Nifty for 23 Jul 08

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.


Take a close look at the chart. First of all, point 1 and 2 are at a lesser steeper angle when compared to the earlier trend. Next, take a look at point 4, which is supporting a rising trendline. Point 3 has violated the down sloping trend line. Point 5 is higher than point 4.

This can mean one of two things. Either the market is preparing to be bullish. Or this is a relief rally for the fall of the last six and a half months. If the market corrects downwards from here, and takes support around the 3950~4050 levels, then we are preparing to have a new bull move.

If however, the market does not pause here, then it would mean that this is just a relief rally, and bulls may get trapped at higher levels.

Let us analyse the other aspects one by one.

This chart is used to measure time cycles based on the moon phases. It has been noticed that a count of 12 usually brings about a change in trend, as can be seen from the chart. Can this time also bring about a change? The probability is high.


Now, a measure of price. The Price has been bouncing about various Fibonacci levels, and possibly this could be the end of this bear move. The 100% level of around 14570 on the BSE of the previous bottoms is a crucial test. This could be easily surpassed, given the mood of the moment.


In any case, the bottom recorded in mid July is a very important level, and long trades could be initiated using that as a stop. Please keep in mind, that there would be concerted selling at higher levels, suggesting bulls may be trapped, therefore, extreme caution is suggested at higher levels.

Trade happy after planning your trade.

I am attaching the various charts of the tradable indices which should allow a trader to judge what levels to decide for (him)herself depending on their comfort levels.

The Bank Nifty seems to be ready to assume the mantle of leadership for the Index once again. This large move up can be discounted as a relief rally to the bear phase. For such an extended move, it is prudent to expect a correction.

The chart shows the Future pushing through the recent resistances. It also can be seen that they have been offering support too.

The increase in volumes also suggests conviction in this up move.

Therefore, dips may be utilised to buy, retaining the stop at ~4700 levels.

The Nifty Future also is pushing through the resistances, while receiving support after pushing through.

The same strategy could be used. Buying on dips may be profitable.

And finally, the Nifty itself.

After a long time, we see a convincing more back into positive territory. The volumes are slightly higher than average. We see quite a few positive volume bars in this last week up move.

This encourages us to take long positions on dips.

Further, the chart also shows us that the last bottom is not accompanied by stronger negative sentiment. Another plus point for the bullish case.

Nifty for 26 Jun 08

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 am posting the charts for yesterday and today.

In my last post, it was suggested that we may see a short term downside target of 4185. The Nifty did achieve a brief bottom at 4093.

As of now, given that we have a derivative expiration, the event based short covering has provided a relief rally to the upside.

Yesterday’s chart shows the touch points of the short term and the obstacles which the Nifty bull would need to face in the recovery of the Index.

Looking one day into the future, we will also notice, that if the Nifty closes above 4325, then a bullish hammer will form on the weekly chart. This is a very powerful reversal signal.

Thus we may see some substantial recovery. However, as a guideline, we may use the first chart to anticipate the points of resistance.

There has been an increase in volumes but the volumes are not entirely bullish. Therefore, even though the Index is rising, the sentiment is still not totally bullish. I expect some short term resistance between 4370 and 4390. The Index may fall slightly. But to keep the fragile bullish sentiment intact, the Index must stay above the last bottom of 4093.

Trade happy after planning your trade.

Nifty for 20 Jun 08

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.

It has been quite some time since I posted last. I have had some engagements which prevented me to do an in-depth analysis. It is very apparent from the chart that the trends on all time frames are down. The market does not have enough strength to be able to pierce the previous swing top.

The first question which comes to my mind is … where would it stop? First we take the short term perspective. Taking the Fibonacci calculations into account, we have a probable downside target of 4185. This is based on the last downside leg starting from the swing high of ~5299. Will this be the last of the downside? We cannot be sure of that at the present point in time. Only time will tell whether 4185 would be the bottom or not.

Further, within the months of June and July, we are having cycles in time falling on 21 June, 2 July, 6 July and 21 July. That suggests that this may be a volatile trading period. As the market is deep in oversold zone, I expect a lot of upside retracements, which would attract the attention of profit booking as well as new bears.

The last leg on this journey may attract a lot of shorting, which would trap the bears. Then only would we find the market in a position to resume its long term journey upward. So far we do not see any evidence of fear in bears, and shorting is resulting in sizable profits.

Where does the reader, the ordinary stock market investor enter? It is simple, wait for a base to be made. Let the negative sentiment be weaned out and then make your move.

Now, I present the long term charts of both the Indices.

The last time I posted this simple chart, the Nifty was poised at a very interesting juncture. As of now, the Nifty too has given up any semblance of being able to stand against the bear onslaught.

This weekend, I also present another chart, which I normally use to judge the market condition. This is a simple trend following chart, which I rely on to get the feel of the market.

The trick to successful trading is to determine the trend, and once the trend is in place, to take trades in the direction of the trend. This is the time tested safe strategy to the market.

Unfortunately, 99% of the small traders do not follow this principle. Rather, they try to hunt for the bottoms and sell at the tops. That is where they fail. And who makes money? The sharks.

This brings us back to the short term chart. Has the short term down trend terminated. Not yet. The short term bullish pattern which we normally look for has still not formed.

I find that my observations of the end of last month need not be changed.

We may still have upward corrections for the drop of this month. These upward corrections will attract profit booking as well as bears. Therefore, it is suggested to be nimble footed at this stage. If you do not monitor the market on a daily basis, it is better to stay away.

It is an old saying that “any fool can buy at anytime, he must find a bigger fool to buy later for profit.” Profit in the market is all about timing when to buy. Stay tuned.

Nifty for 29 May 08

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 bottom fishers would have had a small bad day. The stop to be placed at 4835, which was suggested yesterday, would have allowed an exit with a tiny loss.

Whether today’s fall was due to expiration stop loss running, or it was due to a genuine tanking; only time can tell. From the pattern, it does suggest that the sharks wanted the Nifty to close lower, in order to take advantage of options which expire worthless.

The sentiment is still negative. Though, it does seem that it is changing mildly to positive.

Further, I present the long term charts of both the Indices.

The Nifty seems poised at a very interesting juncture on the long term chart. The Sensex, however, is showing weakness in its trend. As I have mentioned earlier, I would follow the Nifty, as its Future is the largest traded derivative on the Indian bourses.

According to this long term chart, it does seem that the Nifty may take support on its long term trendline, and then move back up.

This brings us back to the short term chart. And as has been repeated time and again, for those who have exhibited patience to buy, it is suggested to wait just a little longer. A short term bullish pattern has still not formed. The long term perspective is still showing bullishness, though the intermediate trend is exhibiting sideways to weak trend.

We may still have upward corrections for the drop of this month. These upward corrections will attract profit booking as well as bears. Therefore, it is suggested to be nimble footed at this stage. If you do not monitor the market on a daily basis, it is better to stay away.

It is an old saying that “any fool can buy at anytime, he must find a bigger fool to buy later for profit.” Profit in the market is all about timing when to buy. Stay tuned.

Trade happy after planning your trade.

Nifty for 28 May 08

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, the Index did test the blue down-sloping trendline. As expected, we did have a solid bounce back up.

From the pattern of the chart, it does seem that this downside move has exhausted, and it may now resume its upward trend. However, the correction from ~5250 to ~4835 has been rather steep. That has allowed some negative sentiment to build up.

That will contribute to some anticipated resistance around the 5050~5100 levels. As of now, we can term this bounce as a correction to the previous fall. If the Indices make a good base here, and exhibit a short term bullish pattern to emerge, than only will we label this as a fresh move up.

For those who have exhibited patience to buy, it is suggested to wait just a little longer. A short term bullish pattern has still not formed. For bottom hunters, this could be an ideal opportunity to buy. However, prudence suggests that the stop may be placed at 4835.

Trade happy after planning your trade.

Nifty for 27 May 08

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 banking sector continues to lead the Index down. It has again contributed to the fall in a big way. Other sectors were mixed.

The scenario anticipated for today did not allow traders to enter comfortably. And in any case, the Index has moved below our stop loss level. Therefore, it makes no sense to be long at this stage.

The Index is again testing the blue down-sloping trendline. With such a large price move, it is expected to provide support. But as mentioned yesterday, the move up is likely to be met by selling, so I do not expect the negative sentiment to change in a hurry.

For those who are a little more conservative, it is suggested to wait patiently to buy. A short term bullish pattern has still not formed.

Trade happy after planning your trade.

Nifty for 26 May 08

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 on the weekend, we did see panic. As a result, we did see the indices opening with a downside gap, and continuing to stay down.

The banking sector contributed to the fall in a big way. Had it not been for the technology sector, the Indices would have taken a larger beating.

It is on panic days like this, that bottom fishing is very tempting.

I expect a minor downside tomorrow, and then, we could see a rebound. This rebound would entice traders to think that the short term bear phase is over. However, we can expect renewed selling at higher levels, not only for profit booking, but also by bears.

As of now, the Index has given up all semblances of bullishness. We could buy tomorrow after the 10:30 am, only if we have guts of steel, and place a strict stop loss at 4790. But it may be suggested to book profits quickly also.

For those who are a little more conservative, it is suggested to wait patiently to buy.

It is expected that the global cues are going to be mixed, due to the trading holiday in USA. That is also the reason why the market was traded thinly today.

Trade happy after planning your trade.

Nifty for 23 May 08

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 chart says it all. The steady uptrend of the last two odd months has finally been broken. This break is unhealthy for the longer term trend of the Index.

The sentiment has indeed turned sharply negative in the last two trading sessions alone. What was looking like a correction now seems to be a fresh downward move. This may allow the Nifty to move to the lower end of the short term down-sloping channel ~4850. If that is true, then our earlier check points of ~4934 and ~4923 would be violated.

It is now advisable to give up bullish hopes for some time. Wait patiently until we see a definite bull pattern, and then only take long positions. For those who are already long, it is suggested to place stops as each trader’s comfort level allows.

Last week, it was suggested that we have a cycle in time falling on 25 May 08. Let us see what this cycle brings.

We may even see panic.

Trade happy after planning your trade.

Nifty for 21 May 08

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.

Is the correction over? From today’s sharp retracement up, it would seem so. In any case, we had expected the correction to be mild. However, the market will soon tell us. If it violates 5050 on the downside, we may assume that the correction is still continuing. If it violates 5168 on the upside, then it is over.

Today, the low has just kissed our monitoring level of 5066 as was mentioned yesterday, and retraced dramatically. This is a point in favour of the bulls.

As on today, the probability of a mild downside move seems more. It is quite possible that the Nifty may test the ~5050 levels once again. The market has presented both the bullish and bearish scenarios.

The market sentiment is still bullish. This allows us to suggest that dips may be used to buy.

The only chink in the Nifty’s armour seems the banking sector. If we have any positive stock or sector specific news relating to the banking sector, we could see the Nifty fly.

Trade happy after planning your trade.

Nifty for 20 May 08

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.

After a few strong bull days, it is quite natural to expect a correction due to profit booking.

As of now the sentiment remains mildly positive. This correction is expected to be mild. As of now, the technical position suggests that it may correct to the orange zone. However, the previous swing low of 4935 should be significant. Therefore, it may be expected that the Nifty could stop anywhere above that level.

However, if the Nifty remains above the previous swing top of 5066, then it will signal to us stronger days ahead for the Index.

Trade happy after planning your trade.

Nifty for 16 May 08

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.

It was suggested to maintain uneasy longs while adhering to strict stops. Readers who would have followed that suggestion would now be extremely comfortable and sitting on a small nest of profits.

Even though the sentiment is mildly positive, nevertheless, it is not one of reckless abandon. Therefore, depending on the trading time frame of individual readers, it is suggested to keep raising trailing stops to lock in profits.

We may have a couple of up days next week, and then we could see a correction. As of now, this anticipated dip may be utilised to buy.

Trade happy after planning your trade.

Nifty for 14 May 08

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 short term bullish pattern is still holding. As mentioned yesterday, for this pattern to be validated, the market should move above 5066 and not violate the low of 4913.

The sentiment is creeping up, but not too convincingly.

Readers who have guts of steel could hazard buying at this stage. For those who venture to buy, we could place the stop at a close below 4940. Also a trailing stop to exit may be maintained at 4912. These stops may be adhered to ruthlessly.

It is only the IT sector which is really propping the Index up, due to the sops for the sector and also the rising dollar against the Rupee.

Trade happy after planning your trade.

Nifty for 13 May 08

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 moved exactly the reverse of what was anticipated for today. It opened with an upside gap, and then steadily lost ground through the day. The net result however, is almost the same. There seems to be a short term bullish pattern emerging. For this pattern to be validated, the market should move above 5066 and not violate the low of 4913.

In such a case, a short term bullish scenario may be utilised to buy. This is purely from the technical point of view. However, from a personal view, I am not too convinced about the anticipated formation of the bullish pattern. We may see further profit booking at higher levels. As a result, we may see further weakness in the stocks, even though the Index may show bullish signs.

Therefore, I may suggest extreme caution at this stage.

We have revised the orange band slightly to accommodate the new data from the market. During times of uncertainty, it is always advisable to stay away rather than burn holes in the pocket.

Trade happy after planning your trade.

Nifty for 09 May 08

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 mentioned yesterday, “the orange band around the 4970~5000 should now come into play”. It has hit our target bang on. Whether the Index will hold this level or not remains to be seen. Normally, after such a sharp dip, we do see some pull back.

Therefore, we could expect Monday to test the rising blue line, and then make a move up. How strong would it be is anybody’s guess. But short term trader may take advantage of this expected up move. It also goes with without saying to keep stops intact.

This suggestion is akin to bottom fishing, and readers must be tired of hearing me … warning of the hazards of catching a falling knife with open hands.

The chart still shows a steady uptrend, as is apparent by the upwards sloping blue channel. This last down move has been rather sharp, and later we could see selling at higher levels. If we witness strong buying at higher levels, enough to counter profit booking, we could see even higher tops on the Index.

The scenario which I expect on Monday is that the Index could open with a downside gap, and then strong hands may step in to start buying, which could push the Index upwards.

Even now, the suggestion to buy on dips still remains valid. Traders with a longer term horizon could wait for a formation of the short term bullish pattern to enter long positions.

Trade happy after planning your trade.

Nifty for 08 May 08

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 can be seen, the market still is uncertain. Readers could have closed their long positions.

As of now, the market still does not seem bearish, but there is no harm to keep locking in profits and try a re-entry at a later date when the technical position is healthier.

Even now, the suggestion to buy on dips still remains valid. I would still suggest waiting for a formation of the short term bullish pattern to enter long positions.

The orange band around the 4970~5000 should now come into play.

Trade happy after planning your trade.

Nifty for 07 May 08

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.

Traders could now raise their stops to 5101 which is the low for today. Long positions may be closed if the market remains uncertain.

As of now, the market does not seem bearish, but there is no harm to keep locking in profits.

As of now, the suggestion to buy on dips still remains valid. However, I would now wait for a formation of the short term bullish pattern to enter long positions. The market sentiment suddenly seems to have weakened.

We could keep monitoring the market, and take a position only when the market suggests it. I always keep cautioning readers against bottom fishing.

Trade happy after planning your trade.

Nifty for 06 May 08

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, we seem to be in a correction. Had it not been for the IT and FMCG sectors, the fall could have been worse. This sector rotation keeps the sentiment bullish from a longer term perspective. We may see an up day tomorrow and the day after, but the profit booking could drag the correction down later.

The healthier aspect of this correction is that when there is profit booking in one sector, others prop the Index. So the general mood remains buoyant.

We have had a good 28 calendar days up move for this last leg from 4 April. It means that the sentiment has been generally bullish for about one month. It is unrealistic to assume that the bullish sentiment for a month can be corrected in a day or two.

The new orange box is the level now to watch for. That is why we suggest that stops may be retained at a close below 4971.

The suggestion to buy on dips still remains valid.

Trade happy after planning your trade.

Nifty for 05 May 08

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.

Not much to change the mood. As was suggested last week, the market is still looking toppish for the short term, but is still not weak. The bulls would take heart from the fact that there still seems to be steam left in the market.

Stops may be retained at a close below 4971.

The suggestion to buy on dips still remains valid.

Trade happy after planning your trade.

Nifty for 02 May 08

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 did have a gap up open, as can be expected after a holiday, when the market tends to play catch up with the trend. The market does seem to be topping out for the short term. There are evident signs of profit booking. The profit booking is not as intense to turn the mood bearish. It is just plain profit booking.

As mentioned a few days back, if the Index does not violate 4971 on the downside, we could see a sizeable and extended bull run.

There seems no cause for bulls to panic. Only there seems to be sector rotation, and at times like this, we need to be a little choosy in picking stocks. Stops may be raised to a close below 4971.

The suggestion to buy on dips still remains valid.

Trade happy after planning your trade.

Nifty for 25 Apr 08

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.

With the derivatives out of the way, the market came back on its track. The market does seem to be topping out for the short term. There are evident signs of profit booking. The profit booking is not as intense to turn the mood bearish. It is just plain profit booking.

As mentioned a few days back, if the Index does not violate 4971 on the downside, we could see a sizeable and extended bull run.

This expected correction may touch around the 4860 levels and that could be a good re-entry point. In such a case, stops may be retained at 4628.

At the beginning of this month, it was mentioned that the whole month of April could be a period of consolidation with relatively lesser volatility and steady trending. The market has indeed behaved true to book. In such a case, we see a cycle in time falling on 1 May 08. Since that date is a holiday, we could see the final signs of profit booking next week.

How deep down would it take the market? That remains to be seen. In any case, the suggestion to buy on dips still remains valid.

Trade happy after planning your trade.