Nifty for 15 Feb 07

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.

The market thankfully respected our analysis of yesterday, 14 Feb 07.

The short term bottom for yesterday, 14 Feb, becomes very significant. For two reasons. One is that a previous gap was tested and not penetrated, and the second it that today, 15 Feb 07, the market opened with a significant gap.

From the way the Index is behaving, we could see a new high in a few days to come. In fact, except for a small hiccup towards the end of February, we could see the market remaining strong right till the first week of March.

Please consider trading with caution during the last week of February, due to the expiry of the derivatives settlement and the news flows about the budget.

Nifty for 14 Feb 07

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.

Am I wrong in my analysis of yesterday? I do not think so.

I still feel from the charts, that this fall of the last few days has been a correction. We could still see the short term bottom for today, 14 Feb.

From the chart of the Nifty, we can see that the Nifty has tried to close a large gap, which was in the middle of last month. The earlier support level, which should have been a resistance now, has also been violated on its move up. Further, the candle pattern on both … the BSE as well as the NSE has long lower shadows, which is a suggestion of a significant bottom.

The Bank Index is contributing to the weakness in the Index in a major way. It can be due to the news from RBI. Apart from that, no major weakness is seen.

Nifty for 13 Feb 07

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.

As was suggested yesterday, on 12 February, we are in a correction. It was also anticipated that the correction could last for a week or so. But the speed at which the correction has moved, it must have surprised many market players. I have no qualms in admitting that it has surprised me. Is the correction over? Yes, it does seem so, from the position on the chart.

It was also suggested, that we could see an important support level being tested today. And it has been. Thus, the 4000 level on the Nifty becomes a very important level. If that level breaks, then we could assume that the bear run has started.

Further, on the hourly chart, a higher top higher bottom pattern has emerged which lead me to believe that the correction could be over.

We had also asked a question yesterday – “Does it mean that the Great Bull Run of the Indian stock market is over?” and had answered “It does not seem so. Not as yet.” The fact remains that the next six weeks are going to be news driven, and therefore, volatility is going to be very high.

And as suggested again and again, when volatility is increasing, it is imperative that trading should not be overleveraged and to remain hedged at the same time.

Let wisdom prevail.

Nifty for 12 Feb 07

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.

When analysing the market, I hate to say “I told you so”, but from the messages I received today, it does seem that traders are hoping against hope that their investments will turn out positive. When a trading plan changes from hope to prayer, traders should know that they are in the wrong business, and trading is not for them.

However, if they are in the business of trading, then they should be hearing what the market is telling them, rather than try and beat the market. And the market is telling us that I am weak. It also tells us that such a sharp fall will be met with periodic profit booking of bears, which could push the market back up slightly. It also tells us, that bulls will be euphoric to see such a rise, and try and jump on the bandwagon once again, only to see their hopes dashed to the ground. Because, when we see a rise after such a drastic fall, bigger traders come out and tend to sell, which tends to depress prices further.

Does it mean that the Great Bull Run of the Indian stock market is over?

It does not seem so. Not as yet. It does seem that this fall is the start of a correction, and not the start of a bear market. It also seems that this correction could last till 20 to 23 Feb 07. Which brings us right into the time when the Railway Budget would be announced, and heightened speculation will increase volatility.

Therefore, at a time like this, when volatility is increasing, it also becomes imperative that trading should not be overleveraged and hedged at the same time.

Let wisdom prevail.