Update for 11 Sep 09…

It has been almost a week of late night flying and there was no update on that account. A good upswing that has been there and the roles seems to have been reversed with the FIIs now convinced and buying and DIIs saying that this run up is false and selling. The same story all over again. (Reminds me of ‘Love Aaj Kal – Eko hai kahani – bas badle zamanna’). It seems that both the categories just cannot remain in sync with each other. Anyway there was a clean breakout a few days back and we are on our way up with a stop here and a stop there. Infact this is what that is happening now – with every few points of downward journey the markets has people buying into it and that is so far good and has supported the markets from a free fall. Let us see where we are off to now.

The global cues from the Europe seem to be mixed – FTSE closed 0.33% in red – and that is after seeing US recovering and coming off the days lows. DAX closed .37% in green – well it spent most of the time in green only visiting red only twice during the session. CAC was down 0.05% in red. Well the US too started the day in red but then steadily climbed to green – never to look back closing the session at the highest with DOW up 0.84%, Nasdaq up 1.15% and S&P 1.04%. The US seems to have officially called off the recession it seems and the markets ended with handsome gains in the fifth strait session. The Asia has not taken the US cues so far and Nikkei has plunged 0.5% – showing some signs of uptick now trading at 0.15 in red, Strait Times is in green by half a percentage points.

On the charts – as I see it there was a Gravestone Doji and that may show some selling pressure for a few days ahead of us. Since the FIIs have been net buyers the selling would have then come from the unconvinced DIIs and retail. The volumes have been 104% of last 50 day average so on that account cannot say that we have been overpowered. Second thing that I notice is that we have not been able to violate the upper Bollinger band – we should have been trailing by violating the upper Bollinger band if this upswing was to continue with steam. There is smart support around the 4 EMA levels and 4 EMA is at 4690 exact – so watch out for this level. If we do go below this level then the lower logical level should be middle of Bollinger bands around 4650 and the real bad downturn can come only below this level. One can never really say that this will come or not as there are reasons for strong supports along the way that I will cover as I complete this writeup. Needless so say that buy was generated on the 315 on Sep 4th. The trend line support is at 4660 levels. So that doubles the effectiveness of support available at around this level. ADX has finally started rising and is up to 16 as of today and I will still wait for the crossover of 20 to see the trend and crossover of 40 for the trend to strengthen up. MACD is bullish though mildly. RSI is bullish at 64 points and trailing above the SMA (15) at 59. If RSI is to fall below around the level of 58/59  - it could indicate weakness otherwise the party will continue. Another problem is the Slow Stochastic that are overbought and has had a bearish crossover of %K line below %D line. The TRIX too signals a rally up so far.

Now coming to a very interesting part – Options data. Since I had some time yesterday I took time to study it and what shows can scare away the living daylight of bears. The PCR is at 1.66 and if you think with this kind of open interest in Puts the operators will allow the markets will spiral down – just forget it. Short of some country Nuking the other I do not see a reason for the supports on the downside to be broken. I am pasting the Nifty open interest table sorted from high to low so you can have a look yourself. Only relief for the bears is that 4700 levels open interest is figuring at the fourth level and we may make an attempt to approach (I say again Approach it) but to violate it – just seems too far as of now. Levels of 4600 and 4500 are just too far and supports on account of options only too strong for a meaningful downside. On the upside the level of 4900 will be a stiff level to crack. So as far as the options data is concerned – we can be range bound between 4700 and 4900 levels.

I will summarise – as far as the global cues are concerned the US is doing great but it has failed to inspire the rest of the world in real terms. The downward infection now may travel from the rest of the world to US and we may see US sobering down at these or a little higher levels. The global cues for us remain mixed with a bit of weakness. The technicals are bullish but becoming stretched. Options should keep the markets range bound giving stiff resistance for the markets to break down meaningfully. So consolidation in this band might happen and levels will be broken on the upside or lower side next month. Ideal strategy might be to dilute longs at higher levels (talking of nifty positions) and buy on dips. For those holding longs do not hold if likely to close below 4791, for those who took shorts do not hold shorts if likely to close above 4852. For the day buy if above 4790 and sell below this level.

Best of luck and may all of you make money and tons of it.

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

I 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.

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.

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.

Hangman Candlestick! – so what?? Update for 26 Aug 09…

I personally feel that we are now bullish to the point of being stupid – but then what? The markets never listened to me. The day will come when retail will be caught up in a web of self induced enthusiasm – the enthusiasm that will blind them and they will then grope in the dark while the markets will play out something unexpected. All the same till the time the party is on – remain on a edge and play out. The candle stick made yesterday was a Hangman Candlestick. Basically it comes after a trend up and has a potential to change the trend. It is perhaps not correct to use this as we are not in a typical trend and upswing (or for that matter of downswing) is of 3 or 4 candles. But all the same it can signal a reversal.

The Global cues are mixed at the best with positive vibes and some caution. The Asia had closed in the red after making attempts to go green. Nikkei was 0.79% down, Hang Seng down 0.49% and Strait Times was up 0.25%. Europe took cues from Asia and opened in red then sensing good day in US closed in green – almost at the days highest. FTSE was up 0.42%, DAX up 0.68% and CAC up 0.78%. The US opened in green and then quickly went up almost a percent plus. Thereafter it dropped to close at the levels of opening – not really flat but somewhere there. Dow was up 0.32%, Nasdaq was up 0.31% and S&P up 0.24%.

As far as the candles are concerned – the markets are now pushing the bullish envelope. We are just a tick short of upper Bollinger band. On 315 we are comfortably on a – buy. But the markets have crisscrossed this lines four times earlier so a typical breakout has not happened. Like I said yesterday we can test the upper Bollinger band limit at 4747 and for the time being that should be it. The volumes increased somewhat with nifty logging average 50 day volumes. Ofcourse this is expiry week so activity increases as there are rollovers to consider, new positions to open or old ones to close. Absolutely surprisingly – ADX does not budge a bit – trailing at 14 (I hope my software is not struck) Weak – it shouts on top of its voice. Typical divergence with markets going to new highs without support of ADX. RSI is rocking and bullish at 58. Slow Stochastic is bullish  but with %k line in overbought territory. MACD has given its first bullish tick. I do have to agree that most of the indications are bullish.

The Broadband is not playing up so the options data is not loading. Pardon me for that so we go on without the options data. The global cues are still bullish and so are most of the indications on the candlesticks. Only words of caution in the winds are the candle itself – the Hangman and ADX that is not showing this upswing as a trend. The ideal strategy is to remain long with a stoploss of 4507 on closing and if short a strict stoploss of closing above 4623. For the day be long above 4591 and short below this.

Best of luck to everyone for the trades today.

Update for 25 Aug 09…

 So 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. The 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.

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. There 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.

So 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.

Update for 18 Aug 09…

We seem to have come made a violent attempt to make a breakout. This has been on the lower side that has been expected by me and my bear fraternity for a long time. So many reasons that the markets were just sweeping below the carpet – and well I think the time has come for the markets to see what the lower side of the life seems like. There has been a Chinese angle to  this meltdown and I think that this was about the time that it happened. In any case if this was to happen then either this or that would have been reason enough. No justifications either side. The markets opened gap down and then the sell off just gathered strength without a respite. Look at the FII data – like I had mentioned yesterday that the FIIs do not seem in any mood to buy into our markets any longer. Now there is another thing that we are perhaps are not considering – and that is that though the DIIs are merrily pumping in money at each level – where do they have their stop losses? (If any – I am certain that since they are playing with my and your money – the stop losses are far away) And that they will start selling at much lower levels. I pray for my mutual funds. For all those who think that the market has already dropped so much and would not like to jump on the shorts – then think again – the fall has just started and it is of global scale – if what I see purely on the charts alone then there is along way to go and that way is just pointing downwards. The markets should give a confirmation that he trend is down and down only. Okay – now I will try not to get carried away and come to the Brass tracks…

The Global cues are bearish and actually saying bearish without throwing a bucket of red paint on top of it would perhaps convey the situation a bit better. After burning every index and stock in Asia the fire went on to Europe with FTSE down 1.48%, Dax down 2.02% and CAC down 2.16%. US opened well in red and then traded in fairly narrow band to close at the lowest for the day. Dow was down 2%, Nasdaq down 2.75% and S&P down 2.43%. The Asia once again started the day in red but Nikkei is now green up 0.2% – the strait Times – now in early trades is just 0.16% down. The meltdown yesterday was supposedly due to profit taking in the wake of slower-than-expected economic growth in Japan. It has been described as one of the worst single day percentage loss in last six odd weeks.

Next I come to the Candle sticks. Frankly what I had expected yesterday was a piercing candle – that would go more than two third down the white candle we had on last Friday and that would ideally had been enough to signal a good reversal – but the markets just did not stop there and continued the journey till they took support at the 50 EMA. I have magnified and put the candles up for all to see. The candle had taken a support on 12 Aug and now 17 Aug. 3 EMA has definitely fallen below the 15 EMA and 15 EMA is just 14 points above the 20 EMA – actually poised for a fall below. Already the 315 has generated a sell – second time in last ten days. – now it has to be seen whether we bounce back vigoursly to show that we are range bound or continue down. The ADX gave a sell yesterday and today too the value is 14 – so it will only be in these coming few days that we will know whether this downtrend has enough strength to sustain. MACD remains bearish. RSI generated sell and TRIX is looking down. Slow Stochastic too has turned around but not really given a sell. All in all – majority are either generating sell or justifying a greater downfall of indexes.

As far as the option data is concerned the Put call ratio has reached 0.8866 and open interest is maximum in 4700 call and 4300 put. So on the down side the 4300 may be a difficult nut to crack. Besides this there is a build up in 4600 and 4500 call so upward journey may be as painful with 4700 being the absolute max. The option pain is minimum at 4500 – 4400 range at the moment. Inspite of reliance defying the general bearishness of the markets I was certain that it will never cross 2100 because of the highest call buildup there and now I am even more certain as basically there is only call buildup with very less put writing – so the downside in reliance may be expected more than the yesterday’s 94 Rs odd fall.

To summarise global cues remain to be bearish. On charts all seems favouring the bears though a small bounce cannot be ruled out due to the ferocity of the fall yesterday. The options are still not showing the extreme of sentiments but still favours the bears. Ideal strategy is to remain short – do not hold shorts if likely to close above 4604, If holding log best would be get off the bus at the best levels today – and do not hold longs in any case if closing below 4464. For intraday go short below 4486 and long above it.

Indicator	Bullish/Bearish	Sell/Buy Signal	Nifty at signal	Points gained/lost since (4387)	Remarks
315 Strategy	Bearish	Sell/17 Aug	4387	-
ADX	Bearish	Sell/17 Aug	4387	-
MACD	Bearish	Sell/06 Aug	4586	+ 199
RSI	Bearish	Sell/07 Aug	4387	-
Slow Stochastic	--	--	--	--	No signal
Options	Neutral / bearish	--	--	--

Neither a bull – nor a bear… Update for 17 Aug 09…

… sometimes I seem more like an a**. Well then I suppose that this is the way of the markets. If the 80% will not loose then the 20% will not make a killing and the markets will not be exciting for people like me to sit and stare. Are markets bullish? are they bearish?… A lifetime goes by learning the answers and the markets change with a flick of a switch. But then this is what I suppose the markets are supposed to do in the first place – fox us. In any case if it continues this way – so will I !!. The markets are really caught up in a range and the breakout will ideally give a good opportunity to make money. Now the next question is when will this breakout take place and what direction it will be. Afterall if we do not have these answers in our hand then we will loose out big time. It may be a good idea to sit on sidelines – but then tell me – what man with the right amount of Adrenaline pumped up in his veins will sit ideally on the side lines? Not me – though my heart does skip a beat every now and then. If however the trend is caught right then it is a big achievement. So we need to first break up the question in two parts and then try to see how we can answer both the parts. Also what ever knowledge of technicals I have I will throw them into a box and see the historical data to pick up signals as to when and which side will we have a breakout.

The best indicator as I see it – that indicates the range and when we will get out of the range is ADX. (I am talking about only the indicators I follow – and if there is some other then telling me would be great.) ADX ideally – if it under 20 then it is signalling no trend either side. The Upswing lost its momentum of the upswing on 5 Jun 09 and then around 7 Jul 09 it got caught in a trap of no particular trend. Historically the ADX has not been keeping below 20 for too long periods of time – so one can expect a trend moving in a definite direction soon. The lowest was seen in the recent times on 11 Sep 08 at 10. We are presently at 14 and to take directional call now is not the right thing to do. There is no trend – there is just bullish and bearish pulls and pressures and that is all. It is because of this reason really that it is extremely difficult to take a directional call on the market right now. Now something I have not researched my self but ripped off the other blogs. – there is a Head and Shoulders (inverse) that is made and a breakout above 4700 with volumes will carry it higher. Others say that it is a bull trap in making with attempts of the movers and shakers to get retail on the train before pushing it in deep sea. You can pick up any line and tow it and chances are that you have 50% chance to win the prize being right. But also consider the H1N1 and the monsoons. These are two things that cannot be wished away. You can click both the maps to get an idea and sense as to where are we headed too. In any case if we go upwards then this was negativity was compensated for and if we don’t then it justifies the downtrend. Two more information pieces that one can consider… the valuations now as compared to the forward projections of 2010 are stretched and FIIs do not seem to be in too much of a rush to put in money in India. Well the last point can be contested and I would welcome it.

Coming to the global cues – the day of upswing has died down fairly fast. Asia was still reeling from the upswing so closed green – Nikkei up 0.76%, Hang Seng up 0.15% and Strait Times up 0.66%. China has had a bad sell of sessions previously and it is just a matter of time we catch up. Europe was flat to green for most of the session but ended definitely red. FTSE was down 0.87%, Dax down 1.7% and CAC down 0.83%. Of course it was US that had dragged the Europe down and US by itself ended – DOW down 0.82%, Nasdaq down 1.19% and S&P down 0.85% down.

As far as the Charts are concerned – there was a black candle. that could not pierce the white candle. Previously – many a sell off have started after a this black candle coming after a tall white candle. The 3 EMA is comfortably above the 15EMA line and we are in the middle of the constricted Bollinger bands. The bands will expand with a break out now. Volumes are again low. I have already discussed ADX in detail and it remains to be Bullish but trendless.(I repeat that the ADX data as represented in the chart pasted is incorrect.) The value of ADX is 14. MACD remains to be bearish. RSI is bullish but looks down. Slow Stochastic is Bullish. TRIX is looking down. So all in all you can see the amount of confusion that the signals are generating. One can safely wait on the sidelines for the indicators to be in consonance with each other.

The way the Put call ratio is swinging above and below one – it seems that it is in the best interests of the operators to keep the markets range bound between 4700 and 4500/4300. A break beyond these levels will only make a trend and that would be interesting. All the same I would like to add that 4700 on the upside may turn out to be a tough nut to crack by the bulls.

So to summarise the Global cues are once again bearish. Technicals are mixed at the best and options data too show call and put writing changing every day – either we remain range bound till there is a definite thrust in one of the direction. The best strategy would be to sit on the sidelines. However if you are upto it then for longs keep stoploss 4459 and for shorts keep a stoploss of 4569. For day trading – buy above 4551 and sell below this level. Best of luck to everyone. May you all make money.

Update for 13 Aug 09…

Hey guys am I missing something or there is some error in the FII and DII data? It has been ripped out from directly from the NSE site so I presume that the data presented is correct and the FIIs continue to be net sellers. Did it mean that after the FIIs had done with their selling the DIIs threw in whatever they could to save the markets from the massacre? I really do not have answers for this and neither did I find any solutions. In any case it has been my experience that not all share their experience or let us say knowledge – may be they are more busy making money. 

The global cues are against the markets at the moment – let us start from one side. Asia was what we saw and reacted to – it was the colour of blood. Nikkei down 1.42%, Hang Seng Down 3.03% and Strait Times down 1%. Europe took cues from that and opened flat and fell, soon the markets there however started to improve and continued to go higher finishing at the highest for the day. Of course the US trend laid the path for the upswing. The US too started flat but soon went on to touch new highs – now in md session trading flat at around their best levels. Dow as of now is 1.25% up, Nasdaq up 1.64% and S&P up 1.21%. I am enclosing the write up from the Yahoo finance that I find it important that you go through and know what is happening.

I quote…

Stocks jumped in light trading Wednesday as investors awaited the Federal Reserve's interest rate announcement. Major stock market indicators rose more than 1 percent, including the Dow Jones industrial average, which gained 120 points to reverse a sharp slide Tuesday.

For months, investors have been looking for evidence that the economy is strengthening and pulling out of recession. Traders pay particular attention to the Fed's assessments of the economy. The latest is due at 2:15 Eastern when the central bank concludes a two-day meeting on interest rates.

It is widely expected that the central bank will hold the federal funds rate near zero. What investors are uncertain about it how the Fed will size up the economy -- whether it sees further signs of strengthening that would justify the gains in stocks since the spring.About four stocks rose for every one that fell on the New York Stock Exchange, where volume came to 439.1 million shares, compared with 503.4 million shares traded Tuesday. Light volume price moves and could be overstating investors' enthusiasm ahead of the Fed decision.The market is bouncing back a day after posting its biggest loss in five weeks. The Dow slid 1 percent and the S&P 500 index lost 1.3 percent. (Source: Click Here)

Coming to my favourite – the technicals. The candle was a hammer and purely from the candles point of view it can signal a reversal – reversal from the present downtrend. But also importantly it the candle just shied a dot short of hitting 50 EMA running at 4342. The 3 EMA remains firmly below the 15 EMA and as of today also crashed below the 20 EMA standing on top of 25 EMA exactly at 4471. SO on that account the bears should not really loose their sleep. The volumes were still low. The ADX has improved by a point to be at 17 – but that too is weak still. MACD is still bearish and the divergence has increased – mind you. RSI is at 49.7 and today too I will disregard it as a bearish crossover. We will give it another day. TRIX is looking down and Slow Stochastic while still remaining in oversold territory has generated a buy signal. Very fairly and squarely we remain bearish as far as the technicals are concerned. What you also see in this chart on the left is the dots of the Parabolic SAR (10, 2 , 20). They too are red as of now.

The options data has no change so the Put call remains a shade below 1. So all in all the Global cues are likely to remain strong in view of the Fed meet outcome. The Hammer and Slow Stochastic can signal bullish run whereas ADX, MACD, TRIX continue to signal bearish undertones. Options are not likely to play a role except the 4700 being a strong reistance upwards.

Indicator	Bullish/Bearish	Sell/Buy Signal	Nifty Level at signal	Points gained / lost since (4457)	Remarks
Harami	-	-	-	-	Signal has played it part and buried
Hammer	Bullish (reversal)	-	-	-
315 Strategy	Bearish	Sell / 10 Aug	4437	(-) 20
ADX	Bearish	Sell / 07 Aug	4481	+ 24
MACD	Bearish	Sell / 10 Aug	4437	(-) 20
RSI	-	-	-	-	Disregarding – waiting for a clearer indication
Slow Stochastic	Bullish	Buy / 12 Aug	4457	0
Options	Neutral	-	-	-

So we might be reaching the stage where it might be wise to sit on sidelines especially if the market close in green. All the same the best strategy as of now would be to remain short. Do keep a stoploss for the shorts at 4516 on closing and if you are long then do not hold if the market closes below 4386. For the day – if market is above 4483 – go long and below it go short. Best of luck to everyone for tomorrow.

Explanation given by ID Stockstar for my first Paragraph on ‘Stockezy’ on 12 Aug:

Well cash selling many times used just as one way of doing cross arbitrage!

Like when nf shorted at 4700 level with call writing done and put buying done....also stock future shorting done.......so only thing that remains is using cash stocks to bring it down....so cash basket selling used to help make all 3 trades in profit. now question remains what happens to cash stocks......if they want to keep trend up they just buy more stock futures at bottom and reverse nf future and option positions.....and now how to take nifty uppppppp take it up with spot cash buying in nifty stocks and nifty future buying!

If u see all data in toto for last 10 days u can make out!

TO highlight more.....when nf was at 4700 for three days nf was rising with lower nf future volume and stock future short positions were added up and call writing was on.....more so in medium term nifty calls like sept and nf was waiting to dip yesterday nearly all positions started reversing hence thats reason for strong pullback today as they defend lower put writing very well in closing!

Hence now swing trade wise unless 4350 breaks in closing basis trend is up!

Update for 12 Aug 09…

I have searched high and low for the answers to the questions that have been hounding my mind seeing the markets today. They opened as per the expectations… so far so good – then went on to show strength – suddenly sold off with a bounce again. I wonder those sitting with tons of certificates in finance and economics are not the ones jittering like this. But then what the hell – it happens every second day. The moves were extremely sharp and am sure that only the fast fingers would have got anything worthwhile fishing in these waters. The FII data streaming in is not really bright from any angle except that they have not sold the whole lot like they did yesterday and day before. The DII seems to have become pretty active – the moot point will be to see how long FII withdraw and DII keep pumping in money. There is tons of money in our country that sits in the side lines. That is okay but historically a vast majority will never flow into the markets at any rate. Another angle is the money being sucked out due to the IPOs that have been open and are to come in the next few days.

As far as the global cues are concerned – they are not good at the moment – what can happen till morning is --- uhh !! not likely to become good – but then as I sleep the world turns around. Asia was good – we had Nikkei up 0.58%, Hang Seng up 0.69% and Strait Times – the one that was not trading yesterday make most use of the lost time and ended up 1.88%. I will not talk about our levels as shown close after adjustment were far away from where they were at the moment. – they were green nevertheless. Europe had opened green and perhaps that was the strength that was with us to remain green – all the same the Europe thereafter nosedived to close at the day worst levels. FTSE was down 1.08%, DAX down 2.44% and CAC down 1.38%. US has reached its mid session and no – it is nowhere good as of now. They are waiting for the beginning of two day feds meeting. As of now Dow is down 1.07%, Nasdaq down 1.38% and S&P down 1.36%.

As far as our technicals are concerned – there is no good news inspite of this bounce in green that we had. Let us see the details… 3 EMA first had crossed below the 15 EMA and now it is below the 20 EMA. So shorts rejoice. We are past the middle of the Bollinger Bands on the down side now – it remains to be seen when and how we hit the bottom of the lower Bollinger band. Bollinger bands are constricting and I – being the bear I am at the moment am not interested in at the moment. The volumes were low – 74% of the last 50 Day average. Do not look at the ADX in the chart – I have already written to iCharts that their values are incorrect and they have promised to rectify them – till then the ADX reading is 16 – weak trend. So I am really waiting for a value above 20 while the markets fall for it to be classified as a down trend as per this. All the same the sell signal remains. MACD is bearish. RSI is at 50.53 so I will disregard the bearish indication that it had generated yesterday. Slow Stochastic is bearish but oversold. Remember – if we are indeed in a downturn then it can remain oversold for pretty long – so keep aside the worry for some time. The TRIX – the leading indicator is looking down.

As far as the options data is concerned not too much of change – nor any out of the way build-up at any levels so the same holds true for today as yesterday. So I will summarise – the Global cues are likely to remain weak tomorrow. Technically markets are weak and likely to have a greater down side in the days to come. The ideal strategy is to go short or remain short who initiated them earlier. Stoploss for shorts is 4555 and absolute stoploss for longs (if anyone is holding) is 4421. For day trading be long above 4500 and short below it. The fireworks will start only below 4388 levels. And mind you there is a strong support there.

 

Indicator	Bullish/Bearish	Sell/Buy Signal	Nifty level at signal	Points gained/lost since 4471	Remarks.
Harami	Bearish	Sell / 04 Aug	4681	+210
315 Strategy	Bearish	Sell / 10 Aug	4437	- 34
ADX	Bearish	Sell / 07 Aug	4481	+ 10
MACD	Bearish	Sell / 10 Aug	4437	- 34
RSI	-	-	-	-	Disregarding – waiting for clearer indication.
Slow Stochastic	Bearish	Sell / 05 Aug	4694	+ 223
Options	Neutral	-	-	-

I would like to wish every one for tomorrow’s trades.

Market update for 11 Aug 09…

  The markets have played out in the hands of two events for last three days, firstly the bears and secondly the technicals. It is a question of what came earlier – the markets or technicals. At some stage of life they both have intertwined so much with each other that it is frankly extremely difficult to tell. Well – still all the same they have atleast given us the opportunity to see how the markets will shape out. The FIIs at the moment seem to have become a major problem. They are sucking out liquidity out of the system and the DIIs can never catch up. It may so happen that the DIIs also give up and what a day it will be. Hope that it will not come in a hurry. In any case I will stop babbling about all this and get to the task at hand. All the same before I begin with reading of the data – we have at the moment some not so news around us. A semi agrarian society at the best that relies on monsoons have deficit monsoons. A population of a billion plus having less than good health facilities – with Swine flu knocking in the backyard. Enough to give anyone jitters. Add to it a pint of Chinese bubble about to go bust etc. A perfect recipe for disasters on the markets. Not that if all goes well it matters – then a single statement that this has been factored in in the markets will see it through – but unfortunately that is not the case. So except trouble in the short term.

As far as the global cues are concerned – things were poised for a bounce – and a strong one at that. All the same Nikkei ended 1.08% green, Hang Seng 2.72% green and Strait Times was closed. Europe opened red and made a half hearted attempt to recover but apart from FTSE – none did. FTSE closed 0.68% green, DAX red and CAC red 0.75% and 0.47% respectively. US opened red – tried to recover but has since sunk deeper red. DOW is presently 0.48% down, Nasdaq down 0.67% and S&P 0.53%. They do have a lot of time in hand to attempt a recovery – we will have to see it at their close tomorrow.

The candle today was another black one – though it is not a perfect ‘three crows’ bearish pattern – it is very close to it. As far as this pattern is concerned expect some more down turn. We have already violated the middle of the Bollinger bands now all we have to do is to test the bottom of the bands. 3 EMA has crossed below the 15 EMA and has generated a sell signal. Volumes were low – lower than yesterday at 79% of the 50 day average. ADX had already generated a sell signal and remains weak. If it comes above 20 then – at the moment it will give strength to the bears. MACD has generated sell. RSI generated sell signal and Slow stochastic bearish. Only small caution with the Slow Stochastic is that %K line has entered oversold. Does not really matter as of now but will build up in time to come.

Options data now has a good amount of call writing going on so be prepared for a painful recovery if any. The way 4700 calls are being build up – forget reaching above it for this expiry. If meaningfully 4400 is broken tomorrow then a run up (or may I say down) to 4300 is quite possible.

To summarise the global cues have turned weak. Majority of technicals I follow on the charts have generated a sell signal. Would be ideal to sit tight on shorts and till there is some kind of turnaround – no longs. Option data does not suggest extreme of sentiments but call build up is going on. It will be a time before options meaningfully sway the markets. As per the options the levels to watch out for are 4700 on the up side and 4400 and 4300 on the down side. (4400 if breached – likely to force option sellers to cover or hedge positions – helping the market fall)

So to wrap up Ideal strategy is to go and remain short. Stoploss for shorts is 4624 and stoploss for those carrying longs is 4474. For the day go short below 4519 and long above 4519.

MARKET SUMMARY
Indicator	Bullish/Bearish	Sell/Buy Signal	Nifty level at signal	Points gained/lost since	Remarks
				4437
HARAMI	Bearish	Sell / 04 Aug	4681	244
315 STRATEGY	Bearish	Sell / 10 Aug	4437	0
ADX	Bearish	Sell / 07 Aug	4481	44
MACD	Bearish	Sell / 10 Aug	4437	0
RSI	Bearish	Sell /10 Aug	4437	0
Slow Stochastic	Bearish	Sell / 05 Aug	4694	257
Options	Neutral	-	-	-

Markets, Markets…. crazy markets…. Update for 10 Aug 09

Actually one does not call them crazy – it is so very understood by everyone who has been in the markets for whatever time that they are crazy and they have a mind of their own. All the same the desire to tame them would be aim of anyone who dreams. See for example the way the markets behaved last two days. they followed the dictum of the candles to the core and then stopped just a needle bit short of turning the indicators bearish. Ofcourse I will be substantiating whatever I say – but for the time being suffice to say – they showed arrogance inspite of being poised for a fall more severe that what we witnessed. We once again stand at crossroads and stare at the way to go. There is a way this side and the other. I have to choose the path of the markets otherwise I will be lost in the forest filled with everyone to take a snipe at what is mine. I have deliberated on what I should put across this weekend. I even thought about skipping this one update and write when there would be more clarity about the direction. It is never easy to say sorry in the hindsight.

The markets went the way they were supposed to – fall they did… The Harami played exactly as in a text book – but then why am I afraid? Am I afraid because of the way the US and the European markets fanned out – closing the trades for the weekend? Yes and maybe. Fact remains that they were not supposed to close strong – it could be the head of a snake making one attempt to surprise – the last bit of effort to show that it will dare – or it may be the strike with vengeance that can take us to the new heights. Whatever it would be it is time to be on our toes and keep a watchful eyes – the markets can go either side with strength not giving any time for us to think and act.

Coming to the global cues the markets started in Asia as flat to green but kept going down to close at – Nikkei – the only oasis of green at 0.23% up, Hang Seng down 2.51% and Strait Times down 2.05%. Europe too opened red but by mid day it was clear that the US cues are overtly positive and that led to a sharp rally with the markets ending comfortably green with FTSE at 0.87%, Fax up 1.66% and Cac up 1.25%. As the two major areas of concern – namely the housing and employment came better than expected the US rallied right from the beginning to close – DOW up 1.23%, Nasdaq up 1.37% and S&P up 1.34%. So it goes without saying that the global cues are looking good.

 Now here is the trouble area – ideally the fallout of a confirmed Harami should be continued selling pressure. Yesterday panned out to be the second day of selling – ideally beginning of many to come. Now the 3 EMA line – it is just shy of crossing below the 15 EMA at 4537. If this crossover does not happen then it will be a signal to build up longs and square off shorts. Volumes again fell to 84% average of last 50 day traded. ADX has just generated a sell signal with a –DI crossover of +DI. MACD is one point short of generating a sell signal. RSI is one point short of generating a sell signal. Slow Stochastic is already in a sell mode.

As far as the options data is concerned the call build up has quickly filled out the available calls with the Put call ratio dropping below 1 to 0.97. remember it was 1.1 on Thursday? The data of the main strike prices is as in the table above. The call build up is at 4700, 4800 and 5000. So basically as per the option data the fight between the bulls and bears is on and no one knows where the market will go. The levels of 4700 on the upside and 4500 & 4300 important levels on the lower side are important. The 4500 level is already in money.

So all in all the global cues are bullish. The technicals that I follow are either already bearish or turning bearish. If these indicators take support at these levels then a strong bounce back can happen – but if they breach these levels then we are on our downward journey. Options are as of now on sidelines only – will give pauses at 4700 levels on the upside and 4300 on the lower side.

Indicator	Bullish/Bearish	Sell/Buy Signal	Nifty level at signal	Points gained/lost since (4481)	Remarks
Harami	Bearish	sell / 04 Aug	4681	+ 200	Harami confirmed as bearish
315 Strategy	-	-	-	-	20 points short of generating sell signal
ADX	Bearish	sell / 7 Aug	4481	+/- 0
MACD	-	-	-	-	1 point short of generating sell signal
RSI	-	-	-	-	1 point short of generating sell signal
Slow Stochastic	Bearish	Sell / 05 Aug	4694	+213
Options	Neutral

One may either sit on the sidelines for a day or be positional short at the moment. For the day sell below 4574 go long above 4574. For those positional short keep stoploss 4676 and if you are long do not hold below 4551. Best of luck to every one. Whish you all make money…

Update for 07 Aug 09…

Firstly allow me to apologise for not updating the blog yesterday. Night flying coupled with a killing schedule in the past few days was the culprit. It was a bad day for the markets – but frankly it was not unexpected – after there has been a non stop rally for some time now and there has to be some consolidation. If we do not go into a free fall then this might turn out to be the right dosage of the medicine required by the markets to perform even better in the coming days. Add to it that this is not a local phenomenon – it is global in scale.

The Global cues that panned out and are out there at the moment are really not as encouraging as they should be. Even it is not all honky dory in our home front – all the same – the markets did what they assumed to be the best – if there is a fall one day – take positions to make use of the rise the next day – only that it may not happen so in the coming few days. Take Europe for example. They were trying to reach out for new heights a day after a poor show. FTSE opened green and went on to touch new heights. It was only US that dampened their spirits and finally they did end in green after paring some of their losses. FTSE was up 0.93%, DAX was up 0.32% and CAC was up 0.56%. US had a second day in the red with the fall being more broader than the day before with DOW down 0.27%, Nasdaq down 1% and S&P down 0.56%. Ofcourse the least expected out of this US closing is that Asia too dips red and that is what there is to see at the moment. Nikkei is down 0.55% and Strait Times is down 0.72%.

On the charts the Bearish Harami did play out – not the next day as expected but the day after. In the candles you can under some conditions add and subtract the real bodies and that being so – we are can count on this to be the beginning of a downturn. How long it lasts – where it goes – is for other to guess – I will stick too – that if we have other indicators giving a sell then it is time to sit on sidelines with money ready rather than all invested. On the Jul 29th the 15 EMA line was tested by the candles and you can take it that yesterday was the second time it has happened. If we do not fall now then the next time would be the last time the line should be tested. We are close to the middle of the Bollinger Bands so some more down time is left before the support is taken around 4446 levels. The volumes were average (103% of last 50 day average). ADX is still bullish but the ADX line per-se is at 17 and may be pointing towards a change in trend. MACD is still bullish but divergence has reduced a lot since last few days. RSI is bullish with the RSI at 57 and SMA (25) at 54.75. A crossover down will give a sell signal. TRIX still looks up and Slow Stochastic generates a sell signal.

As far as the options data is concerned the open interest remains leading at  4700 call so it will remain a major resistance for a crossover this month or till the options trend changes. Please find the open interest attached as a jpg file. With this also consider that the put call ratio is very near to 1 at 1.1 (up from 1.05 a day before) I still feel that the options will not play an important role in markets except defining the range as 4700 on the up side and 4300 on the bottom with minor support at 4500.

To summarise the Global cues are negative and weak. It is likely that Europe will get slaughtered for standing against the trend yesterday. Candles have Harami confirmed as bearish. ADX weak but bullish so far, Slow Stochastic bearish and rest all bullish. Options are not likely to play a major part except providing support at 4300 and 4500 levels and major resistance at 4700 level. For the day – sell below 4636 and buy if the markets go above this level. Ideal strategy is to go short with a stoploss of 4722 and those holding long should not keep it if closing likely to be below 4611.

Indicator	Bullish/Bearish	Sell/Buy Signal	Nifty level at signal	Points gained/lost since (4585)	Remarks
Harami	Bearish	sell / 04 Aug	4681	+ 95	Not waited for confirmation
ADX	Bullish (weak)	buy / 14 Jul	4111	+ 474
MACD	Bullish (becoming weak)	buy / 16 Jul	4231	+ 354
RSI	Bullish	buy / 16 jul	4231	+ 354
Slow Stochastic	Bearish	Sell / 05 Aug	4694	+ 109

Seeing the above table either I will sit on sidelines or go short as majority is turning the tables for the bulls. Cheers to the Bears.