Monday, August 24, 2009

Update for 25 Aug 09…

 imageSo we have the same situation wherein the FIIs are having a ball of the time purchasing and the DIIs seem to have resigned to the idea that the upswing is here to stay and it is best to board the bus. imageThe run up seems to be here to stay for the time being atleast. The entire world is getting convinced that the upswing is there to stay. Mind you that if we do test 4700 this time around then it would be the third time this level will be tested and if it breaks – which is likely – then the upper limit is way up.

Daily 24 Aug 09 Let me not waste any more time and start with the global cues. It should be left to no doubt that the global cues have had a big hand in propelling our markets ahead in a big way. The Asia today closed strong with Nikkei gaining 3.35%, Hang Seng closing 1.67% up and Strait Times up 2.65%. The Europe too opened strong – traded the day in a fairly narrow band (not unlike what is happening in our markets now a days) and closed fairly strong. FTSE was up 0.93%, DAX up 1.04% and CAC seemed to be closed – as there is no update on Yahoooooo. The US opened in green but around the flat line – went on to good highs but does not seem to be sustaining there – it is back to the flat line and if it does close red then it will be a red closing after going green after a long long time. As I write the blog the US is just past its mid session and Dow is down 0.02% in red, Nasdaq 0.25% in red and S&P down 0.13% in red. Mind you the markets touched the highest for the 2009 year before retracting.

As far as our charts are concerned the third with candle signifies thee soldiers and is generally a signal for a good time to come. The candles went past the middle of the Bollinger bands and may test the highs(upper band) at around 4736 – of course that is conditional to good global cues. otherwise we remain range bound. On 315 the 3EMA line is above the 15 EMA line so the trend is up as per that.20 and 15 EMA lines are also criss crossing each other and as of now the 13 EMA has closed above the 20 EMA line supporting the present uptrend. The volumes were a shade better than what we have seen past few days. It was 82% of the past 50 day average. Gentlemen – here lies my concern – the ADX is still trailing at 14 – and this is the reason inspite of seeing this upswing and my desire to catch it before it runs up – I exercise restraint. put call 24 Aug 09There is no strength whatsoever in this upmove as per ADX and mind you there are people who may swear by ADX. The MACD is showing all the signs of a bullish crossover and by my experience now – the MACD does not do such frequent crossovers in trending markets so this may be another false move. The crossover did not happen and MACD is still bearish. Those who do swing trading in such tight times also – for them RSI is bullish. TRIX seems neutral and Slow Stochastic are bullish and not yet near the overbought territory so bulls can breath with ease as far as this is concerned.

As far as the options data is concerned – have a look at the put build up and the call disappearing in thin air. Though we can still not call it extreme – but this level of put build up can certainly resist the markets going down – at least in this expiry. The Open interest (high to low) is as follows for the nifty contracts. Put 4400>Put4300>call 4700>put 4500>put 4600>put 4200.

imageSo to summarise – if the global cues remain what they are – then ideal strategy should be to remain long. The stoploss for the longs should be closing below 4444 and if someone is holding shorts then stoploss should be close above 4563. For intraday go long above 4545 and short below this level. Before I pen off for the night – some food for thought. The Baltic index can shed light as to what lies in store for us. It would be prudent that everyone reads the article by clicking the Index chart and get grip of what it means.



sukhminder singh said...

now there is convergence of thought process of FIIs DIIs and other investors so bull force may continue.if after expiry on hangoverday frtday momentum is not maintained then caution may build up and profit booking by weak hands may add fuel to the fire.your point is well taken that time has not come for blind faith more so when indicators oscillators do not depict the real ground picture during sharp up or down trends.if it is a true uptrend then i will wait for P/C ratio OI to go up to 1.5.

S S Cheema said...

Sukhwinder - there are two reasons that I see as to why we do not see the technicals playing out purely - first is the manipulations on almost daily basis. We cannot really blame anyone as the volumes are extremely low and it is perhaps happening on the global scale. News are being reacted too strongly in one direction today and discounted the other way the very next day.
Second is that there are no trends - it takes a generation of operators living in fast lane who's life span actively is 2-4 years to turnover and the past greed or fear to be brushed aside and a new begining is made. So we just have to buy time in non trending markets and wait our time for a trend to be there.
P.S. - I have deleted your second post as it was duplicate.