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.