Nifty for 01 Mar 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.

I have been known to be wrong, several times. I could be wrong yesterday, today … and tomorrow.

Therefore, please do not go by what I say … go by what the market is telling us.

Today the market tells us that it is trying to bottom out and resume the long term uptrend upwards. Whether or not it can succeed, does not depend on our wishes … but on the collective wisdom of the market.

At this point I can only remind traders, allow the market to display a bottoming pattern and then only buy.

Till then, be happy.

Nifty for 28 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.

We just seem to forget lessons from history about global meltdowns and their reactions on our markets. And at this point in time, the correlation is huge. For a very simple reason. Trading in some Western countries is not dictated by humans, but by computers, and when a certain level is triggered, the computers start selling. That fuels the fire further, and also triggers some huge funds going belly up.

Have we forgotten the lessons of the Dow Crash of 1987 and 1990? Most traders in the market today would be “raw”, to remember the Dow lessons of so long ago. That is why, they also tend to forget the lessons of the Indian markets of Jan 2004, May 2004, Jan 2005, Oct 2005, May 2006, June 2006, and the most recent December 2006. Aaah … now I understand … people have become so fixated to watching the intraday charts, that they forget the bigger picture.

That poison which is injected in the system needs to be weaned away before the trend can change.

As was suggested yesterday 27 Feb, “For smaller traders, it may be suggested to take a vacation. Allow the entire impact of the budget to be assimilated by the MBAs, allow the market to reflect their assessment of the situation and how the big boys want to play it, and then enter the market, hanging on to their tail coats.”

Today the Nifty has behaved perfectly both in terms of support and resistance. As they say, one picture is worth a thousand words, so is today’s chart. Stay with the trend, and as of now, the trend is down. Please think of buying only when we have confirmation of a reversal in trend.

Finally, the question which most people ask in their comments … what do I think the market is going to do tomorrow? I think the market is going to make a tentative move up, meet with selling resistance, and then make a short term higher bottom. This could be viewed by short term traders as a signal to jump in at the absolute bottom, which is still a few days away. Not tomorrow.

Till then, vacation happy.

Nifty for 27 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 is telling us that no one wants to take positions aggressively for a simple reason. We have a major financial event around the corner. According to a time analysis, earlier I had anticipated that the market could continue positive till 8 or 9 of March. From the behaviour of the Index, it now seems that the market could continue sideways to weak till that time.

For smaller traders, it may be suggested to take a vacation. Allow the entire impact of the budget to be assimilated by the MBAs, allow the market to reflect their assessment of the situation and how the big boys want to play it, and then enter the market, hanging on to their tail coats.

The chart already shows the various supports, resistances and the congestion zones. Allow the market to confirm the zones, and then take any positions.

Nifty for 26 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 warned in my analysis of Friday, the market was extremely volatile, and warned us in the first hour that it is unable to break out upwards. As a result, we had another tanking session, till the 3850 levels. After that, an amazing 100 point recovery must have left most traders gasping for breath.

In volatile times, it is extremely difficult for a trader to time the market, except to anticipate a reversal. As the market keeps progressing, various forces come into play, and we can only try and anticipate a reversal level. This time it was around the 3850 level, which can be seen on the chart as a dotted line. It is not a great thing to mark out a level. As some sceptics are fond of saying, place enough lines on a chart, and somewhere or the other, we will find a support or resistance.

What is more important is that we have prior knowledge of a particular level. How we monitor the price at these important levels, and trade it, is the name of the game.

At present the Nifty has tested an earlier congestion zone, around the grey shaded portion on the chart. This zone is very important, as we have two earlier gaps. Also the previous swing low is also occurring in that region. The next anticipated move of the Nifty can be that it moves back above the yellow line, just enough to lull bulls into a false sense of security, and then snap the trap. The next level of resistance could be around 4050.

From there, we may see another fall, which could place the final stamp of doom for over-leveraged bulls. It may be too early to say, but the projected level of this fall could last till 3800, and then we would evaluate the next course of action. Short term players could utilise any rise to exit losing positions.

Till then, trade happy.

Nifty for 23 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.

On Friday, 23 Feb, the market did something quite unexpected. Instead of stopping at the support, it tanked further. And what a fall it was. It sliced through one support, and stopped at another. As can very clearly be seen on the chart, the short term trend is down. It can also be seen that the market is near another support.

Normally, in such a situation, after such a fall, the market opens with a gap. Either upside or downside.

The average reader would immediately say, … ahh … here is a perfectly hedged statement. The idea of saying this is not prompted by my desire to keep my reputation as an analyst intact. It’s only a desire to allow readers to be prepared for Monday, and formulate a trading plan, and implement it. Read on …

In case the market opens with a downside gap, it will trigger more stops of bulls, and in case it opens to the upside, smaller players would think that the downside is over and try and buy furiously. It is also a normal occurrence that these panic actions on the opening bell are normally wrong. Therefore, it is suggested not to jump in at the opening. Allow the market to simmer for about an hour, and then only enter into fresh trades.

By that time, we will have a fair idea of the future direction of the market.

As of now, the long term trend is still up. The short term is down. Now it may be expected that the market achieves a short term objective of 3900. From there it could possibly retrace a substantial portion of the 180 odd points fall and rise a 100 odd points. We could then see fresh bear action and also profit booking. Which would only confirm that the short term trend is down.

The projected level of this fall could last till 3800, and then we would evaluate the next course of action. Short term players could utilise any rise to exit losing positions.