Friday, August 28, 2009

Heads Operators win, Tails I loose… Update for 28 Aug 09…

image imageI would like to first get up and salute the perfect manner in which the closing of the markets was planned out that we hit the nail on the head.  It is phenomenal to see the markets singing to the tune of whomsoever the operators are. The markets were supposed to be range bound – basically due to the open interest that was there at the levels of 4600 and 4700. You can see it from the option pain chart – the markets closed to the perfection. What happened today is not important – what will happen tomorrow is extremely important. The possibilities are of breaking the range upwards or downwards and remaining range bound does not seem to be an option as of now – all the same it will be the way the markets want. The opening may be dictated by the Global cues but thereafter we should get on with the business of ‘doing something’. The verdict is ofcourse divided as I have called out so many times before so it remains to be seen where we are off too.

Daily 27 Aug 09 Now as far as the global cues are concerned – heading south seems to be the natural place to be. Asia traded fairly negative with only Strait Times ending in green. Infact Strait Times too started in red but steadily recovered to close 0.53% in green. Nikkei ended 1.56% red, and Hang Seng ended 1.04% in red. Europe spent the entire day round the flat line as there was no trigger – either good or bad. As the US opened Europe saw red and closed down FTSE down 0.43%, Dax down 0.94% and CAC down 0.54%. US had economic data where in GDP declined by 1% (better than expected), consumer spending contracted by 1% against 1.2% and jobless claims were down by 10,000. All this news dropped the US indices – but later due to drop in US dollar – led to better energy performance and that led to recovery among US – Dow ened up 0.39%, Nasdaq up 0.16% and S&P up 0.28%. Mind you there is still no good news out of US – GDP is still contracting. Though the Nikkei has opened green – the Japan’s unemployment rate has hit record high this July and the prices fell at a record pace. So all may not be good.

As far as the charts are concerned – though it was manipulated perhaps – the fact is that the markets are not touching the upper Bollinger Band. As of now the markets seem to be topping out – but like I said earlier – today will be the day that will show the correct direction. 315 remains bullish and all the EMA lines are facing up. Volumes too have been shade better. The candle was very near to a Doji but not a classical one. Volumes were shade higher than average. ADX still is trailing at 14 and mind you I went through all the charts of Nifty stocks – except for some IT stocks – the ADX is below 20 – giving indication of non trending markets. MACD has a bullish indication and a negative (read bearish) divergence. RSI is the same – Bullish with negative divergence. Slow Stochastic are overbought and one can expect a correction of sorts soon. TRIX is looking up. We have hit a roof for the third time now – if we do not push our way through it then expect a substantial drop down.

put call ratio 27 Aug 09 Though it may be too early to play out the Options data – but all the same – I will give out nifty pain and open interest. I saw someone giving out PCR for all individual strike prices on to read the greed and fear at those levels but am not sure if it works well – I would request anyone who has worked on that system to educate me if possible. The Nifty Put call ratio is 1.5 as of now with major call build up at 4900 level and Put build up at 4500 levels.

To summarise the Global cues may not be good today. Most of the indicators are bullish be with negative undertones/divergences. I would be extremely cautious in this month as I believe historically this has not been a good month for markets. Options are frankly giving a wide room to the markets to manoeuvre as of now with call build up at 4900 level and put build up at 4500. But I will say again that it is too early to read the option data for market manoeuvres as of now. Ideal strategy still would be cautions long with stop loss of closing below 4629. For those who are carrying on with shorts do not hold shorts if the markets are likely to close above 4693. For the day be long above 4651 and short below it.

Best of luck to everyone for today.