Food for Thought........!

[S S]

During last two trading sessions, Spot Nifty was unable to cross the level of left shoulder formed earlier. And like it was mentioned in my post dated 27th June, H&S formation appears to be taking place, targeting 3700-3800 range.

It is therefore evident that unless this H&S pattern gets more clear and remains a part of the Cup & Handle formation, that the Handle formation shall not be completed without completion of H&S targets.

For any change in short term trend, the Adv-Decl numbers and US$-INR rate shall be the best guiding factors.

Cheers!
SS

 

[S S]

Hi!

With the Union Budget on Monday 6th July 09, that everyone is curious about the likely market move thereafter.

The Economic survey has laid down a Wish list of things that everyone would look forward to. It appears too good to be true. The Media is talking about a Big Budget this time, and there are likely to be many major changes.

But as already said earlier, Pranab is NOT the best finance person available, and although he may be taking tips from PM & Chiddu, that he still has his mindset and his ways of doing things.

And with the overall enthusiasm of the media for a Good Budget, that I am getting more suspicious. I still feel that the target for H&S can still be looked at 61.8% which is at around 3825.

Therefore, in my opinion, Spot Nifty reaching the level around 3825 shall be one important criteria for the handle to get completed. In the extreme case, it may go down to the level of around 3675, from where it had jumped on 18th May 09.

And if that happens, then 3675-3825 could safely be taken as a bottom and bottom fishing may be started around these levels.

As pointed out earlier, in the current scenario, one must always keep an eye on the Adv-Decl numbers along with the INR-US$ rate. Intermittent upswings are possible, and swing traders can make full advantage of the swings.

In all the probabilities, it appears that the current month is more likely to end up in red than otherwise.

But that is my opinion, and I could be wrong
Cheers!
SS

 

[S S]

Hi!

So, my conclusion that the charts are the ‘Kundali’ of the things to happen, appears to be correct. Inspite of the Economic Survey declaring the Wish List, that the reaction of the markets to the Union Budget this year, was negative.

The charts with H&S formation had already indicated it.

Then why all those experts and analysts on CNBC-NDTV and other business channel never understand it? Does it mean that they have no idea about the charts and technical analysis and they give their own opinion in a ‘Self Styled Expert’ manner or they are just dumb…or may be both

Last 30 mts of trading for Friday 10th July showed a steep decline, which was again with volumes. If one checks the OI for the Nifty Options, one finds that although the top two options traded on Friday were 4000 PE followed by 4300 CE, the Open Interest is maximum for 3800 PE followed by 4000 PE and then 4300 CE.

In my opinion, this means that the support for Spot Nifty has moved down from 4000 to 3800, with upper resistance being at 4300.

To play safe, it would be worth buying 4000 PE at whatever price it is available. But ideally, it would be the writing of 4000 CE that may turn out to be more profitable. But then, it has it’s own risk involved and traders with insufficient experience should NOT push their luck too far.

And this is based on the status of Friday closing, which could change during the course of trading, next week.

As seen from the chart given in my posting on 5th July 09, the immediate target for Spot Nifty stands around 3820. But the possibility of Nifty moving further down to 3675 or even below, cannot be ruled out.

That is my opinion, and I could be wrong
Cheers!
SS

 

[S S]

Hi!

The markets could be on an intermittent up trend to retrace the fall from the high of about 4480 on 6th July to the low of about 3920 on 13th July 2009.

And this may move up to 4133, before resuming the down trend. Just a likely probability.

That is my opinion, and I could be wrong
Cheers!
SS

 

[debdeeps]

Hi!

The markets could be on an intermittent up trend to retrace the fall from the high of about 4480 on 6th July to the low of about 3920 on 13th July 2009.

And this may move up to 4133, before resuming the down trend. Just a likely probability.

That is my opinion, and I could be wrong
Cheers!
SS

Hi SS,
Sorry to bug you but why 4133? The fall was approximately of 560 points and 61.8% retracement of this fall stands at 4266 and 50% means 4200. Pls explain why 4133, is this because it is 38.2% retracement that's why?

 

[S S]

Very Good Question.

Yes. Actually for a healthy correction, it should be 61.80% and the target should be around 4266.

But that is for a healthy correction, and I personally do NOT think that the overall current downtrend is demanding one. I looked at it more like a sucker's trap, when many people may think that the trend has changed, which will get fuelled by the experts on CNBC-NDTV etc. People will confidently take long position, to ultimately loose as the markets once again collapse in the near future.

That is why, I did not even consider 50% correction to 4200, where I could be proved wrong if the Spot Nifty makes as attempt to touch 4200. It is NOT impossible.

But as the US$ is getting stronger and everything including Gold and Crude is coming down along with other commodities, that I felt that the current correction could remain to a minimum level. That is why the target of around 4133, which has already been almost reached during today's session, when Spot Nifty went to a high of around 4129.

So, if my reasoning works, we should see a red candle tomorrow. But Nifty can always put anyone on a wrong foot, and I am no exception.

Cheers!
SS

 

[debdeeps]

Very Good Question.

Yes. Actually for a healthy correction, it should be 61.80% and the target should be around 4266.

But that is for a healthy correction, and I personally do NOT think that the overall current downtrend is demanding one. I looked at it more like a sucker's trap, when many people may think that the trend has changed, which will get fuelled by the experts on CNBC-NDTV etc. People will confidently take long position, to ultimately loose as the markets once again collapse in the near future.

That is why, I did not even consider 50% correction to 4200, where I could be proved wrong if the Spot Nifty makes as attempt to touch 4200. It is NOT impossible.

But as the US$ is getting stronger and everything including Gold and Crude is coming down along with other commodities, that I felt that the current correction could remain to a minimum level. That is why the target of around 4133, which has already been almost reached during today's session, when Spot Nifty went to a high of around 4129.

So, if my reasoning works, we should see a red candle tomorrow. But Nifty can always put anyone on a wrong foot, and I am no exception.

Cheers!
SS

Hi SS,
So gut feeling didn't work today, looks like nifty towards 61.8% retracement. Anyways thanks for your reply. Always love reading your posts. :thumb:

 

[MurAtt]

Dear S S,

Your regular participation here :
http://www.traderji.com/futures/30742-intraday-nifty-futures-wave-count.html#post335291
would be highly appreciated.

Thanks in advance - Murtaza

 

[S S]

Hi Debdeeps,

I always say that I give my views and I could be wrong.
I always advice people to think for themselves and then act.
And I always advice people to judge the trend of the market and play by the market trend to avoid loosing.

Nothing Hard and Fast. All are the probabilities worked out, and surely they are NOT certainties. None of us is God almighty, to know exact things that are going to occur in future.

Now, having said all this, I find that Dow has shot up like mad in today's session, and therefore, 61.8% retracement it is, as I write this message. But then, I could be wrong

However, 61.8% retracement means a healthy correction, and therefore, if that happens, then Nifty can take it's time to slide to 3600-3800 band, or even lower, as it feels.

The maximum Open Interest for various Nifty Options for last three days in diminishing order is for the strikes at :

For 13th : 3800PE-4000PE-4300CE
For 14th : 3800PE-4000PE-3900PE-4300CE
For 15th : 4000PE-3800PE-3900PE-4100PE-4300CE-4200PE-4700CE-4600CE-4200CE-4300PE

This is indicative of the Nifty being held above 4200 but below 4300 as of date. If the Asian markets follow the US markets, and Indian markets do likewise, then OI for 4300CE may get reduced after which 4600-4700 shall be the resistance for tomorrow.

If that happens, Nifty shall be above 4480, which may break the validity of H&S.

This means that probably the Handle formation is over and the markets could rise to higher levels.

But somehow, this appears too fast and therefore unusual. Markets always do the un-expected, so one needs to wait and then decide for the future course for the markets.

Murtaza, thanks for the link. Seems to be a new thread that I was unaware of.

Cheers!
SS

 

[S S]

Hi!

There are two separate things that one must have a look at, this week.

First is the Spot Nifty monthly chart. In no way that it gives any indication for breaking out above the 4790 level. Although the markets have been doing extremely good during the last week, on the monthly chart, it does NOT appear sufficiently forceful.

Therefore, the trend could be in either direction.

Secondly, the OI for Nifty Options. The current position, as at the close of Friday 17th July 2009 shows the various strike rates as follows, in the diminishing order :

4000PE-3800PE-4100PE-4300PE-3900PE-4200PE
which is followed by :
4700CE-4300CE-4400CE-4600CE

This gives the picture that a strong support exists from 3800 to 4300 by the Put Writers, who think that the Spot Nifty shall firmly remain above 4300.

It is followed by the Call writers who expect a strong resistance from 4300 to 4700.

4300 level being common to both, one finds that the OI for 4300CE has reduced but for 4400CE, it has increased, creating a strong resistance at 4400…. But this could be a temporary phase because the OI keeps varying during the trading session, based on the quantity traded.

Spot Nifty has closed between 4300 & 4400 on Friday and hence is likely to open in the same range on Monday. Variation in the OI for 4300 & 4400 Calls and Puts during the day would give a clue for the further direction of the market on Monday.

Therefore, I do NOT see any major move in the early part of next week.

That is my opinion, and I could be wrong
Cheers!
SS