not get anywhere in the markets. The only problem here is that there are only a handful of those thorough bred bulls who had the courage of conviction to ride this rally fully. All in all here is a piece of advice to all… (including me ofcourse)

  • To the bears: The markets have the capability to open gap up everyday and climb up without so much so a 20 point correction – till the shorts squeeze you dry. I wonderful quote that I had read a long time back went on something like this… “The markets can remain against you longer that you can remain solvent…” Makes sense now.daily 21 Jul 09
  • To the unsure bulls: let us assume the markets have run up 500 points without a stop and you want to enter the markets when the markets correct. You wait – the markets run up another 300 points – correct 100 points – will that be a good entry point? give me a break – entering today is at +500 points and entering then is at +700 points. Ride the trend and there is no point early or late in entering or exiting the markets.
  • Those who would have followed the markets blindly on the technicals would have been sitting on the right side of the markets and are the only ones who would have made money. Here I am seeing and telling everyone but doing the wrong thing myself. – Never too late to bang your head on the wall and regret I guess.

The global cues are wonderful – FIIs buying or selling not withstanding. the entire markets the world over are green. FTSE is +1.25%, Dax closed up 1.04% and Cac closed 1.63% up. The US continued its upward march – Dow 1.19% up, Nasdaq up 1.2% and S&P up 1.14%. The Nikkei has opened up 1.88% and Strait Times is up 0.31%. No sanity as we see the markets as of now.

As I talk about the technicals another wise crack lights up in my head – in a down trend there are no supports – in a upswing there  are no resistances – Cheers. There has been no resistance worth talking about that has not been broken and surpassed in half an hour of trading. All the same the markets a have run up crazy and can fall crazy – I feel it is time to be a bit cautious. The markets have rallied right from the bottom of the Bollinger band’s lower edge to the upper edge. The candles had yesterday touched the upper edge and may trail the upper edge. 3 EMA has crossed above the 15 EMA and the buy signal was generated on Friday. Infact the 15 EMA is just a point short of 20 EMA. ADX is rocking and uptrend seems to be gathering strength as we see it on ADX. MACD had the second day of positive divergence and is now formally said that it is bullish. RSI is bullish and had generated buy yesterday. Slow Stochastic are the only ones that can slow this uptrend – being overbought. Infact both %K and %D lines are in overbought territory. TRIX is looking up.

reliance put call ratio 21 jul icicibank put call 21 jul 09 infosys put call 21 Jul 09   As far as the options are concerned – I think you will have to read my last write up on options to understand how the calls have made the markets run up. The Put:Call has reversed itself and Put / call ratio is 1.47 – a phenomenal increase in puts. The ratio has come all the way from less than one to more than one. NTPC Put call 21 Jul 09Put Call ratio 21 Jul 09The open interest is as of now the greatest in 4000 puts followed by 3800 followed by 4200 – puts. Now here is a conflicting and equally worrying thing that I notice. The open interest in Index is more than one - (1.47) to be precise – in the individual stocks – the call build up is much more. Take a look at the charts yourself. I will end the write up now.

The Global cues are fairly bullish and so are the technicals. The option data does not support too much bullish so all in all – we may be topping up. I will sit another day on the so called sidelines. Cheers – and have a nice trading day.


Thursday, July 16, 2009

Time for Introspection… Update for 16 Jul 09

image Yeah! I do have to take out time and think it out as to how I can improve and where I lacked that the profit that we were running – of 10 k till day before shows a loss now. Where did I lack? See – all said and done most of the levels and the market direction have afterall been correctly predicted over the last few weeks. Where I lacked was on conviction in what the technicals said? After they did point out towards all this. A drop followed by a bounce – even so much so – bounce to 4250 level. Where I lacked is the well thought of exit strategy. Every single book in technical analysis or investment that I have read says that the entry into a position is very important – no doubt – but more important is to time the exit. Well over my next few days I will be spending considerable time and effort to study indicators or strategies that make me come out of positions with maximum profits. I know that it is going to be a daunting task. Looking at the FII/DII data both have purchased collectively for more than 525 worth and that is how the markets ran up singularly.

Daily 15 Jul 09 Coming to the global cues and the technicals. Asia closed well. Europe opened flat – kept climbing to close at the best levels for the day – FTSE up 2.57%, Dax up 3.07% and CAC up 2.90%. US too opened positive – on getting the surprising results from intel – the markets continued their journey upwards to finish at one of the best levels seen. Dow up 3.07%, Nasdaq up 3.51% and S&P up 2.96%. Asia today has opened with a gap up of around 2% and is maintaining it. Nikkei up 2.2% and Strait Times up 1.79%.

On the charts most of the indicators are sitting spot on the confluence that can either propel them forward or make them go back to the original levels. Let us start with the Candles – two good white candles. 3 EMA inching up towards the 15 EMA. We are also in the middle of the Bollinger bands and a crossover will give bullish cues. A matter of fact is that we have 20 EMA at 4213, 15 EMA at 4192 and 3 EMA at 4149. Pretty close to each other and a crossover of lower EMA will signal buy. Volumes were better but still not as much as last 50 day average. ADX – all three line are making a confluence almost accurately. ADX (the black line) – mind you is not giving too much credence to this upswing. The +DI has crossed above the –DI and that makes the markets mildly bullish. MACD is still bearish with reducing divergence. RSI has started looking up and a 50 crossover generates a buy signal. (second – for those who follow this). Slow Stochastic is bullish and at this rate will turn back after a day or two. TRIX is flat and not committal.

reliance put call 15 jul 09 icicibank put call 15 jul 09 Nifty put call 15 Jul 09 Over the last two trading sessions – specially yesterday the open interest in Put have increased dramatically – reversing the position in Nifty. Look at the Nifty Put/call ratio. Option pain for nifty remains almost at the same levels. Considering the open interest. 4000 strike leads followed by 3800 followed by 3900, followed by 4100 – so now we have hurdles going down. The build up of call is way down at fifth position for 4300 levels. So that should be the next hurdle – that we may be at on opening. apart from this the calls in all individual counters still rules.

All in all we have very good global cues. Mixed technicals – with still a small tilt in favour of bears and a lot of call writing still going on. Whatever we see today may turn out to be the highest for the next few days. There are too many resistances at around these levels.

Ser No Stock/Index Sold / Bought at Last Closing Notional Profit/Loss Stoploss Remarks
1. Nifty - 50 (4185) 4237 -2600 4207/4202 Shifted the stoploss to 4255 – may have made a mistake.
2. Reliance         Not initiated.
3. Nifty Call         Not Initiated.


Wednesday, July 15, 2009

Update for 15 Jul 09…

I love us – Indians. There seems to be no normal way to do the things. It goes without saying that the bounce was expected – but then like everything Indian – we tend to overdo. image Sell like the heavens are falling and buy like there is no tomorrow. And yes the markets went overboard. Now the markets being what they are and and what they did – I have another question – the preliminary data that has come regarding the FIIs and DIIs is what is given on the the left – you mean to say that we have gone up 150 odd points on 87.23 Cr of FII and 200.29 Cr of DII buying? Smells like a fish? Yeah the fish may turn out to be the retail – you and me kind who would have just jumped in like there is no tomorrow. GOD bless us all for getting ready for FIIs and DIIs to cull us. Mind you the Global cues are not what they were like yesterday. Infact so much so that there was a bright chance that after the economic data came out yesterday – the US would slip in the red.

Daily 14 Jul 09 Without wasting any more time let us come on to the global cues. Europe opened flat and after a lot of see – saw closed green with good gains. FTSE was up 0.85%, DAX was up 1.26% and CAC was up by 0.98%. The economic data out of US was mixed to say the least. Goldman Sachs and Johnson and Johnson reported better than expected results. Infact the Goldman Sachs results were impressive – in Bloomberg’s words. Dow was up 0.33%, Nasdaq up 0.36% and S&P up 0.53%. In Asia only Nikkei has opened and is just about 0.31% in green. In another prominent news – China’s reserves have reached a record 2.132 Trillion.

Unitech put call 14 Jul ABAN put call 14 jul      On the candle sticks there was a big white candle yesterday. We seems to be off to the middle of the Bollinger band today if all goes well. DLF put call 14 Julicicibank put call 14 julThe markets have closed after adjustment above the 50 EMA though the 3 EMA line still trails below it. The volumes were less than the last 25 and 50 day moving average on the NSE. Put call ratio reliancesuzlon put call 14 julADX still remains bearish and the bulls are likely to give it a go – before the bears are technically more stronger than what they are now. MACD divergence is still negative – but reduced somewhat. RSI is bearish with and attempt to recovery. I had expected the recovery as the Slow Stochastic were oversold and that has happened and they had turned bullish yesterday. The Slow Stochastic has the capacity to take the markets green today too. TRIX is still bearish.

ThAxisBank put call 14 jule biggest traded volumes on Nifty were – in descending order are Reliance, ABAN, ICICIBank, Suzlon, DLF, AXIS Bank, Unitech. These had the biggest traded volumes on nifty and I am going to present you the Put call ratio for all these – have a look. Yes there is a Put build up but still not the kind that can perhaps help the markets recover – atleast as of now.

Best of luck to everyone for today’s trading and I will introspect as to why I have let the profits on my position drop from 10 k to 3.5k. Should I have had some other stoploss? and if so – what system should I base it on? As of now I am only following 315 Strategy. Ideas are welcome.
Ser No Stock/Index Sold / Bought at Last Closing Notional Profit/Loss Stoploss Remarks
1. Nifty - 50 (4185) 4111 +3700 4207/4202 Since I expect the markets to go to max of 4200 levels the stoploss can be kept another 25 points above so that it does not get triggered.
2. Reliance         Not initiated
3. Nifty Call         Looking forward to selling Nifty call, strike 4200 when nifty crosses 4150.


Tuesday, July 14, 2009

Update for 14th Jul 09…

A breather is what I had expected yesterday after breaching the 3900 levels. image Like a ship about to burst at seams – the Markets held on… yes they did close negative but gave a sense that after bulls are not happy about the way they have been treated. The problem does not lie here – but lies in the fact that FII money is flowing out and inspite of the continues buying from the DII the markets are not getting the support they want. Here I have another question that haunts me. I have invested a fair amount of money in Mutual funds and just going purely by the money flow data that pops in front of my eyes every morning I am inclined to think – and think hard. Is the money in good hands with them? How come they are always are doing opposite to what the FIIs are doing? Daily 13 Jul 09 Are they under some sort of a pressure to keep the markets looking good? – read not going to dumps the way the FIIs have sold. After all we would have gone down much worse – had the DIIs also sold during this period. Finally I had a portfolio of stock when the markets crashed – I lost 50% and so did – some of the mutual funds that I hold. Questions… Questions and more questions and sadly no answers. Yes there are fund houses that did perform better – and ofcourse I have shifted to those fund houses.

The Global cues are what the bulls would have prayed for with their knees down. These cues will certainly put pressure on the bears today – or perhaps for this week. Let us see them. Europe had opened red/flatish and then as the US cues kept coming in ahead of the important data out of US the markets kept improving finally ending 2 to 3 percent in green. FTSE up 1.82%. DAX up 3.19% and CAC up 2.31%. US too started the day almost flat but then ahead of the data coming out it started recovering – finally ending decisively in the bull territory. Dow was up 2.27%, Nasdaq up 2.12% and S&P up 2.49%. After a week of bull hunting – it is time that bulls also try to show their strength for whatever they are worth and the Asia has opened green. Nikkei is up 2.11% and Strait Times up 1.76%. All this is well but the news out of US is not all that good – mind you their Budget deficit is up 1 Trillion with the fears of it reaching 2 Trillion and there are fear that the dollar as a currency may not perform well in near future.

Option pain 13 jul 09 call put ratio 13 Jul 09 As far as the candles are concerned – we have a small reversal pattern yesterday. The hammer! That made the markets come off the lows before closing – however we continue to trail the lower Bollinger bands. The 15 EMA is at 4197 – very near to where we entered the shorts. This is the level that I am not hoping to be breached when the bulls try to play with the bears. If not breached then this is the level around where we will get a signal to increase on to the short we are already holding. On the down side 100 EMA is at 3830 – another hurdle to our markets going down. ADX is bearish and seeing purely from the ADX point of view – the sell signal was generated with the day – before’s candles. MACD continues with the negative divergence and is bearish. RSI still looking down but not in the oversold territory. Only signal that supports a recovery on the charts that I follow is Slow Stochastic – that is both oversold and has %K line crossing above the % D line. TRIX is bearish.

Looking at the Options data – one of the biggest build up of open interest in Nifty is 3800 level and I feel that we are going to be playing in a narrow band till the time this levels is broken on the down side. The banking sector may perform the best in this week during the recovery.

All in all – the global cues favour a recovery – that I had frankly expected yesterday in our markets. Technicals remain weak but as the Slow Stochastic is overbought and bullish – it will help the market recover a bit today. Options have seen the largest open interest buildup at 3800 level that would take time to be broken on the downside. I feel we should remain range bond between – 3800 to 4150 levels for some time. max upside should be capped at 4200.

Best of luck to everyone for today…

Ser No Stock/Index Sold / Bought at Last Closing Notional Profit/Loss Stoploss Remarks
1. Nifty - 50 (4185) 3974 +10550 4207/4202 Since I expect the markets to go to max of 4200 levels the stoploss can be kept another 25 points above so that it does not get triggered.
2. Reliance         Not initiated
3. Nifty Call         Looking forward to selling Nifty call, strike 4200 when nifty crosses 4150.


Sunday, July 12, 2009

Update for 13 Jul 09…

I was going through a write up on technical analysis by Steven B. Achelis and was surprised that during the beginning of the use of technicals – they were compared with the Voodoism!


Looking back with the kinds of comments that I get sometimes I wonder whether we are living at any other different times. One must understand that it is impossible to predict the future. Take for example the Black Swan principle, it makes it impossible for anyone to predict the future as it proposes that the surprises topsy turvy your expectations. If that be so then leave aside technicals -- no fundamentals can either point towards the future. But then there has to be something that -- even if it does not predict the future price trend - still gives us a sense of what may happen as an iota of an probability more than expected.

Everyone knows that the technical analysis is all about looking at the past and trying to predict what will happen in the future under the same circumstances. The problem is that the circumstances are never the same. So all we get round it and get an anchor on which we can rely. There are millions of complex mathematical probabilities that are used to predict an outcome, unfortunately none of them have stood the test of time. Otherwise this world as we know it will not be there. In my opinion the technical analysis is not perfect but then neither is anything else. So in all my wiseness have chosen technical analysis over the fundamental analysis. Atleast in technical analysis there is an advantage of looking back and feeling happy that under those circumstances had I entered the trade I would have been millionaire. And being an optimist is that I am I know that -- that miracle trade is just around the corner.

Daily 10 Jul 09Now talking about the fall we had yesterday – there are no absolute answers so I will just try to list out the circumstances under which we may have fallen in the last half an hours or so.

  • One of the strongest argument that I can find for this sell off was – excessive optimism. Evidence was there that I had started posting on the blog – see there was no put build up to start with – only calls and calls and calls. Can you imagine? only call build up. I saw that happening a few months back – only put build up – I did not know what to make out of it – but this time around I think I read them correctly.
  • The second was the budget. Good budget notwithstanding – the aura for markets was negative. How and why – you will have to refer to some one else
  • Third was this faint little rumour that the monsoons will not be average.
  • Finally was that the global cues are just not playing up. Now I have written time and again – we have a recession – we might come out of it – yes – but to go back to the growth rate previous to this recession – will take a long long time.
  • And to all those – the fundamental variety type – technicals said so. ;-)
  • There may be something that we do not know yet.

Let me tell you what I have written above has no meaning for me – because it is like justifying what has happened and nothing else and after a long time I have realised there is no reason at all that justifies what the markets do – so just take the signals and be on the right side of the trend – and technicals help.

As far as the global cues are concerned – they are not particularly good – not particularly bad either. But that thing that we have been riding on previously – India outshining the world is making us go down and cover the lost ground. Nikkei was 0.04%, Hang Seng closed 0.46% down and strait Times 0.02% green. Europe was down – FTSE 0.76% down, dax 1.16% down and CAC 1.42% down. US was a mixed bag – Dow down 0.45%, Nasdaq up 0.2% and S&P down 0.4%.

ICICI bank 10 Jul 09Reliance Put call ratio 10 Jul 09On the charts we are trailing bottom edge of the Bollinger bands and once there – there is no knowing till when we will trail this. We have the 100 EMA and 200 EMA at 3827 and 3724 respectively – breaking of each of these supports will weaken the markets further. I am looking forward to some support at these levels. ADX is now building up the strength of this downturn. MACD is bearish like hell and RSI too is bearish but not oversold yet – so wait for some more time before there is some consolidation before going down deeper perhaps. Slow Stochastic is bearish but over sold. TRIX is still looking down.

Nifty Put call ratio 10 Jul 09NTPC put call 10 Jul 09Option pain 10 Jul 09As far option data is concerned – see the problem – the more viciously we fall – the more hope there is of recover and more the call will be written and the more painful will be the process of the recovery. That is the way of life and the markets.

    I will now put forward the positions that we were carrying forward. Can you believe it – what to talk about others I too was just not ready to take the reliance position though the markets are looking weak. All the same even the lone nifty is not doing badly. I do not know why the markets sold off yesterday – but I am sure that there will be more selling in the coming few days.

Ser No Stock / Index Sold / Bought at Last closing Notional profit / loss Stoploss Remarks
1. Nifty - 50 (4185) 3994 + 9550/- 4238/4233 Stop loss is at 15 EMA level and once the RSI is oversold we will shift it closer so that we can take advantage of the bounce short covering that is likely to happen at 3800/3850 level. Do not sell off – and take out profits prematurely.
2. Reliance         Not Initiated.