RSI Scare

First of all, my most sincere apologies to all of you. Though I wish to... but there is no gain if I spend more time in explaining my absence. I know you are not interested in knowing those reasons behind my absence and would simply want me to get back to writing trading and tutorial posts. So will not bother you more and  get to that straight away.

I had explained some of the scenarios and their meaning in my last post which was two weeks back. Since then we have had two positive weeks and things are extremely interesting now.

We have created a new peak in last two weeks. Also we have managed three higher lows now on weekly basis. To be honest, I was not expecting the rise in last two weeks. I would have settled for rise of the first week and would have bet against the second week but then such are the markets. This week, I am definitely betting against the similar rise though we may not fall much.

MACD is flat but RSI is nearing the overbought zone as seen above. RSI is much more overbought in daily chart. Have a look below on daily chart. Also worth noting is that RSI in overbought or oversold zone has been very reliable in last two years or so and I have marked instances of RSI overshooting the upper band and subsequent market reaction.

Presently also, as seen above, RSI is in stratosphere and that certainly is not a good sign in short term. Expect some weakness in the NIFTY this week but do not short heavily. Things often get irrational in a strongly trending market in either direction. Otherwise how would you explain last two weeks with virtually no change in fundamentals of companies, Country or World.

Then I cannot help but share good news that I have been promoted after successful completion of my last project. This development in partially responsible for my absence. However after thinking a lot about best way to apologize and make amends with all my readers, I have decided to write three posts on the trot in three days. That was the only thing which came to my mind and hope you would like it too. So I am going to go all out of my way to make sure that you have two more posts in next two days. Will also be back on Twitter in case you want those supports and resistance levels.

Needless to say, will love to hear your comments. Happy Trading.

Watta Week

A lot has happened since I made last post a week back.

There was power outages which crippled almost 600 Million people in a rising superpower country. There were blasts in my home town, Pune, in an area which can be very crowded on the eve of Rakshabandhan. There has been RBI meet in last week with only symbolic action coming through. There was a Fed meeting too not very different from RBI. Then we now officially have a drought which further threatens our already paralyzed economy. We have managed a few medals (way less than whats Phelps alone have won) in Olympics.

Let us hope this week brings us some real good news.

I have been trying to write a post every 2-3 days but things have been not working out as well so I will have to manage with what best I can do. Let us see what charts tell us for coming week.

See the weekly chart for NIFTY above. The upward pointing arrows indicate higher highs that we are getting from Jan. If we had got higher highs also, that would have meant some thing but the high of June last week was lower than the Feb and that is where this theory is weakened. Right now also, the coming week is very important and a positive week will give us at least some hope that uptrend is not ruled out completely. However a negative week will leave open the possibility that low of 2 weeks back was not the final low and we may go on to make a low which is lower than the low of June first week. This will almost completely negate the possibility of uptrend.

My reading; we are not out of the woods as yet. At the same time I am also getting a 'feeling' that we may be at the end of this long term bear correction. Usually such long term trends end in high power euphoria (bull) or high despair carnage (bears) which is yet to be seen. That is the reason I don't think we have seen the end of this downtrend. What are we waiting for? May be some kind of shock after all.

Europe, US or even China can bring about that kind of shock which can kill the sentiments and make everyone lose hope. That precisely will be the point to start investing and make merry. If we don't get such bad news from outside, may be we can make Pranab Da FM again. That will certainly qualify.

Will have to make another post soon. It is already half made and won't be long.

Happy Trading. Don't forget the comments.

I still hate IT Returns

And I will continue to hate IT Returns. But that is for next year, at least for this year I am through with them. It is a relief and I can say that next year it will be a cake walk unless new FM changes something and brings up new so called 'Saral' form to make returns 'Simpler'.

Then in a related development my usual charting software has gone bonkers and I was trying to get it back up online through today. Failed; so you will see a different chart today.

The chart is slightly different than usual but I am sure you will not find it difficult to read. It lacks few functionality but will make do for some time. The interesting thing to see on the chart is the close proximity of 50DMA and 200 DMA. We are inching towards a Death Cross and it can be confirmed only after it lasts for a few sessions.

I will reiterate that in my opinion we are still in a bear market which is seeing counter trend rallies in between. Out trading horizon is usually less than 4 weeks and hence we have to mind the short as well as medium term trends and factor them in our trading decisions. It may be little difficult to believe we are in long term bear market looking at the chart above so may be our perspective will be clear if we see the chart of long term.

If you see this chart on a weekly or monthly basis things become a lot more clear. I expect some weakness in the market even in next four weeks but I am not sure about the magnitude of the move. It may not be as violent as in the last series. We may see some downward move followed by a rally and then some consolidation in the new trading range before a break out. That will be a good point for us to make some investment (not trading) decisions.

Have to study few more things in details before I can make a sound trading call. It may be simply buy/sell trade or I may work out some 'Spread' kind of trade to reduce the risk. Will try to make that post very soon but have to get some idea or some news from Europe/US to make it worthwhile.

Finally I have made up my mind regarding tutorials also so will be back with that as well. Will try to start that tomorrow itself if trading scenario is not clear. Lets hope for best. Happy trading till then.