Laboured up-move….

The amount of pain the markets are having moving up seems to be extremely painful and it is no wonder that we are moving at an extremely slow pace upwards. It was expected that the bad news will continue – and the markets will cling and try to whatever good news it gets to inch up. The problem is that the good news is just soaked up like water on sand with little or no effect. The govt definitely wants a rosy picture to be there when the elections storm hits then in their face. The point is that SOPs that they are taking out are not being readily accepted by the industry/markets. Take banks for that matter – the reduction in interest rate is like a thick soup where the main ingredient is lost in the thick gravy. Airlines are hell bent on not giving out any fresh rate cuts inspite of ATF prices falling like anything over past month or two. The left has voiced against the insurance bill. The tussle seems to go on and on.

The Global cues are nothing to talk about really. Nikkei was up 1.57%, Hang Seng down 3.34% and Strait Times down 2.78%. We also dropped as Reliance shed 5%. Europe was weighed down due to banks, autos and oils. FTSE now has dropped 7 days out of 8 last traded days. It has lost 44% this year and hardly heading to ‘Happy Christmas’ The focus now seems to have shifted on what will be offered by 2009. FTSE ended down 1.88%, DAX down 1.23% and CAC down 2.31%. News of Toyota projecting first loss in 70 years due to relentless global slide in car sales coupled with rising yen has shaken up already jittery economy. Not only did it pull down auto shares across the world – it also pulled down the crude by almost 4% –back to below 40$ a barrel. Finally US that had opened flat with negative bias – never saw green the entire trading day and ended with Dow down 0.69%, Nasdaq down 2.04% and S&P down 1.83%.

As far as the candles are concerned – we have entered a phase of low volatility – the ATR (average true range) for past ten day period on nifty has dropped to 120 from 230+ a month and a half. On the lighter side – till now the investors were loosing money – now traders are also loosing to the broker houses. The candle was black and seems that some profit taking is kicking in – We have only two days now left for the expiry. I really hope like hell that the expectations of short covering do not die like last to last month where the expiry came and went and there was nothing that happened. We are trailing between 50 EMA on top and 25 EMA below. The 50 EMA is what I would like to be below – only then new higher levels can be thought about. The volumes were miserable to say the least on nifty. Bollinger bands are expanding a bit and MACD divergence has once again increased – showing that yesterday’s profit booking or whatever did not do any damage. RSI still is good and %K and %D line of Slow Stochastics are trailing on 80 – just below the overbought levels. TRIX is still looking up. Saw yesterday? the nifty hit the R1 and then promptly settled down at lower levels. Jaggu’s TRIN is bullish – so not to worry at the moment.

Pivot data…
R3 3193 against 3176 on yesterday
R2 3141
R1 3090
Pivot 3058 against 3073 on yesterday
S1 3007
S2 2975
S3 2924 against 2970 on yesterday
Projected High Range 3074 to 3116
Projected Low Range 3104 to 3062
Fib Projected High 3132
Fib Projected Low 3004

China has cut interest rates – so that should matter and Asia is down.

Capital preservation….

I never really gave a thought to capital preservation till now. It really never mattered before – the going was so good that it really did not matter whether you planned anything or not. Pick up junk for whatever you feel it was worth and it would turn out to be Midas's touch. So a generation of investor got used to just putting money in stock markets – there was nothing called investing – I was surprised when one day I was nominated a so called investment advisor by ICICI Bank and wanted to tell me to invest (Somehow they classified me as a HNI – that itself was the joke of the year). Anyway when I sat with him and grilled him for some time – his advise was to buy this – buy that and that. I was shell shocked that day – this guy had no entry policy and worst had nothing in his kitty there was called as exit strategy. See the genesis of problem with ICICI Bank – expansion without matching expansion of quality man resources – Anyway I will not dwell any longer than this into ICICI Bank – my aim is not Bank thrashing at the moment. Since I had seen some ups and down’s in the market at even without having a policy myself – I was sure that anyone who was supposed to advise me should atleast  have a theoretical knowledge more than me. Any way this was true not only for him but for most of us – the retail investor, the investment advisor and tons of others not to miss the advisors who used to come on to the idiot box every morning and go on and on and on – blah blah blah. There was a buy recommendation, hold recommendation and recommendation to sell only to move to some other share/stock. There was no advise that told the investor to take out some money from the markets – do a risk assessment or to set goals. That is the reason that our loss ran on and on.

Well now that we have burned the fingers – let us see what we can do.  I am in the middle of reading a book on investing and he say something that struck to me as a wonderful advise. He says study what others do for themselves but at the end of the day see what strategy suites you and then stick to it.  What it means is that inspite of what I say or someone else says – at the end of the day – since the money is yours – the risk is yours so you have to choose what is right and what is wrong with your approach to making money. Then he went on to say that risk profile yourself. That can be done online by a number of sites. They ask you questions like your age bracket, current salary and so many other questions and then tell you a ratio – your savings should include – for example 70% should be in risk free low return investments/instruments, 20% in so and so and balance 10% in stocks. Now here lies our problem – see if I was to restrict my investment in stocks of 10% of my total savings – and the going goes good then it is well within the right to increase the percentage to 12 or 15% – but it does not happen like this – we generally then start pulling out our resources from the otherwise safe investments and pump into stocks. It is here that the hurt lies. So let us see how we manage money – firstly our proportion will increase without doubt – as the investments give good returns the proportion will increase so ideally if we had planned it 10%.it will grow – so now one should allow it to grow – but at each stage – take out some profits and put them in non volatile instruments – bonds/FDs/postal deposits etc. now there will be a symmetry of growth in both the – high risk and low risk side of investments. It is so basic that we overlook it and land in trouble. It has to do with one of the two things – the greed and fear. I followed this policy and had a full 100% reserves. I should be rich as per this philosophy – but my greed and fear made me break one FD after another and sink it in the market not realising that there is no bottom. So inspite of having a wonderful strategy I could not make use of it and suffered. In the end – I urge you to make a strategy and stick to it – have to do mind training the yoga way I guess.

The global cues were once again mixed on Friday but if the bulls have held out so long – and if they may hold out a bit longer then a good short covering rally could be on the cards. We are infact short of the zone that I have been eying for so long now – 3200-3500 band. Some sort of profit booking should be done without doubt and wait for a better opportunity once again to enter markets. Europe had closed all red on Friday – with FTSE being 1.01% down, DAX down by 1.26% and CAC down by 0.26%. US was mixed with Dow down 0.3% Nasdaq up by 0.77% and S&P up by 0.29%.Asia has opened carrying the same trend over to this week – Nikkei opened flat and has since climbed up in green now 1.42%, Hang Seng and Strait Times on the other hand have opened flat and fell red – now down by 0.3% and 0.24% respectively.

As far as the candles are concerned – they continue to hug the upper limit of Bollinger bands with the bands expanding and 5 EMA trailing comfortably above the 20 EMA line. The next great thing would be if we touch and do a 50 EMA crossover (See the purple line in the chart – that is 50 EMA). The volumes were certainly more than the average that we have been seeing in the recent past. MACD positive divergence continues but has reduced a bit. RSI continues to be bullish. TRIX still looking up and MACD showing doubts whether to remain in overbought territory for some more time or to fall down. The fall will come only with market falling overall.

Pivot data…
R3 3176 against 3222 on friday
R2 3143
R1 3110
Pivot 3073 against 3018 on friday
S1 3040
S2 3003
S3 2970 against 2814 on friday
Projected High Range 3091 to 3126
Projected Low Range 3085 to 3050
Fib Projected High 3125
Fib Projected Low 3016

Even the Supports have moved up into the 3000 zone – so improving with baby steps – but improving all the same. Best of luck everybody.

Shucks… ran out of idea for header…

Being late for posting is becoming my habit only – actually my brother, his wify and kids are here and I run out of time in the evenings. I apologise for this behaviour of mine and will try to post be evening. Actually Sangat also affects – Jaggu (I am referring to you).

The battle was finally lost by the bears yesterday – they did attempt to take the markets lower – but I guess the bulls were smart enough to hold on to the levels – and that created short covering. If we do have some more steam left – then that along with the short covering should still carry us to a little better levels. The fall in inflation is much beyond the short term expectations and that is what would have given steam for the upswing yesterday. There are many like me who have a lot to gain if we go to higher levels. My advise would be – be patient – do not start taking out the money at this level. we are surely to see better times than this. The crude is down to 36$ a barrel. We will propel forward on these news – crude, inflation, expiry next week and elections alone. The global cues will create havoc with this little plan of mine but that may happen still.

Infact the global cues still do not point to any particular direction and the confusion remains. most of the movement is not in a particular direction with conviction. One index is up the second down and that to on or about the flat line most of the times. The bad news abroad is just not finishing. The Europe – my favourite punching bag – that takes cues from Asia and US both remains to be number one in the confused state. FTSE up 0.15%, DAX up 1.02% and CAC 0.24%. So Bush finally decided not to go ahead with his so called dishing out money to the poor Auto Makers and is now considering ‘Orderly’ auto bankruptcy. The signal is without any doubt points towards still deteriorating economy. The US markets made an attempt to remain around the zero level but failed in doing so by the mid session and closed red like in chilly red. Dow down 2.49%, Nasdaq down 1.71% and S&P down 2.12%. Now that would have and did effect the opening in Asia. But the markets have since recovered from the lows. Nikkei is now only 0.21% down, Hang Seng down 1.54% and Strait Times in green 0.55%.

I am just crazily confused as far as the candles are concerned. Bearish engulfing one day followed by bullish engulfing the second day – what do you expect me to say actually? I am confused but then we can talk about the non confusing issues – like the Bollinger bands are widening and the widening is with the candles on the upper limit – so we may see the continuation of uptrend still. 5 EMA is still above the 20 EMA. Volumes were better than average. MACD divergence into the positive side – so far so good. RSI looking up and good again. TRIX as good as ever. Slow Stochastic shows the red line about to attempt to cross the blue line again – again it might remain in this overbought state for a day or so.

Pivot data…
R3 3222 against 3209 on yesterday
R2 3168
R1 3114
Pivot 3018 against 2991 on yesterday
S1 2964
S2 2868
S3 2814 against 2773 on yesterday
Projected High Range 3066 to 3141
Projected Low Range 3003 to 2928
Fib Projected High 3112
Fib Projected Low 2881

Notice the Fib projected high remains same today but the pivot is above 3000 and R3 moved in 3200 levels.

FootNote: I will no longer be posting the articles on TheIndianStocks as self and Aryan – the host of the site has a difference of opinion that does not have a middle ground.

Confused?…. don’t worry …. you are not the only one…

Markets are seeking direction and there is confusion galore… it is not that the confusion is our state of mind only. It is so in rest of Asia, Europe and US. So many things are playing on the mind of investors perhaps. Is it to get any worse? The markets are generally known to take a view forward – that is a quarter, perhaps a few quarters ahead – but for the markets to have confidence in that future outlook just does not seems to come. The bad news just keeps on getting worse. The good news hardly gets bigger or better. So we are in a hang fire where the technical try to take us to higher levels and the fundamentals pull us down. Remember what I had thought loudly yesterday on the reduction of interest rates in US? the debate around the same points is there now in US and the euphoria of 0% rate of interest and the utility is being questioned and the markets fell – well not really hard but the kind of upswing they showed on the announcement of the same is down and out – now this debate will continue and let us see where we reach when we are at the end of the road.

I am already late in posting this so I will hurry up and leave touching controversial thought process to myself. The markets yesterday were cautious to say the least – they kept both bearish and bullish well within the striking distance – and atleast as far as we were concerned struck and went the bearish way. Europe was also in the same state – FTSE opened green – fell down and then recovered to the flat line closing just 0.35% in green, DAX was down 0.46% and CAC was in red 0.30%. US opened red – closed red red with a good attempt to go green. Finally Dow closed 1.12% in red, Nasdaq down 0.67% and S&P down 0.96%. The confused state in Asia in the morning opening today continues. Nikkei is green less than a percent, hang Seng too was green but red by half a percent point and Strait Times is just about green and looking down.

The state of affairs on the candles have turned from all bullish to mixed now. The candle was black and it missed engulfing the previous candle by 2 points otherwise it would have been a good bearish engulfing pattern. What are two points within good friends? we will call is bearish engulfing pattern. The Bollinger band has expanded a bit and 5 EMA still trails comfortably above 20 EMA and the candles trail the upper edge. The volumes were more than recent average and I will be posting the averages figures (comparative) from tomorrow onwards. (just came to know how and where to look up the figures from! Okay the bad news first – the Slow Stochastic have given a signal that is used by many traders to sell the positions. Apart from that the RSI is actually not too enthused. MACD divergence remains positive and at the same place we left them yesterday. TRIX still looks up and refuses to show doubts on the run up. Take your pick of being a bear or a bull now.

Pivot data…
R3 3209 against 3141 on yesterday
R2 3124
R1 3039
Pivot 2991 against 3081 on yesterday
S1 2906
S2 2858
S3 2773 against 2896 on yesterday
Projected High Range 3015 to 3081
Projected Low Range 3070 to 3004
Fib Projected High 3112
Fib Projected Low 2906

The range has increased – the upper band going up and lower band going down. Pivot too has moved down almost a 100 points – another interesting day in our hands. Best of luck…

I will no longer be posting the articles on TheIndianStocks as self and Aryan – the host of the site has a difference of opinion that does not have a middle ground.

Feeling confident?…

For 17 Dec 08

Slowly the tables are being turned and day by day the confidence level is being taken to the new highs – infact there was already apprehension in one of the minds on idiot box that we might have seen the bottom – wait – this is exactly the game plan. This is exactly what I have been saying for past so many days – our next fall will be when all have jumped on the train and is confident of a good rally – if you see it  - I am sure you will find it sickening. Go with this rally – to wherever it takes us but remain very very very very cautious as we reach 3200 or 3500 levels. I am sure that we will go there and I am pretty sure that we will return from there. Infact it may be a time to selectively exit  in the coming few weeks and sit tight for some time. Till that time/levels come – continue riding up. The markets shed its confused state of mind yesterday and have shown a good green tick. It did so on slightly less volumes. But then as long as it went up.

The news of the day was stolen by US by reducing the benchmark rate to 0% to 0.25% from earlier 1%. I did not have enough time to study what will be the repercussions or how it effects them – but I derive only this from my glance at it – two things – firstly, they are in deeper trouble than what we will ever see till that hits us in our face – secondly, there is nowhere to go now as far as benchmark rate reduction goes – this is the bottom – unless now they come up with something that Fed will pay from its pocket for taking money from them. I am sure that they would know this and I am sure that there will be many tricks up their sleeves – but again this it – in this particular case – they are at point Zero. The US markets reacted and closed all the way up in green but personally I would not be too happy and may like to wait for the true reaction as these facts sink in.

Well on the global from the global cues the story goes on like this – Asia was mixed with all colours visible – Nikkei red 1.12% down, Hang Seng green 0.55% up and Strait Times  green 0.41%. Europe was green FTSE up 0.74%, Dax up 1.61% and CAC up 2.07%. The Europe had infact oscillated around the flat line with positive bias before it finally closed green ahead of the Fed decision in US.US was mildly positive till the time the Fed decision came – then it shot skywards with jubilation – Dow up 4.2%, Nasdaq up 5.41% and S&P up 5.14%. Ofcourse it will get more interesting now onwards.

Our candles are swinging the colour remains white and testing new levels – I do see as small trouble just short of the 3200 mark – but should be achievable. The Bollinger bands have widened and 5 EMA line is confidently above the 20 EMA. The MACD divergence has remained same – food for thought – why should it remain same to yesterday? RSI is good without doubt – and TRIX is even better – just short of the 1 mark and looking up. See I have had a lot of confidence in the indicator and it did indicate in advance the trend – good. It still looks up. it is the Slow Stochastic that is bugging me – Red line trails above the blue line and both in overbought territory. Again a brakes here for a day or so may be good.

Pivot data…
R3 3141 against 3107 on yesterday
R2 3107
R1 3074
Pivot 3081 against 2970 on yesterday
S1 2985
S2 2929
S3 2896 against 2833 on yesterday
Projected High Range 3046 to 3091
Projected Low Range 3013 to 2968
Fib Projected High 3076
Fib Projected Low 2938

If we open with a huge gap up then I will not be too enthused by the markets – but if they open around the flat line with positive bias – then it will touch another high today. By the way it closed at the highest point yesterday – it is only after adjusting the closing point that market was down 11 points.

An Appeal....

I have in mind to make a widget for the blog - it is a simple idea but skills to write html code will be required - if you can help me please leave your mail ID/mobile no in comments - I will contact you.