Update for 09 Aug 10

I have had a long break and will now again make a sincere effort to start and be regular on the blog once again. The markets once again are in a state of flux and moving just to sort out the trader. I am confident and do maintain that India is a wonderful investing opportunity and those who invest here as investors for the next 10 odd years (I repeat ‘INVESTORS’) – they are likely to reap phenomenal benefits in the years to come. The snapshot that I have posted to the left is trend channel that we are into and as long as the basic channel is not broken on the downside – apart from some corrections – the uptrend is intact. Infact if one would have noticed – there had been a talk of correction for a very long time – and now that we are so near the top of the channel – there is a talk of continued uptrend. Like I said the uptrend on a longer term perspective is unquestionable but on the short term – a small correction is very much in offing. Now whether it happens today or after a few days – it will be known in coming weeks (if not next week itself). My only hope is that we all should be on the right side of the market when this happens.

The last trading day of the week ended with DOW down 0.20%, Nasdaq down 0.20% and S&P down 0.37%. Europe fared even worse with FTSE down 0.62%, Dax down 1.17% and CAC down 1.28%. Asia was mixed with Nikkei down 0.12%, Hang Seng up 0.59% and Strait Times down 0.39%. It may not exactly give strength for us to open on Monday – may be another flattish opening.

Now that we have this basic in our minds – let us see what the technical's tell us. Firstly the FIIs have been buying for some time now – and I only hope that they do not decide to pull out some profits.

Let us see the option data. Firstly the put build up is huge and may prevent a real fall that so many are expecting – but then unwinding can take place pretty fast. The levels at which the put build up is there is 81 lacs at 5400 level and 99.72 lacs at 5300 levels. So support at 5300 should be good. As far as the call build up is concerned – the call build up is 86 lacs at 5600 levels and 75 lacs at 5500 levels. So the market perhaps is laying down a range 5300 to 5600. It is perhaps too early to see option pain – but all the same the worst would be market ending at 5400 level as per option pain.

Let start no with the charts, ADX is saying that we are not trending – so to take a particular directional call may not be a very good idea, however if at all the signals ae indicating long as far as we remain above 5414. The PSAR too is indicating long as of now – but I would like to rub in we are at the upper end of the channel and a correction can be in the offing. RSI is bullish, ADX is bearish indicating a weak trend. MACD is bearish – but just so. Slow Stochastics are overbought. Bollinger bands have contracted and the candles are trailing upper Bollinger bands – so chances are the markets will first correct to middle Bollinger bands to 5318. The volumes in Nifty Futures have been 116% the average. Interestingly the IFCI fell on 5% + on 249% of average volumes – if it does not bounce back on Monday then we may see lower levels.

So now to summarise – the medium to long term trend remains up – but for the immediate future there may be some downside – and infact that can be healthy for the markets to continue upwards. The low level that can be expected are 4925 levels. Best of luck for Monday…

Why I feel it is the time to drop again….

Firstly, I am have not gone into the kind of depth I would have normally gone before updating this blog but all the same there are some teasers that I would like to put across. Take a look at this clipping. Firstly we had a sharp fall that started 16 days back to be precise. Then we had a bounce back that was expected. Now.. Now.. This bounce back has touched the 61.8% retracement and I feel that this is what is would have been and the potential at the moment to keep going up has exhausted. The course of action that I expect in the order of precedence is – First scenario – we fall back making a lower bottom. Second option is that we consolidate here before going up again. Whatever the market does – it is pretty certain that we will see these levels or lower for a few days more.

Rest – frankly either the market knows or Ofcourse the LORD Almighty.

staying positionally short with adequate protection (options) may bear fruits…

Update for 15 Sep 09…

Like I said yesterday – it is not that the confusion is there in our minds only – it is there everywhere and no one really knows where, how and when we are headed too. That we have to go somewhere is – but inevitable. What is probably happening is that the positions are taken with a hope that the markets will go somewhere (mostly on the bearish side) and when the markets do not do anywhere there is a rush to square off the positions with a fear for carrying positions overnight and the markets then return to the start point. That would be a fair assumption why we are not going anywhere. Top this with dismal FII and DII interest – we are back to the start really with nothing happening. And at the cost of a repetition – it is not confined to our markets. It is happening everywhere. Look at Asia, Europe – US anywhere – the markets just not decided after moving up so much – where to go to.

Let us look at the global cues – Asia was all red and deep red (except us of course ;’-D  ) Nikkei was down 2.3%, Hang Seng was down 1.08% and Strait Times was down 1.54%. Moving on to Europe they too opened with deep cuts but then went on to recover (something like us) FTSE finally closed 0.15% up in green, DAX down 0.07% and CAC down 0.11%. US is facing major concerns on the US-China trade terms and opened lower but as of now – just short of the mid session is hovering around the unchanged line – Dow in red 0.16%, Nasdaq down 0.04% and S&P down 0.03%. The way the things stand – the markets can make a recovery also – so will have to review again tomorrow.

As far as the technicals are concerned the candle was a red one – the entire day played out in a narrow zone only with a short covering helped attempt to recovery.The market momentum definitely seems to be tapering off on the charts. The volumes are low and the chances after today have brightened to visit middle Bollinger bands. TRIX is bullish and so is MACD and RSI. Slow Stochastic have come out of the overbought condition but are bearish as of now. All in all – nothing much is happening. ADX too seems bullish at the moment.

The options data is roaming around at the same place so I will not spend time to dwell upon it too much. The PCR is 1.81 and that is the expectations of the majority speaking that the market will fall – or let us put it this way that the markets should fall. The writers of Puts will not like that situation obviously so we can still wait out for a major fall to come our way.

All in all the trend so far remains bullish and for those long do not hold longs if the markets are likely to close below 4795 those in the bear camp who are short should not hold shorts if the markets are likely to close above 4859. For the day be long above 4807 and short below this level.

May you all make money. Good luck!

Update for 14 Sep 09…

This is the time when the confusion galore in everyone’s minds. There is just no clarity as to where and when the markets will move. On top of it all the technicals are not helpful, Fundamentals are on shaky ground and result is – what the heck and were the heck are we off to? More high in sight? maybe! How about lows? Maybe! The FIIs buy – DIIs sell – DIIs buy FIIs sell. I think that this will continue and the sell off if it comes will be big. So many rumours floating around. So much of data pointing nowhere and still we have to go along with our days and night dutifully.

Let me first begin with the Global cues – though they are touching new highs – they seem to be in doldrums like everyone else – taking each step forward with caution but moving ahead all the same. Take Asia for example – Nikkei was down 0.66%, Hang Seng up 0.44% and Strait Times down 0.04%. Europe had some bit of more clarity and they spent time comfortably in green. FTSE was up 0.48%, DAX up 0.52% and CAC up 0.78%. US was red but definitely off their lows – and almost recovering the losses of the day with DOW down 0.23%, Nasdaq down 0.15% and S&P down 0.14%. It is more like that they are standing still in a time wrap for some event to come – some trigger to push them somewhere.

As far as the Charts are concerned – The candles for the second day is close to a DOJI - “I say close because it has a body worth 10 odd points” This just displays the power play that is happening between the bulls and the bears and no one making a worthwhile headway. Mind you this is after the bulls ripped the upper limit and surged ahead – but seems to have again got caught up in a band. As far as the Bollinger bands are concerned the markets are not violating the upper bands and it seems that the upswing will not remain too forceful in the coming days. All the same – market remain to be in a bullish phase so far.  The ADX seems to be creeping in – it has reached 17 from about a low of 11. Now it remains to be seen what it supports – the bulls or the bears when it does breakout above 20. MACD remains bullish. RSI is bullish and Slow Stochastic are bearish with the indicator in overbought zone. TRIX is bullish. So far so good as far the indicators are concerned.

As far as the Options data is concerned the PCR stands (Nifty) as you would be seeing from the chart on to the left hand side the PCR is at 1.66 but the volumes seems to have dropped from 1.3 million to 1.18 million. In addition to this the Option pain points out the lowest pain in the level of 4700 Nifty. Are we heading towards this closing? I really do not know as half the month is still left waiting for a direction really. As of now the decline still seems difficult but then PCR can change if the big fish so desires.  The 4600 put now has the greatest open interest of 6.6 lacs, 4900 call 5.17 lacs, 4500 put 5.08 lacs and 4700 put 4.94 lacs, 500 call 4.3 lacs and 4000 put of 3.4 lacs. The range for the market should still be 4600 to 4900 with 4700 a support on the downside.

To sum it up I would put it across this way for the Monday markets – Global cues may remain tepid – may be because of consolidation or a correction. Technicals are bullish but getting overbought and Doji is yet to work out –so be careful. The options data says that we are not likely to fall easily but keep an eye on the PCR and the volumes – increase or drop – whatever. The picture of the PCR above is liked to the sire where you can track the PCR real time.

Ideal strategy is to remain long with a stoploss on closing below 4794, those short can keep a stoploss at closing above 4857. For the day remain long above 4806 and short below it. May you all make tons of money.

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.

Update for 07 Sep 09…

When I talked about the resilience of the markets in my last post I had frankly not expected the kind of upswing from the markets that it really showed. That was a fabulous turnaround that took the markets to the close it did. now like we have had multiple tests of the highs earlier – we have tested the lows also. The range is small and the breakout will happen whenever it has to. The high is at 4735 and low at 4576. There should ideally be another attempt at breaking the high once again and I am quite certain that the high will be broken – how much conviction that breakout has will remain to be seen. Look at the FII and DII data – this selling by FIIs will remain a concern whether we like it or not.

The global cues were good and that should start the week on a good note. The Asia had ended the week with the Nikkei down in red 0.27%, Hang Seng up 2.82% and Strait Times up 0.94%. Europe performed better than Asia and it started in green and ended in green higher than the opening point – never visiting the red area. FTSE ended up 1.15%, DAX up 1.57% and CAC up 1.27%. US on the other hand started the day flat but went on to comfortable green by mid session and remained there only for the rest of the time – ending – Dow up 1.03%, Nasdaq up 1.79% and S&P up 1.31%. Nikkei has started the day today almost a percent up. Mind you today being Labour day the US markets will remain closed and that part of the cues will be missing so incorporate this factor in your assessment of the markets.

On the charts the markets bounced once again from the middle of the Bollinger bands not really bothering to violate the middle of the bands to test the lower band. It also coincided with the support as you would be seeing on the chart on the left. Now to this end we are very close to test the upper Bollinger Band at 4779. The range too has become so constrictive that a breakout is just a matter of time and I would still not bet on the direction of the breakout. Notice two things on the charts – the green ticks do not have relatively more volumes than the red candles. The red candles are with a little bit more volumes than green candles. Now that is the reason I say that it is difficult to say who is running out of steam. Not only that it may be prudent to point out the FII and DII data once again.The TRIX is flat with perhaps a little positive bias. As far as the MACD goes the lines are overlapping each other with hardly any divergence. RSI is at 57.76 and the RSI simple moving average for 15 days is also above 50 at 54.6 – this has two things – the moving average is above the 50 point and the RSI is trailing above the SMA. As always my concern is the ADX – it is at 11 – It will surely move shortly above the 20 marker and that mind you will definitely give out the trend the markets will take in near future. So what I am saying is that do not read into the 100 odd points upswing – it is most likely to be temporary – one of those days run up. As far as the Slow Stochastic are concerned they have turned bullish by a cat’s whisker – so I will read it neutral. MACD is still bearish. So here we are – with nothing to read really in the tea cup of technicals.

As far as the options data is concerned the PCR is at 1.23 – resisting the markets from going into a free fall. Options pain says that 4600 is the level and till that moves the markets are signalling a hovering around this point. The greatest open interest is at 4600 Put now with 45.93 lac, 4500 put with 44.41 lac open interest, 4800 call with open interest at 36.19 lac (next bus stop around 4800 levels?) 4300 put at 33.78 lac and 4000 put with 33.14 lac open interest. So that does give us some sense as to where we are heading for.

I will summarise this in the following manner, Global cues are good. Our Charts are mixed with volumes and the ADX not playing up still. The Options data point out towards to some more upswing before we stop. All in all the ideal strategy would be to remain long. The stoploss for longs would be closing below the 4579 level and if holding shorts then keep stoploss of close above 4665 for the day. For today go long above 4644 and short below it. I wish all of you luck for today’s trading.

Update for 04 Sep 09…

We must say hats off to the Indian markets resilience.   Under the same circumstances some time back we may have fallen like there has been no tomorrow. The Global markets are not really playing up but still we are holding on to levels that cannot be called bad really. There has been other things one has to keep in mind like the markets have not broken above 4700 levels really and that its future depends upon convincingly breaking above and sustaining that level. You can take it 4725 – 4750 level or so – it depends how you read the charts and what methodology is used. If we somehow manage to see through these two months – Sep and Oct then I feel there is some good times in store for us. Actually there was a lot of enthusiasm in some quarters that was already seeing markets at 5000 levels. There has been infact so much Put writing happening – just the signal that the markets are optimistic and that may be the soft underbelly. More on it after a moment.

The Global cues are mixed – doing the tango as I say usually. Asia had Nikkei down 0.64%, Hang Seng up 1.23% and Strait Times up 1.11%. Europe ended in red inspite of keeping flat for the majority of the session. FTSE ended down 0.43%, Dax was down 0.35% and CAC ended 0.55% in red. Europe fell on US concerns and US that has had four days of slide found some hope and pushed its way up. The US markets – past the mid session now are crawling to a little higher levels. Dow at the moment is at 0.32% in green, Nasdaq 0.47% in green and S&P 0.42% in green. The US markets too are fighting for foothold around very important support and resistance level. Nasdaq at 2000, S&P at 1000 levels. The chances are bright that the US markets will end up green – max about a percent or so.

As far as the technicals are concerned – today has been the fourth red tick we have seen in the past as many days. The technicals have slowly and steadily turned bearish but some key spots are yet to be conquered by the bears – though they do seem to be in a winning streak. We are in the middle of the Bollinger bands and the 15 EMA still is 5 points below the 3 EMA – meaning that classically the sell signal has till not been generated.  MACD is just about to generate a negative divergence – but bullish still. Slow Stochastic the markets are bearish and fast moving to the oversold zone. %K is already in oversold zone and %D line will soon follow it there. TRIX is neutral – or seems like so. RSI still is bullish and has not generated the 50 crossover from top to bottom sell signal. The ADX has dropped even further down to 11 now.

As far as the Options data is concerned – whatever support that we are finding is due to the put writing at every 100 points in Nifty. But what is happening is that now the call writing has also started in the same earnest so the Put call ratio is 1.23. My sense is that If we go further down then the call writing will gather more  strength of momentum and eventually our recovering will become difficult. Ofcourse I am assuming that call writing will start at a faster rate it is being done now. The open interest at the various levels is 46.8 lacs put 4600, 44.85 lacs at call 4700, 41 lacs at put 4500, 38 and 36 lacs at calls 4900 and 4800 respectively. If we go below the 4500 mark then the next resistance to fall will come at 4300 nifty levels.. Just for info the call writing in Reliance is 24 lacs plus calls and just 7 lacs something puts and you think that reliance will recover?

So to sum it up – Global cues are positive a bit – the Asian markets will definitely open green and then where they go is anybody’s guess. Mine is that they go red. FIIs continuous selling will keep our markets under pressure for the time being. Charts are either bearish or turning bearish so they will oppose bulls even if they do not support bears. Option data is as of now resisting the markets to fall but may resist the markets recovering if the call build up happens as we creep lower. So a massive selloff or buy out is not likely – we might be expected to move in a range with a closing either side of the flat line.

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 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	-	-	-