Wednesday, July 29, 2009

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.



Doji said...

Nice analysis Cheema, Thank you


S S Cheema said...

Thanks Doji