Sure and steady….

Conflicting views on the direction our indexes will take in short term has created confusion but the markets are weathering all storms and moving steadily up – a small step at a time – beating bears here – killing them there. But every time it has defied the bears – every time it has taken a step to go up – it has been little less than expected by me. I did not perhaps realise that the bears are strong and cash rich. But my assumption was based on the fact that they have to let the bulls go to some heights before they meaningfully cull them. It may be actually that the bulls too are wary of each step they take. All said and done – I was of the opinion that the markets will go in the range of 32 to 35 hundred on nifty before the serious selling will set in. – Culling of bulls I meant. So we have some time to go before we reach there – one step at a time. I still stand by the figure I gave above. Now only markets have to prove me right – or wrong.

There was nothing really good about the global cues or the markets. Infact we should see the weakness shown by the world markets somewhat magnified in our trading today. Asia was weak – except ofcourse our markets. Europe opened green then steadily slipped in red – at one point diving deep down then recovering close to the flat line but in red. FTSE was 0.07% red, DAX was 0.18% red and CAC closed 0.87% in red. US struggle continued with the fate of the automakers still hanging on a thread and while the comments were there to signal and calm the frayed nerves of the investors – there were no details on timings, amount or the term of the package to the big three daddies of US auto industry. While the General motors and Ford finished the session a few points in positive (0.14%) to be precise, The US indices traded in red. DOW was down 0.75%, Nasdaq down 2.1% and S&P down 1.27%.

The candle formed was white and good. The Bollinger bands have expanded a bit and the Candles are along the upper line of the bollinger bands. 5 EMA line is above the 20 EMA line. The volumes were same as yesterday. MACD positive divergence has increased and the goodness continues. RSI is good and so is TRIX. Now the problem – MACD red and blue lines are in overbought  zone and they do not intended remaining there for too long. That is the way so just a time before it drops (taking the markets down with it) Also the red line has already looked down attempting a crossover to the lower side. Another negative day in making today? Let us see.

Pivot data…
R3 3107 against 3060 on yesterday
R2 3065
R1 3023
Pivot 2970 against 2889 on yesterday
S1 2928
S2 2875
S3 2833 against 2719 on yesterday
Projected High Range 2996 to 3044
Projected Low Range 2980 to 2932
Fib Projected High 3037
Fib Projected Low 2891

Expected opening with weakness and may recover towards afternoon. Notice that the resistances have moved – all above 3000. R3 is now infact moved to 3100 levels. Best of luck everyone.

Making money….

I was interacting yesterday with some friends and we started discussing stocks. The talk naturally moved on to how many have made money in the markets. The story was simple and was repeated so many times. I was doing so well till Jan this year and now I am down to 45%(best performing), 20%, 10% of the money I invested. Basically everyone had lost. Then like a miracle – one of them raised his voice – cleared his throat and said – “.. gentlemen my father is a financial wizard .. he is the man who has made money not only when the markets had gone up – he still makes money when the markets are down in the dumps..” a few jaws dropped – including mine and we all waited eagerly to jot down the notes. He continued “…he has a secret weapon that he does not share with anyone but only with me and today I will tell you his strategy…” “ and his strategy is  -- invest in Govt Bank FDs…”  - WOW that is the voice of a true Indian of his generation. That is exactly why a generation gives a damn whether the markets go up or down… unfortunately this is the exact reason why the other generation has suffered – they took no heed to the words of wisdom and wanted to become financial wizards themselves overnight. Over leveraged in the markets where as any management guru worth his salt will profile your risk taking capacity and then put you with this profile in a band and give you a break up of what and where you should invest – FDs, Bonds, low risk securities, Insurance and then stocks – generally 5-10 or 20% of your portfolio .. and in that a very small portion – probably in derivatives – but the greed took control of logic and here we are – a group of looser finding ways and means to make money. See – I can assure you – if we have the will and intelligence to continue then it is just a matter of time before we start making money. There is rule somewhere – 80% of the money is made by 20% of investors. So all you have to aim for is to be in this 20%. I would have loved to talk about a strategy on capital preservation in good times and bad times – running out of time now – some other time perhaps.

There was a flow of news that kept the markets at the good levels last week – one was the 100 basis reduction in repo and reverse repo rate. Then the government unveiled a 307bn fiscal stimulus package. Next came the much awaited reduction in petrol and diesel prices. Last but not the least was the government plans to accelerate the investments in the infrastructure. This has translated into a package close to 100 Billion Rupees. This made the Reality, metal, auto and banking to stage a strong rally. IT was the factor that has lost out in this race and closed negative. Pharma was the next looser.

We were the best performers in Asia – simple. Asia fell like a hot brick. Nikkei down 5.56%, Hang Seng  down 5.48% and Strait Times down 3%. Europe also did not do particularly well closing anywhere from 2 to 2.5% in red. FTSE was 2.47% red, Dax down 2.18% and CAC down 2.8%. The bad news in US continued and markets continued doing the dance as in Sharukh’s Rab-ne… – but people seem sick of bad news and eventually – steadily climbed in green ending – Dow up 0.75%, Nasdaq up 2.18% and S&P up 0.7% – yes you read it correct – they went green. And now the confusion begins as to where are we going to go on monday!

There was a fierce fight between the bulls and the bears. Two Dojis’!! But unfortunately I strongly feel that they do not go well for the bulls – the only factor if any will be the other indicators that are glowing green. Also it is just a matter of a few points and its appearance after a run up otherwise the Doji would have neatly been classified as a Dragonfly Doji – and that is a good bullish Doji. But since it fails on these points – I am confused. The Bollinger bands are narrowing still – cannot say that they are anywhere at their historically narrowest level – but all the same – the break out may be violent – whichever side – or whoever wins – the Bulls or the Bears. The 5 EMA red line is above the blue line and sits there with confidence. MACD divergences is virtually the same as yesterday and as positive. RSI is good but has taken a break  - now flat but remains bullish. Slow Stochastic is in overbought zone – both the %K and the %D lines. However red line continues to be above the blue line. TRIX is looking up and is very very good – I wonder why should you short with these indications. What are the bears doing? waiting for some better opportunity? Ummm! food for thought – they can make us fall harder only if we go up – so bulls are taking the line – and up we are likely to go eventually.

Pivot data…
R3 3060 against 3029 on friday
R2 30013
R1 2967
Pivot 2889 against 2908 on friday
S1 2843
S2 2765
S3 2719 against 2788 on friday
Projected High Range 2928 to 2990
Projected Low Range 2881 to 2819
Fib Projected High 2969
Fib Projected Low 2778

Interesting – Pivot has shifted down and the range between the R3 and S3 has increased. It would be interesting to see the outcome on monday – best of luck everybody.

ShoutBox

Sorry gentlemen and ladies who visit this blog - the shout box that I had placed was being misused for placing irrelevant material and ads and has been removed permanently.
Thanks
Cheema

Time to wait…. Time to watch….

The link to visual guide is http://flowingdata.com/2008/11/25/visual-guide-to-the-financial-crisis/ Somehow the jpg is just not behaving.

So our expecting that the run up will  take a breather was not a bad call. It had to and the way actually we have closed is not encouraging. I had expected the market’s to go a little bit further up before closing. In all the probability then it will go lower tomorrow. There are actions taken and news flowing on daily basis – that is exactly what was expected – close to the elections the govt will keep the momentum of news flow to continue and that would have ideally let the markets and the economy in a fairly buoyant state. Now the problem is that the govt is declaring the SOPs but the industry is not really towing the line. Take for example the rate cuts – so many promises and the banking sector is still defiant really – they have refused reduction in rates for one reason or another. Finally I believe that the consensus has been reached and some thing floating on the idiot box – 7% rate of interest for loans upto 5 Lacs and 8 or 8.5% from 5-20 Lacs. I am sure that the govt would have done its homework and the idiot box too was saying that 85% of home loans fall in these categories – what I am worried about is = will this amount to subsidy? what part will be financed by the govt and how. And at the end of the day will the real estate sector really benefit from this? Yesterday I came across this visual guide to the financial crisis in US. take a look at it – just as we are doing – there was just no acceptance of the fact that the problem is at hand till the time it was too big to handle really – see the phase of ignorance we are going through? We too are just not ready to accept that real estate is extremely vulnerable at the moment and you cannot expect closing the eyes to wish the problem away. I am sure that we as general public would not be knowing the real inside to the under currents  in this sector – but I am sure the right people would be knowing it exactly how big the problem is and in which direction we are heading. Meanwhile in US there has been no respite at all to the bad news – increase in unemployment data and further job cuts. Bank of America has indicated to cut upto 35,000 jobs over the next three year. Let us assume that at some point of time the job cutting will stop – but will that mean that new jobs are created for the next generation? Uh! food for thought. The package to the Auto sector is encountering resistance at the senate and the low sales is already giving sleepless nights to the auto makers there.

Asia was mixed – the entire global indexes are taking a breather – good for everyone – baby steps up are anyway better to giant leaps. Nikkei closed in green 0.70%, Hang Seng up 0.23% and Strait Times down 1.51%. All had dipped lower before closing at fairly higher levels – like us. Europe continued with this uncertain trend FTSE closing 0.49% up in green and Dax and CAC ending 0.78% and 0.43% in red. It is finally the US that has thrown in the towel to this upswing and markets closed in red – Dow down 2.24%, Nasdaq down 3.68% and S&P down 2.85%. Asia has opened red as expected – Nikkei about 2.5% down and Strait Times down 1.25%.

On the charts it was a Doji – a reversal signal. It is a candle that shows that the bulls and bears had a good fight and the result was indecisive. In any case it has the power to put to end – what ever trend that was stronger at that moment of time. Upswing – was our pace – wasn’t it? So do we spend a little bit of more time here? maybe. So brace yourself for the halt at this station for some time. The Bollinger bands have constricted further giving a hint that the market may remain range bound for some time and then viciously breakout. The 5EMA line continues to trail above the 20 EMA line and the Volumes were good. Take it as a fierce battle between bulls and bears. The MACD divergence has increased further. RSi is still  looking good the red (%K) line has reached overbought zone and the blue line is following closely. TRIX is still looking up. All in all this halt at this level should ideally be temporary with we continuing upwards – mind you that is ideally – and the markets are not ideal most of the times.

Pivot data…
R3 3029 against 3095 yesterday
R2 2992
R1 2956
Pivot 2908 against 2884 yesterday
S1 2872
S2 2824
S3 2788 against 2673 yesterday
Projected High Range 2932 to 2974
Projected Low Range 2915 to 2873
Fib Projected High 2967
Fib Projected Low 2838

If you have been following the pivot charts then you will realise that the range is becoming narrower by the day. Another news is the crude inching up – it is important to see where we stabilise eventually.

WoW… that’s a wonderful run up…

Want a controversial controversy? Watch http://video.google.com/videoplay?docid=1954933468700958565&hl=es

Before I start with writing the blog – I would like to tell you that this is my 150th post on  this blog – meaningful or not – there were so many times when I though that this is a waste of time to share my experiences as they do not matter – but then I am typing my a hundred fiftieth post and somehow that makes be proud in some sense. I have survived so for so long. Hope I continue getting moral help to continue with same vigour.

So the past few days did turn out to be good – mind you that barring small breaks in-between this sun up should still continue – at the most touching a small low of 2800/2900 at the most. There is an environment that wants this bear market behind us. Tough at the end of the day the bears will still play havoc – but like they say – make hay while sun shines. Infact this is not happening only on the our national scale – this is on the global scale – month after month – week after week – bad bad bad and then a relief. Ideally this was expected some time back but it has come now –at a time when other small but significant news and events are with this rally. Out govt along with many others are taking steps to sort out the issue. Oil is touching its all time low. Elections and expected dynamism of Obama, all countries in some way or other doing what can be done to contain the damage. Mind you all this will take its time to show up in the markets and the economy in general. If we do classify this as one of the worst recessions in the history then the bad news is yet to actually come in. The real estate has been a mute spectator standing on the sidelines and standing stout – hardly rolling back the prices, the uncertainty of the job cuts will next figure up when there is a significant reduction in salaries of those who are not shifted to the unemployed line – under threat perhaps to be the next to be sorted out. That fear of job cuts and salary cuts will force the people save for the uncertain future – the spending will further fall – and that will snowball into further deepening recession. Ah! worry not that is still some time away – but do not forget that all rises will be sold into and ultimately we will touch lower than before levels.

The Global cues continue to be good at the moment. Asia closed – Nikkei up 3.15%, HangSeng up 5.59% and Strait Times up 3.83%. Europe is the first one to doubt and seems that it has not been able to digest this run up – Europe remain confused. FTSE was in red 0.32%, DAX up 0.54% and Cac up 0.68%. All the doubts created by Europe will be put to rest if we see US closing well in green – that seems like a possibility so far. At the moment the US after opening in green has crossed the mid session remaining in green by about a percentage point. It is now that it seems to show some doubts of continuing in green. The Indexes are looking like going down  - will just have to wait and see where we go by the end of their session.

On the Charts the candle was good and white and confidently crossed the middle of the Bollinger band. Remember last time the candles turned back from the middle of the bands. This time it seems as the candles have the capacity to touch the upper band. The upper band is at a few points above 3000 and be careful if we reach that level. I do not see the candles being violated on the upper side. The 5 EMA has crossed over comfortably the 20 EMA line and many would actually see this as a point to enter market – in longs. Some guts they have though technically they are right. The volumes were higher than the recent past few days. MACD divergence has increased with the Red line increasing the distance between the red and blue line. RSI is GOOOOOOOD and so is Slow Stochastic. TRIX is looking up like staring the stars.

So expect for a small breather the upswing should ideally continue.

Pivot data…
R3 3095 against 3008 yesterday
R2 3039
R1 2983
Pivot 2884 against 2786 yesterday
S1 2828
S2 2729
S3 2673 against 2564 yesterday
Projected High Range 2934 to 3011
Projected Low Range 2868 to 2791
Fib Projected High 2982
Fib Projected Low 2742

Okay I will look out for two very important levels where reversal to what ever is the starting trend should be the turn about point. If the market opens green then the level I will watch out for is 3039 and if it opens in red then I will look out whether the level – 2828 holds.

Continuation of classes where Jaggu left……

Some Acronyms expanded

BSE                             =          BOMBAY SE EXIT

NSE                             =          NATION SE EXIT

NIFTY                           =          NO INCOME FOR THIS YEAR

FII                             =          FRAUDULANT INTERNATIONAL INVESTOR

PE                              =          PLUNGE ENDLESS
 
EBITDA                          =          EXIT BEFORE IT TUMBLES DOWN AGAIN

HNI                             =          HAS NO IDEA

PMS                             =          PRE-MEDITATED SCAM

SIP                             =          SUICIDE by INVESTING PATIENTLY

CORRECTION                      =          THE NEXT DAY AFTER YOU BOUGHT SHARES

MOMENTUM BUYING                 =          THE FINE ART OF BUYING HIGH AND SELLING LOW

VALUE BUYING                    =          THE FINE ART OF BUYING LOW AND SELLING EVEN LOWER

CEO --Chief Embezzlement Officer.

CFO-- Corporate Fraud Officer.

BULL MARKET -- A random market movement causing an investor to mistake
himself for a financial genius.

BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, the
wife gets no jewelry, and the husband gets no sex.

VALUE INVESTING -- The art of buying low and selling lower.

P/E RATIO -- The percentage of investors wetting their pants as the market
keeps crashing.

BROKER -- What my broker has made me.

STANDARD & POOR -- Your life in a nutshell.

STOCK ANALYST -- Idiot who just downgraded your stock.

STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally
between themselves.

FINANCIAL PLANNER -- A guy whose phone has been disconnected.

CASH FLOW-- The movement your money makes as it disappears down the toilet.

PROFIT -- an archaic word no longer in use