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.



H S Cheema said...

very realistic expression of predicament of various category of mind sets. My congratulations for the article well written. Keep it up

verma7038 said...
This comment has been removed by the author.
verma7038 said...

good day.
used to see ur comments on Genius's blog only.

your analysis and approach is fantastic.


S S Cheema said...

Thanks pop and thanks verma for your encouraging remarks.
Verma: look forward to you on this blog off and on... ;-)