A posting after the fact - Nifty for 14 and 15 March 07

Dear readers,

I have been extremly tied up for the last few days and hence, could not post here.

Here are my musings, as if I would have written exactly as I saw the charts on 14 and 15 March 2007.

Nifty for 14 March 2007
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 per our earlier estimate, we had expected the short term trend to remain weak (not meaning down) till 15 March. And tomorrow, it is quite possible that we may see a short term bottom. The blue circle could allow us to witness a short term support.

A significant level has been tested today, which has earlier long term resistances and supports. Further, we see historical gaps at these very levels. As of now, the short term trend is still up, the intermediate trend is still trying to turn up, and the long term trend is still up.

Yesterday, I had made an error in this statement … “The 3684 level is still exerting its influence on the tops and the 3685 level on the down side.” The sentence should read as … “The 3784 level is still exerting its influence on the tops … ” … As of now, the situation still seems a buy
on dips, so readers could draw up their trading plans accordingly.

Some people have asked me how can we trade a market where we have a 100 point gap down or up, and how stops can be implemented.

The answer is simple, at times of upheaval, it is always prudent to be hedged, rather than having naked positions. The profits may be limited in hedged positions, but the capital losses are severely restricted in times of disaster.

This brings us back to our motto; Trade happy. It allows for lesser mistakes.

Nifty for 14 March 2007
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.

There seems no change from yesterday. The green line still seems like acting as a magnet.

15 March has come. We now need to observe whether or not see a short term bottom. The blue circle could allow us to witness a short term support. Allow the market to confirm it, before taking any hasty steps.

The previous long term peak is also a significant level, so we may see a hitch at that level.

Trade happy. It allows for lesser mistakes.

Nifty for 16 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.

Normally, when we see a decisive bottom in the market, we see the price making upward gaps rather than downward gaps. As of Friday, we still observe a higher bottom. Therefore, we could conclude that we could see a short term recovery leading into 21 or 22 March. It needs to be seen how strong the recovery is.

However, unfortunately, the banks are still showing considerable weakness, and as such could be a drag on the Nifty. In such a case, I do not expect much strength in the recovery.

We could witness concentrated selling next week, which may allow the Nifty to attract short selling. Therefore, it is suggested that we could wait for more opportune buying opportunities if we are longer term traders. Short term traders could take a fling at buying for a few days.

As a watch word, since the intermediate trend is sideways, hedging could be adopted to avoid disastrous price moves.

Trade happy.

Nifty for 13 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.

As of now, the biggest factor which seems to be influencing the market is the May 2006 top of 3774. That is why I think we see the Nifty bouncing off and on that particular level.

As of now, the short term trend is up, the intermediate trend is trying to turn up, and the long term trend is still up.

The 3684 level is still exerting its influence on the tops and the 3685 level on the down side. As of now, the situation still seems a buy on dips, so readers could draw up their trading plans accordingly.

Trade happy.

Nifty for 12 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.

On Friday, it was stated … “It will be interesting to see what the market does on 15, 21 and 31 March.” And here is what I expect. Leading in to 15 March, I expect the short term weakness to continue, and from then on, we could see the Index making a short term top between 21 to 23, and a higher bottom on 31 March.

As of now, the short term trend is up, the intermediate trend is down, and the long term trend is still up.

This type of situation always scares traders to make mistakes and give money to the sharks. None of the sharks would probably be reading this blog, so I can safely make this statement, act like minnows, and satisfy yourself on the left-overs of the sharks.

Trading is an individual things, and everyone positions her(him)self according to her(his) time frame. Therefore, please buy according to your suitable temperament.

The 3684 and 3802 levels now gain significance, as is marked on the chart.

Trade happy.

Nifty for 09 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.

The chart of today has nothing to do with Elliott or Gann, or any other method of analysis except common sense. Point No 1 faced resistance at a rising trendline, which has been tested historically. Point No 2 got support at a similar trendline. Point No 3 faced resistance which was very close to a pre-determined level of 3802, which we have been carrying for days. Point No 4 took support, also at a pre-determined level of 3685.

Point No 3 is higher than Point No 1. Point No 4 is higher than point No 2. So what does it tell us? It tells us that the market is seeking higher levels. For the time being, it may be suggested that we forget the coloured lines, as we seem to be in a fresh up move. This fresh up move will be valid as long as the Nifty does not go below 3569. Till then we may assume that the short term trend is up.

It will be interesting to see what the market does on 15, 21 and 31 March.

And as I am fond of saying, trade happy.

Nifty for 08 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.

As was suggested, we see a rise in the Index stocks, as a result of which, we see the Index rising. On the other hand, we do not see a convincing rise in the second rung stocks. Even the volumes of the index stocks are not as convincing as it should be in a trend reversal. It could mean that we are in the last leg of this bull run. The smaller players may not be convinced with this rise, and after a 800 to 1000 points, would start scrambling to get into the bull run, only to be left holding the baby at the next top.

The short term trend is confirmed as up. This uptrend has all the indications of a correction to the upside of the huge fall we have witnessed in the last two weeks. It really does not matter which phase of the market we are in, as long as we are able to capture the significant moves.

It seems from a lot of comments that my earlier calculation of a cycle in time on 9th February, has raised a lot of queries. Please appreciate that this is only a probable projection. Let us watch how the market approaches this cycle in time. If we do witness some significant event, we could make a judgement. As of now, since we had a change of trend on a few days before 9 Feb, we may see a short term top on 9, rather than a peak.

And as we know the market is a dynamic arena. We have to constantly keep adjusting to it. With the fresh information into the “computer” we get cycles in time on 15, 21 and 31 March.

And as I am fond of saying, trade happy.

Nifty for 07 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 chart of today suggests a consolidation pattern. According to our example of the bullish setup, this could be a perfect example. However, if you want my frank opinion, this could be a manipulation of the Index stocks to allow the sentiment to rise, and then offload non-Index stocks.

As was suggested earlier, we have seen a significant bottom on Tuesday. And from the chart it shows that there was resistance on a rising trendline. As a thumb rule, if we see support on a rising trendline, and another resistance on another rising trendline, we could expect that the short term trend is up.

For extremely active traders, the shorting opportunities could arrive within a couple of days. We were expecting a bounce and in fact, we did see a bounce back. Further, I had suggested earlier that we could have a change in trend on 9 March. It was expected that this date would allow us to have a major top. Now it seems that an uptrend could last till 9 March, and then it could make a significant top on that date.

This is my probable assessment. Trade it how you are comfortable. Always remember, trade happy.

Nifty for 05 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.

It does not require a genius to suggest a trading plan when the market gaps down.

We are approaching our target date of 9 Mar where a change of trend was suggested to be expected. And since the trend is down as of now, we could see a mild retracement upwards. At this point in time, short term traders may wait for a bullish setup on the hourly charts to buy, and longer term traders could wait for the buying setup on the daily charts to buy.

For extremely active traders, the shorting opportunities could be ending within a couple of days. In fact, we could see a bounce back tomorrow. From all indications, we could see a significant bottom tomorrow. The reason being that when we see panics, big money is normally buying.

Till then, do not trade and be happy.

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.

Nifty for 21 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.

Today, 21 Feb, it does seem that the market is preparing itself to end its correction by tomorrow.

As mentioned in our analysis of 20 Feb, “It is quite possible that we may see this weakness continue into the last hours on Thursday, and then the market will push stops.” When a trading range contracts to tight levels, it is going to trigger stops, both for the bulls as well as the bears. The stops of the bulls could be run when the market penetrates the lower stops by just a bit, and then bounce back up. The stops of the bears could be triggered when the market moves higher.

Thursday is upon us.

After today’s price movement, the levels of 4060 to 4080 still are open. The market again seems to be testing this gap.

The short term resistances overhead at the 4130/4140 were tested today. In all probability, the short term bears would place their stops there. Longer term bears would probably be looking at 4170/4180.

As of now, the long term and intermediate trends are still up. The short term is down. The support levels at 4030/4040 and 3950/3970 become even more significant. If these levels are tested and penetrated, then we would need to rethink our strategy.

Till then, trade happy.

Nifty for 20 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 down move was significant today. A constant selling pressure, without very large volumes suggests that we are back in a downward correction mode.

The hiccup mentioned earlier seems to be upon us. It is quite possible that we may see this weakness continue into the last hours on Thursday, and then the market will push stops.

We continue to monitor the trading event of significant importance coming up on Thursday.

After today’s price movement, the levels of 4060 to 4080 still are open. The market seems to be testing this gap.

Further, short term resistances overhead are appearing at the 4130/4140 and at 4170/4180.

Let us wait and watch how the market shapes up this week. As of now, the long term and intermediate trends are still up. The short term is down. Which adds great significance to the support levels at 4030/4040 and 3950/3970. If these levels are tested and penetrated, then we would need to rethink our strategy.

Till then, trade happy.

Nifty for 19 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.

From a trading perspective, today was a non event. With a flat sideways movement on the Index.

The earlier target at 4170, which was providing support, has turned into a short term resistance. From expectations, it does seem that this short term resistance will be violated on the upside, in due course. When it would be, is a question of uncertainty. Simply because we have a trading event of significant importance coming up on Thursday.

The short term bottom of 14 Feb, also remains significant. So does the gap between 4060 and 4080.

From the behaviour of the Index, we could see the market remaining strong right till the first week of March.

It does not harm to remind readers to 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 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.