Thursday, August 27, 2009

Expiry! Update for 27 Aug 09…

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So finally the month will end and this uncertainty will die with it – where do we go now? There are two equally convincing proposals that are being projected as what will be – for the next month. One say that the markets will breakout on the upside and go on to test atleast 4850 level at the very least and the second say that the markets will correct sharply and we will see levels much lower than we have imagined. As I see it the bullish version is the one that is buying more credibility with more and more people convinced that the markets are getting into the safe zone. How safe? – only time will tell. The factors favouring the upswing are – rising wedge, closing above the Psychological barrier of 4650, inverse head and shoulders, majority of the indicators that I follow. And that in favour of the bears are – no meaningful correction for a long time, China factor, ADX and Triple Swing(explanation is there on Jaggu’s Blog). Now you can have your pick.

Daily 26 Aug 09 The global cues are mixed to say the least – In Asia Nikkei closed 1.36%up, Hang Seng up 0.1% and Strait Times up 0.37%. Europe was not so lucky and it opened red – made a couple of sincere efforts to go green – failed and ended red.FTSE down 0.53%, Dax down 0.63% and CAC 0.33%. US started the session red but soon went green only to oscillate the entire time between green and red finally closing green – just above the flat line. Dow was up 0.04% up, Nasdaq up 0.01% and S&P up 0.01%.

 Option pain 26 Aug 09 As far as the candles are concerned – I have an observation – firstly the candles are not trailing the upper edge as I had expected – the most plausible reason is the cal writers do not want the expiry above the 4700 levels. So like I said earlier – the move will happen starting tomorrow onwards. The 315 generated a buy three days back and that has been good so far.All lower EMAs are above the higher EMAs so bullish run continues. Volumes have picked up but that could be due to the rollovers/expiry. ADX is just in no mood to move a bit whatsoever – I have infact tapped my screen as to whether the ADX has not got struck there only – The reading is 14 so this upmove has less meaning to it and there is no trend in place. MACD is bullish. RSI is bullish and Slow Stochastic inspite of being in bullish mode – are overbought. TRIX has also started looking up.

Put Call ratio 26 Aug 09As far as the options data is concerned the 4700 call for this month has the maximum open interest. What should be important to us now is the Sep open interest – but I should tell to that to read the data – of next month is not all that beneficial so early in the next expiry. All the same the build up of open interest for next month is (from high to low) Almost 25 lacs plus In 4500 Put> 4000 Put > 4300 Put. As far as the calls are concerned 21 lacs in 5000 call and 20.5 lakh in 4900 call. Put call ratio is terribly in favour of the bull with the ratio 1.48. So much negativity – I am bullish for the time being whatever be the outcome. Also see the option pain chart – we are ending the month at the point of minimum option pain.

Okay ideal strategy on all counts (baring ADX and overbought Stochastic) is bullish. If I read it correctly 4700 may be taken after expiry. So ideally you should have already been long with stoploss of close below 4593 and if still short for whatever reason keep stoploss of 4676 on closing basis. For the day safe to be long above 4627 and short below it. Just a word – Asia has opened weak…

Best of luck to everyone – have a ball making money today…


allvoices

5 comments:

sukhminder singh said...

TRIN value is quite down as volume emergence is there at buy levels so upmove.if upmove is sudden momentum then fall is imminent.kindly advise if any indicator is there to recognise if option buy is for hedging or otherwise for profit view.best wishes.

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

oops...its better u go "for" cheap next mnth options as be cautious on longs,pls note all indicators in your charts are giving negative divergence..

S S Cheema said...

Sukhminder - thanks for the comment. I will refer to Jaggu and his blog for TRIN. It is he on whom I fall back to get the TRIN readings and their relevance. His link is in the post.
Jaggu - I do agree about the divergence part - but when exactly the divergences will play out is anybody's guess. So I do take the divergence with a pinch of salt. Divergences show over a large periods of time and may play out on even larger timeframes.

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