Market Outlook

I am here again and wanted to write a tutorial before this post. Have started writing it and it should be online for you tomorrow or day after. In the meantime, in this post, I thought of taking stock of our Market and see if any trade exist for coming week. Hope you will like it.

So without wasting any time, let us see the NIFTY chart.

As you can see in the weekly chart above, NIFTY has erased the gains of previous three weeks in the past week alone. It is very frustrating for investors who see values of their picks going up inch by inch and then all of a sudden everything comes crashing down. But it was always on the cards. Right now also as you can see for NIFTY to maintain its bullish momentum the critical level is 5100 as depicted by horizontal line of low of July second week. So we may not be completely out of woods as yet.

This same support is around 5050 on daily level. See below;

RSI is not indicating any oversold condition at all and even MACD (which you will see soon in a tutorial post) is not indicating any reversal. We may not have any respite from downtrend immediately.

I was thinking of making a Straddle or Strangle or Spread trade suggestion but am seriously short of time to work it out. Have to seriously make an automatic excel based worksheet to do the calculations based on the NSE quotes exported or updated directly into it. Will take some doing but it will be a wonderful tool to help us decide things much faster. I had something similar before but it was too crude. Have to make a professional version of it. Will let you know as and when it is done and will also share it with you guys.

Right now, for trade, my thinking is like this. I expect some kind of (at least temporary) up-move on daily or intra-day basis and if I want to trade for a week, I will short the markets tomorrow (if) after they go up. Am expecting markets to maintain downtrend on weekly basis and hence expecting to square off this trade during the week sometimes.

However if I want to keep the trade till end of the series then I would like to think of markets getting back to positive territory after falling for a week or two. This is with the assumption that markets will not violate earlier low as seen above. So I would like to go long sometimes during this week or next for a trade which I want to keep till end or close to end of current series. I hope to get in around 5100 or 5050 level but I will keep position short with some serious stop-loss.

Once again, I will remind you that this blog is not intended as an investment advice for you. It is just my loud thinking about what I expect in the markets. Follow it at your own peril.

Then there is a dearth of comments from you guys. Please let me know what you think of the posts and what would you like to see my writing. It helps surely. Will be back soon with MACD. Happy Trading.

Hat-trick Post

Wow, this time around I could actually do it and I am back with my third post in three days. This goes to show that nothing is i-m-possible.

After thinking about what to write, I decided to let it flow freely without any particular agenda. So even I do not know what will come out of this but before that let us have a look at the NIFTY Chart below;

Of particular interest is the last candle on the right (candle of today). I do not know if you also see it but it appears a close 'Shooting Star' candle to me and if you have forgotten what it means, you can read it here. If true, it simply indicates that the uptrend is near an end for the time being and we may see some correction. Also, if you will notice you will also see an 'Inverted Hammer' around 25th July followed by bearish 'Marubozu' and subsequent change in trend in next couple days. Candlesticks continue to amaze me.

Usually whenever I come across something like this, I like to test my hypothesis on a larger data set. NIFTY and SENSEX with all the data in them have the limitation that they represent 50 and 30 from thousands of stocks in them. This sometimes limits the universality of our analysis. Just to weed out this factor I had a look at the NIFTY 500 chart; and behold the Shooting Star in all its glory.

Shooting Star is much more clear in case of 500 NIFTY stocks. Now this also coincides with an (over)due correction in S&P 500 of US which has defied all odds to go past 1400. It surely needs a breather. Have a look and notice that the last up move has lasted without correction a lot longer than earlier 4 cycles since June.

Almost every chart I see is calling for some correction (or at least a halt in the uptrend) but will it happen? I cannot say but all the needed signs are in place. (Cannot help but mention that; Look at the S&P500 chart and series of higher highs and higher lows since June.. classical) One more thing to note is how much the price has stretched above 50 and 200 Moving Averages. Usually prices tend to come back to MAs and larger the stretch, more violent is the retraction.

In all probability we are in for a small correction. It may be a small counter trend move as usual and may not mean much in the larger scheme of things but nevertheless it may give us some opportunity to initiate a trade.

Then, its been long since I made any philosophical post and I am feeling like giving it a shot. Stay tuned, it may be just around the corner. Right now, this post has stretched a lot so will stop now. Will be back, who knows, by tomorrow. Happy trading till then.

Trade Post and Comments

Thanks guys for your comments. However I did not mean that you write 'thanks' comments. What I meant and expected is that you guys also contribute to the discussion. Not necessarily by some new information but by way of questions, critical comments. You can also write what do you think about the charts I post. You can also write if you have questions about some particular stock or index. Most importantly you can let me know how do you want this blog to shape up.

Idea is, I am not a professional blogger and I just pen down my thoughts in a haphazard manner. There is no order, no sequence and no one to look at the larger picture. You guys are the observers and you can guide me if something is not right. So write something on that line. I actually never thought, but this blog, if made properly, can be a good starting point for many people. This may not happen overnight or in few weeks but if I continue to write for whatever time I am spending now then may be in a few months or in a years time, this blog can be a good resource for many new starters. You guys can help me in it.

As for the trading post, then Markets did not go up for Euro Summit outcome as everyone believed. I also expected some sort of minor rally at least; before a correction of our liking happens. The time has not run out still. US markets are slightly up as of now and we may see some sort of spike in our market too before we get some retracing.

Today morning I tweeted about 5300 PUT being below 80 (it is updated on blog page automatically). I would have planned an entry around 70 level but sadly it did not come today. I believe we may still get that chance. If not and if you want to open a position quickly, 5200 PUT is also good option. Current level is about 50 and Risk for a lot would be limited to around 2500 Rs. Not bad.

Will write MA post and how to trade with them soon. Happy trading and keep commenting.

Got the data...

First up good news... Hard drive data has been retrieved. Bad news, cannot get it today. Can collect it tomorrow. So guys, please wait for a day more for the charts.

Another text post in between should keep you entertained... Before we talk about markets or economy, would like to answer few comments made by readers on the blog.

First, it had been asked many times, but the answer is no. I am not a market analyst. The only market connection I have is through my dad who also used to be an active trader once upon a time. Learnt most of the things from him. Otherwise I am just a normal person working in IT. So sorry to disappoint.

Then second regarding continuity in blog... Those of you who have read this blog from start would know the Genesis. I started writing here for few of my friends who were never tired of asking me same questions again and again. I was tired of explaining them so on advice from one of them started penning down my thoughts. Surprisingly I also started enjoying and so I continued. I do not know how but I started getting lot of other visitors, readers and hence expectations started to rise. It was not possible for me to write everyday as I said I am neither a professional trader not an analyst. I am just a normal person who have relatives getting married, falling sick, who goes on vacation in summer and also goes on site as an IT worker and sometimes just chill out.

Honestly with the mails, comments I am getting, I would want to write everyday. That, friends, is not possible at least till end of this month. We will see how it goes after that.

Then the questions regarding posting of daily supports, resistances, trades, etc. I feel this blog may not be the best place for it. I do not have access to it all the time. Will work out something.

After all this rant, let's also talk some business. As for the markets, it is a dull and flat world. We are probably waiting for formation of government in Greece or some other event to get clue. Till such time sector or stock specific muted action will keep happening. QE3 or another LTRO is what market participants may be hoping for which may do more harm than good in the long term.

But the real action, I feel is going to unfold in commodities. Watch out all precious metals and crude. Will make a techno-funda post on them at the opportune time.

Will write more soon. Till then, happy trading.

NIFTY Charts

This post will be mostly about charts with little commentary. It will also help me regain some perspective about technicals of the NIFTY. Been writing and thinking too much about fundamentals.

Chart 1: NIFTY with various Simple Moving Averages

Note: 50 and 200 SMAs are almost at the same level and NIFTY is resting on them from the top side. 21 and 100 SMAs are sloping up.

Chart 2: NIFTY with various Exponential Moving Averages

Note: I personally prefer EMAs than SMAs and I know that I need to do a post on them to explain why. These MAs will be the first when I start tutorials again. Here 21 EMA is sloping up, 50 EMA is getting flat and downward slope of 100 and 200 EMA has reduced. Note that NIFTY touched 200 EMA from bottom on Friday. 200 EMA usually is a tough cookie to crack and is a strong support or resistance.

I am studying couple more indicators and finding some very interesting stuff with Bollinger Bands. Want to include those charts here but it will get very lenghty. Will make another post with couple charts in the morning. Tomorrow I have taken a day off so it should be possible.

Thanks a lot for hanging in here. As usual, keep your comments coming in; they push me to write more.

Rail Budget Tomorrow

As I had promised, I am back with budget special posts. Tomorrow Mr. Dinesh Trivedi will present his first Rail Budget. Apart from some new Trains, I guess Fares will be hiked first time since 2003. There is also a possibility that some kind of Safety Cess may be born tomorrow to improve security situation of our trains.

I am listing some of the stocks that are watched around rail budget.

• Titagarh Wagons
• Kalindee Rail
• Kernex Microsystem
• Stone India
• Texmaco Rail

Now, I do not follow any of these stocks fundamentally but we can definitely look at the charts.

Kernex is already anticipating positives from budget and has been going up for last 3-4 days. Kalindee and Titagarh have not shown any particular budget related moves.

I would not like to trade any of these stocks with the budget. I would rather play on NIFTY which looks good after bouncing from the support mentioned in earlier posts.

I would not be surprised if NIFTY as a whole moves in positive direction as compared to individual stocks. I may open a small position on the Long Side depending on the general tone of the budget speech if it sounds rational and does not utter too many populist things to start with.

All this is too uncertain but one thing is very likely... Railway Budget may arrive in Parliament tomorrow in a suitcase and not in a bag like last three years.

I will be back with a more definitive post on General Budget soon.

Happy Trading.

Market Today

Oh, I did not realize that my post today morning would find its way straight to the ears (or eyes) of Market God. It went for a hike of about 125 points immediately after my post. However by the end of the day, NIFTY was back to where it started. This move prompted me to check the charts once again. As you can see, the trend line this time was going somewhere close to 5200 as against 5240-5250 in last post.

In any case a closer look was warranted and I did take one.

So the real support (of this trend line) is around 5190. This figures corresponds with 200d EMA and it will be a strong support. If you believe (I unofficially do) that NIFTY is primed for a move up, it will be a good level to create some (small) position. Keep a continuous eye on NIFTY if you really do.

I am itching for writing on couple of scripts; DLF for instance after the Veritas Report or KingFisher after so much news. Hope to find some time for that.

You have great fun during Holi. I appeal to all of you not to waste water and play 'Tika Holi' this year. Have a great festive season and Happy Trading...

NIFTY is at a Support

NIFTY right now is at around 5250 level. If you recall my earlier post, it is a crucial support.

Lets hope it holds (off course only if you are long). As for me, I am on sidelines and trying to devise some strategy to play out budget.

Will make a post on that well within time. Happy trading till then...

NIFTY is at a Support

NIFTY right now is at around 5250 level. If you recall my earlier post, it is a crucial support.

Lets hope it holds (off course only if you are long). As for me, I am on sidelines and trying to devise some strategy to play out budget.

Will make a post on that well within time. Happy trading till then...

Special Trading Session today

Today NSE and BSE are conducting a special trading session from 11 am to 1 pm. Please note that no settlement will take place today. This session is for BSE to test it's Disaster Recovery site (beats me).

It's after eons that I have an off day at home and market is open. I will have fun and so should you...

Happy Trading...