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.