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

[darkstar]

Hi!

While there was a good sunshine all along that suddenly the dark clouds have started approaching. But first, how the last week was different :

During the last week, after a long time that the US$-INR rate dipped below 48 Rupees a dollar, but recovered thereafter.

On the weekly charts for Spot Nifty, last week’s candle was a near Doji with open at around 4977 and close at around 4959. On both the sides were the long wicks, thereby indicating the volatility. It also indicated that efforts to move either up or down were done half-heartedly and did not sustain.

The scene on last two days for the Nifty Options OI also gave indications. While on 24th Sep, the settlement day, the OI outstanding in the diminishing order were :

4900 PE-4800 PE-5300 CE-4700 PE- 5000 CE

which gave a good support at 4900 level and also a good resistance at 5300 level, but indicated a hurdle at 5000 to cross and go up.

On Friday 25th Sep, the picture changed to –

4900 PE-4800 PE-5000 CE -5300 CE-4700 PE

making the resistance at 5000 more stronger than 5300.

Therefore, the next week may see a sideways movement of the market confining itself to the smaller range of 4900-5000 and the larger channel of 4700-5300 levels.

But this need not upset anyone. While the US and Asian markets were down, Indian markets stayed in the green on some days last week. This, in a way, is an indication that the negative influence of external markets on Indian markets has started diminishing.

The BBs are inside the KBs and are about to meet. The high of the weekly candle is somewhere nearby. The 10 Weeks EMA Red line is coinciding with the up trending trend line. So, if the markets continue to move sideways, within a week or two that the pressure shall get developed for the markets to decide…. Whether to stay above the trend line and move up, or to give up and fall below the trend line to make the things difficult.

That is because, once the trend line is broken and the Nifty is below it, that the trend line shall offer a very strong resistance, difficult to break.

As of now, there is no clear indication from the charts, but by a week or to, we shall see the effect, that shall tell us well in advance, whether there is going to be a stable govt in Maharashtra or not.

One must not forget that both BSE-NSE being in Mumbai, the capital of Maharashtra, that there is going to be some effect of the assembly elections due in this month, and the results of the elections.

But as usual, I am expecting the markets to indicate the results even before the polling takes place…. But we need to wait for sometime to see that on charts. One clear indication would be if and when the Spot Nifty goes above the recent high of around 5037 on 22nd Sep…. one could expect a stable govt in Maharashtra…. could be Congress-NCP or Shivsena-BJP. If not, there is likely to be a horse trading of Aayarams-Gayarams.

One comment on Murtaza’s posting of 13th Sep. Let’s take the first example he has mentioned, which is –

“when we hit 4720, we never thought abt 4350 and we hit it thrice in a week”

These are trading advantages. If we are in a region…. say 4500 for Spot Nifty and I go long on 4500 Nifty Calls, and the markets start falling, I just short the futures to cover my calls. When the markets go to the lower level, say of 4350 that I do nothing. But as they start recovering and come above 4400 that I square off my futures and go extra long in 4500 Calls.

For that one must be sure that the markets are temporarily down and are going to recover and therefore, one must manage to stay away from Fear…. which comes only from Greed. And this would depend on everyone’s mindset and experience in the markets.

All my opinions, and I could be wrong.

Cheers!
SS

hi,which software u use for technical analysing i need one of them easy, cheap to use i use odin diet . i prefer if possible rt data extract from odin diet

 

[S S]

Hi!

Every time that I talk about the uptrend, I have been making it explicitly clear that the markets never go up in a straight line, which is healthy for the markets. So, as long as the Spot Nifty remains above the up-trending trend line, a week or two down, does not really matters.

And how the week was. Reliance coming out with 1:1 Bonus and Infosys expecting better [though in real terms the figures may be down due to the depreciation of US$]

The Oil Producing countries have also realised the real picture of falling US$. Which means that even if everything in the world is status quo, the Crude and Gold prices, which are currently linked to US$ shall keep appreciating just because the US$ is falling.

And smartly they are now trying to de-link the Crude prices from US$. I am sure that the Gold shall also follow.

This, in clear terms means that the ‘Supreme” position of US and US markets is fast loosing it’s importance. We also saw in the recent past, that when rest of the markets world over are falling, Indian markets shoot up, and vice-versa.

So, what do we have in store for us, during the next week?

One look at the OI for Nifty Option at the close of 9th Oct 09, shows the trend :

4900 PE-4700 PE-5000 CE-5100 CE-5300 CE

So… as it stands at the close of Friday 9th Oct, that the current channel for Nifty to play around appears to be 4700-500 on the large scale. But I have my own doubts. Before checking the Nifty chart, let’s have a look at the INR-US$ weekly chart.

This chart shows a kind of Head & Shoulder pattern, but NOT a perfect one. So, I will not start working out the likely fall and the target.

However, one must admit that the rate is due to fall further, and the US$ has already started weakening against most of the world currencies.

But this rate has two factors. One the US$ getting weak, and the other… inflow of foreign exchange into the country. Instead, if there is an outflow then the both rates may match to some extent and the INR-US$ rate may NOT vary too much… but that is NOT what it is now happening.

Therefore, in addition to the dollar getting weakened, there has to be a sizable inflow. If NOT atleast the outflow should be absent or less.

I shall still stick to the uptrend with the target of around 5365, which is about 61.8% retracement of the total fall. That is also the position, which intersects the up trending trend line which should offer a high level resistance.

Therefore, in my opinion, one should NOT get upset by a red candle for a week or two on the weekly charts, so long as the trend line is NOT broken. For all practical purposes, the trend line is a trailing stop loss for me.

But I could be wrong.

Cheers!
SS

NB : Reg Darkstar’s question, I use AmiBroker. But again, in my opinion, it is NOT the software used, which is important. It is the knowledge gained through studies of waves. I prefer Elliot Waves, though, I know an extremely little about the Ews.

 

[DanPickUp]

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[S S]

Hi !

First, I wish all the readers of the Traderji Forum in general, and this thread in particular, A Very Happy Deepawali and a Prosperous New Year.

During the two days before Diwali, we found that the Nifty Options OI in the diminishing order was 4900 PE-4800 PE-5000 PE-5300 CE-4700 PE 5200 CE.

While on 15th Oct, the 5100 CE was higher than 5100 PE, it got reversed on the next day, that is 16th Oct 09. It is an interesting situation, as follows :


15-Oct-09 16-Oct-09

4900 PE 68.61 69.83
4800 PE 51.41 56.48
5000 PE 50.67 50.71
5300 CE 44.57 47.28
4700 PE 42.65 42.57
5200 CE 42.58 42.07

5100 PE 31.88 36.91
5100 CE 31.69 33.41


This obviously means that markets are not only trying to be above 5100 levels, but reduction in 5200 CE OI may reduce the resistance to allow the Nifty to go above it. Increase in OI there after [that is, after Nifty has crossed 5200 and gone above] shall make 5200 also a good support.

Simultaneously, we also find that the BBs have slowly started expanding and are poised to cross and go above the KBs. This means that the markets may try to break the upper resistance and move up so rapidly, that many punters shall miss the bus.

Well, that is obviously one possibility, and in my opinion, a strong one. The next resistance is of around 5365, which is actually at the 78.6% of the recent total fall [which I erroneously wrote as at 61.8% in my earlier postings] .

At 78.6%, I do NOT expect it to be a very strong resistance. So, it is very likely, that the bad days are over, and markets are in a position o resume their upward journey with full speed, but in waves and sub-waves.

The only thing that is going against this all is the INR-US$ rate, which has started increasing. Not a good sign. Dollar has NOT become strong, and this means that there is some outflow of foreign exchange.

However, with the manufacturing picking up and banks being approached for genuine loans, the outlook on the fiscal front appears to be promising. So, the INR-US$ rate may increase for a short time, but shall get reversed to help the markets to pick up speed again.

But that is my opinion, and I could be wrong.

Cheers!
SS

 

[S S]

Hi !

An interesting situation that we face this week. To understand it, we need to check the charts for both Weekly and Daily details for Spot Nifty.

First the Weekly chart, where the candle for the last week is a red candle, still remaining above the trend line to close at 4997.05 and also to remain above the 10 week EMA which is at 4887.85 … and this picture is not bad.

But if one sees the daily chart, the picture is entirely different. The first four days of last week had a red candle on each day. On Wednesday, the candle appeared to have taken support from the trend line but there after on Thursday, the candle closed not only below the trend line but also below the 10 DEMA red line.

For the last week, the daily closing was marginally green on Friday at 4997.05 but we also saw that the 10 DEMA level of 5049.12 at Friday’s close had acted as a strong resistance during the day, and had not allowed the spot Nifty to go beyond 5055, which was the 10 DEMA at that point of time during the day.

Therefore, now the question is, which one of the two charts one should consider to take a position on Monday, mainly because the Dow Jones too has closed in the red on Friday.

I am not attaching the charts for the other indices. But there is something different that one can see from most of them, such as Nikkei of Japan, Hangseng of Hong Kong and Straits Times of Singapore. ….. Friday’s close for all these markets is well above the 10 DEMA level.

For Dow Jones, the Friday close was at 9972.18 which appears to have taken support from the 10DEMA that was 9970.91 at Friday’s close.

So, with these all markets remaining above the 10 DEMA level, what makes Indian markets to dip below 10 DEMA and allow that level to act as a resistance?

I do NOT see any negativity. And yet, there is going to be a negative point to be considered.

While in India, we follow the April-March Financial year, most of the American companies follow the Calendar year as their Fiscal year. Therefore, it is very likely that from now till the end of Dec 09, that such companies shall try pulling out their funds …. only to return again in Jan 2010 and thereafter.

Does this make a difference for the long term investor ? …… No & Yes.
No, because actually it does not make a difference.
Yes because it gives opportunity for bottom fishing as the markets slide down inspite of having no negativity, but on account of closure of account elsewhere.

CAC 40 of France, FTSE 100 of UK, DAX of Germany…. all have closed below the 10 DEMA line on Friday. So, possibly there could be a similarity in India and Europe for the funds coming in these countries from the outside…. possibly, and I cannot be sure.

Ideal way for trading during the next week, is to keep a check on the Open Interest for Nifty Options at various strike levels.

For example, at the time of opening on Monday 26th Oct for some time thereafter, if the Spot Nifty remains below 5000 and the OI for 5000 CE goes on the increase, one can be sure that the 5000 level is becoming a strong resistance at that moment of time. Likewise, one can work out during the day for the intraday trading, and checking the OI for all the related strike levels.

And what all that is mentioned above is my opinion, and I could be wrong

Cheers!
SS

 

[MurAtt]

Dear S S,

As usual a concise and clear picture and understanding. Cheers ..

:clapping:

btw - how about a backtest and we check how many times your tagline has gone wrong wrt the no of times you have written it ...
I am sure even the FII have not had as many correct hits

:clap:

 

[S S]

Murtaza,

The subject of ‘Psychology’ starts with it’s basic principle of ‘Individuals differ’ and obviously, different individuals have a different thinking patterns.

I respect the creation of the almighty that allows every individual to think and act. But Man has created Money and in the current times, everyone appears to be running only after the money…. although, many have not only sufficient, but far more than their own requirements. And they don’t stop there… they sometimes run after each other’s blood. If you don’t believe me, think of the two brothers Mukesh & Anil and you will know what I mean.

I may be a mad person in current times, not running after the money. But that keeps the greed away…. well …. most of the times

Since the time that I started giving advice on many subjects, which had points to think and act upon, I started getting a lot of peace of mind and satisfaction …. something one can never buy in one’s lifetime with all the money that the Ambanis, Tatas, Mittals, Birlas, Godrej, Premji and others have, … all put together.

Therefore, in my lifetime, I do NOT want ever to be a Tata or Mittal or Ambani or any one of those big shots. That may be the reason for the different mindset that I have.

That is why the name ‘SS’ which are neither my initials, nor have anything to do with my real name. That way, in reality, SS is a non-existent entity, and hence cannot own a credit or a dis-credit for any comments offered. How I ended up in ‘SS’ is a long story, so lets just forget it here.

And that my friend, is the reason for the usual disclaimer that I have been inserting at the end of my every message

Cheers!
SS

 

[VJAY]

SS sir,
You write my own thinking!!!!! which am not able to put in words....thinks the same as you written........put it in best way.....now days no one thinks the same....seeing all crimes/social activities/politics....alltowards money....money only......

Thanks for the writings

 

[MurAtt]

Dear S S,

wrt the sentiment of the above mail, I am posting a small poem (recd in inbox, copy/pasted here.)

"WAQT NAHI"

Har khushi Hai Logon Ke Daman Mein,
Par Ek Hansi Ke Liye Waqt Nahi.
Din Raat Daudti Duniya Mein,
Zindagi Ke Liye Hi Waqt Nahi.

Maa Ki Loree Ka Ehsaas To Hai,
Par Maa Ko Maa Kehne Ka Waqt Nahi.
Saare Rishton Ko To Hum Maar Chuke,
Ab Unhe Dafnane Ka Bhi Waqt Nahi.

Saare Naam Mobile Mein Hain,
Par Dosti Ke Lye Waqt Nahi.
Gairon Ki Kya Baat Karen,
Jab Apno Ke Liye Hi Waqt Nahi.

Aankhon Me Hai Neend Badee,
Par Sone Ka Waqt Nahi.
Dil Hai Ghamon Se Bhara Hua,
Par Rone Ka Bhi Waqt Nahi.

Paison ki Daud Me Aise Daude,
Ki Thakne ka Bhi Waqt Nahi.
Paraye Ehsason Ki Kya Kadr Karein,
Jab Apane Sapno Ke Liye Hi Waqt Nahi.

Tu Hi Bata E Zindagi,
Iss Zindagi Ka Kya Hoga,
Ki Har Pal Marne Walon Ko,
Jeene Ke Liye Bhi Waqt Nahi.......



If you feel its @ the wrong place, pls do let me know, will edit the post ...

 

[VJAY]

Great!! murtaz bhai......very nice.