Food for Thought........!
- Thread starter S S
- Start date
Hi!
I had been optimistic for a long time. But when the markets have surged upwards during the last week that I become worried. The daily EOD chart for spot Nifty shows that during the last four sessions that the recovery has been over 85%.
I may be wrong, but the last green candle on the weekly chart appears to be as a trap.
If the current sub-wave is considered to be the part of ‘4’ on the charts, then it just cannot violate the level set by number ‘1’, which is 5177.
Therefore, so long as the spot Nifty does not go above 5177 and also does not close above 5177 convincingly, one cannot say that the trend has reversed and there is every chance for the spot Nifty to move downwards again towards 4435 region.
I wish it happens fast because it will end a kind of suspense and the markets could then resume their uptrend successfully.
That is my opinion and I could be wrong.
Cheers!
SS
NB : If 74 year old Anna can fast for 12 days, we all could have mental fasting for 2-3 weeks without any adverse effect
I had been optimistic for a long time. But when the markets have surged upwards during the last week that I become worried. The daily EOD chart for spot Nifty shows that during the last four sessions that the recovery has been over 85%.
I may be wrong, but the last green candle on the weekly chart appears to be as a trap.
If the current sub-wave is considered to be the part of ‘4’ on the charts, then it just cannot violate the level set by number ‘1’, which is 5177.
Therefore, so long as the spot Nifty does not go above 5177 and also does not close above 5177 convincingly, one cannot say that the trend has reversed and there is every chance for the spot Nifty to move downwards again towards 4435 region.
I wish it happens fast because it will end a kind of suspense and the markets could then resume their uptrend successfully.
That is my opinion and I could be wrong.
Cheers!
SS
NB : If 74 year old Anna can fast for 12 days, we all could have mental fasting for 2-3 weeks without any adverse effect
Hi!
Usually, I stick to spot Nifty and it’s behavior, but this time I would prefer to start with Dow Jones. DJ’s chart is showing something explicitly clear and almost in a copybook style. The daily EOD chart for Friday 9th Sep for DJ is –
The current Bear Flag formation is absolutely clear. Those who do not have any idea about Bear Flag may please google search the net and read and confirm. It only means that the Dow Jones is all ready to fall over 2000 points to the levels in the region around 9600 or below. It also means that the last low for Dow Jones on 1st Jul 2010 around 9596 is likely to be re-tested.
Reason could be anything, but if one of the main reason is going to be the IT sector, that shall definitely have a strong impact on Nifty & Sensex.
The spot Nifty daily EOD chart is not showing the Bear Flag as much clear as for DJ. But the low on 25th May 2010 for spot Nifty, which was around 4786 has already been violated on 26th Aug 2011 to reach a level of 4720. So, in the event the DJ does fall by 2000 points or more some effect is likely to drag down the Nifty to a level well below the last low of 4720. Therefore, chances for the Nifty to move towards 4435 region would increase with such fall in DJ.
However, there is an alternate view point. If the fall in DJ does NOT seriously impact the Nifty, then one should consider the possibility seen in the spot Nifty’s daily EOD chart, but with different levels considered :
The chart shows that the spot Nifty had remained in a channel having it’s upper limit around 5950 region and the lower limit near it’s low of around 5177 on 11th Feb 2011. But after breaking the channel downwards, the Nifty had reached the 161.80% level around 4732 and had bounced from there.
It is less likely that with a FALL or around 2200 points in the Dow Jones, the Nifty can still manage to GAIN 200 points as mentioned by some charlies on business TV channels. But it is possible that in spite of a heavy fall in the US markets, the Nifty may once again attain it’s recent low of around 4732 and recover from there, without attempting the lower levels.
That is what my opinion is, and I could be wrong.
Cheers!
SS
Usually, I stick to spot Nifty and it’s behavior, but this time I would prefer to start with Dow Jones. DJ’s chart is showing something explicitly clear and almost in a copybook style. The daily EOD chart for Friday 9th Sep for DJ is –
The current Bear Flag formation is absolutely clear. Those who do not have any idea about Bear Flag may please google search the net and read and confirm. It only means that the Dow Jones is all ready to fall over 2000 points to the levels in the region around 9600 or below. It also means that the last low for Dow Jones on 1st Jul 2010 around 9596 is likely to be re-tested.
Reason could be anything, but if one of the main reason is going to be the IT sector, that shall definitely have a strong impact on Nifty & Sensex.
The spot Nifty daily EOD chart is not showing the Bear Flag as much clear as for DJ. But the low on 25th May 2010 for spot Nifty, which was around 4786 has already been violated on 26th Aug 2011 to reach a level of 4720. So, in the event the DJ does fall by 2000 points or more some effect is likely to drag down the Nifty to a level well below the last low of 4720. Therefore, chances for the Nifty to move towards 4435 region would increase with such fall in DJ.
However, there is an alternate view point. If the fall in DJ does NOT seriously impact the Nifty, then one should consider the possibility seen in the spot Nifty’s daily EOD chart, but with different levels considered :
The chart shows that the spot Nifty had remained in a channel having it’s upper limit around 5950 region and the lower limit near it’s low of around 5177 on 11th Feb 2011. But after breaking the channel downwards, the Nifty had reached the 161.80% level around 4732 and had bounced from there.
It is less likely that with a FALL or around 2200 points in the Dow Jones, the Nifty can still manage to GAIN 200 points as mentioned by some charlies on business TV channels. But it is possible that in spite of a heavy fall in the US markets, the Nifty may once again attain it’s recent low of around 4732 and recover from there, without attempting the lower levels.
That is what my opinion is, and I could be wrong.
Cheers!
SS
umm ...
not to do 'behas' with you BUT what if its a failure i.e. the flag ?
have we had any known instances of flag pole failure ? At least in individual Nifty stocks I have seen many times a pennant/flagpole failure for bullish as well as bearish BUT for Index ...
:-?
Just trying to look for some more alternate views ... and I'm sure SS can post a EW count too ...
not to do 'behas' with you BUT what if its a failure i.e. the flag ?
have we had any known instances of flag pole failure ? At least in individual Nifty stocks I have seen many times a pennant/flagpole failure for bullish as well as bearish BUT for Index ...
:-?
Just trying to look for some more alternate views ... and I'm sure SS can post a EW count too ...
Hi!
Staring with the weekly chart for spot Nifty, we find that the candles for last three weeks are showing Green, but the last two candles were met with the resistance at 10 Weeks EMA Red line.
The weekly candles remaining below the 10 Weeks EMA line, along with all other lines such as lower BB & KB also trending downwards, the trend is definitely NOT upwards.
On the daily EOD chart for spot Nifty, now some outline for a Bear Flag is emerging. The high of around 5170 on 8th Sept, which remains below the low of around 5177 on 11th Feb is the key, and so long the spot Nifty does not touch/cross that level around 5177 that the markets are to move downwards. [Because as per EW analysis, the level ‘4’ cannot violate the level ‘1’ and hopefully, I have marked these two levels correctly]
The two option for the sub-wave 5 to end are –
- the normal kind that should end around 4435 and
- the Truncated kind of wave, that gets cut off at a much earlier level which could be the level around 4730, as seen in the weekly chart.
One can say that the negativities, such as the Euro & Dollar problems are now built in, into the current position of the markets, but there are lot more things coming up, such as the Repo & Reverse Repo rate increase. And the one that happened is NOT the last one, and I expect one more hike around Deepawali.
This sub-wave 5 is likely to take a long time to it’s target around 4435, and therefore could be of a type of a Diagonal Triangle with 5 legs because after a Diagonal Triangle a sudden change in trend is observed with a steep immediate rise that make most of the charlies to miss the bus.
That is what my opinion is and I could be wrong.
Cheers!
SS
Staring with the weekly chart for spot Nifty, we find that the candles for last three weeks are showing Green, but the last two candles were met with the resistance at 10 Weeks EMA Red line.
The weekly candles remaining below the 10 Weeks EMA line, along with all other lines such as lower BB & KB also trending downwards, the trend is definitely NOT upwards.
On the daily EOD chart for spot Nifty, now some outline for a Bear Flag is emerging. The high of around 5170 on 8th Sept, which remains below the low of around 5177 on 11th Feb is the key, and so long the spot Nifty does not touch/cross that level around 5177 that the markets are to move downwards. [Because as per EW analysis, the level ‘4’ cannot violate the level ‘1’ and hopefully, I have marked these two levels correctly]
The two option for the sub-wave 5 to end are –
- the normal kind that should end around 4435 and
- the Truncated kind of wave, that gets cut off at a much earlier level which could be the level around 4730, as seen in the weekly chart.
One can say that the negativities, such as the Euro & Dollar problems are now built in, into the current position of the markets, but there are lot more things coming up, such as the Repo & Reverse Repo rate increase. And the one that happened is NOT the last one, and I expect one more hike around Deepawali.
This sub-wave 5 is likely to take a long time to it’s target around 4435, and therefore could be of a type of a Diagonal Triangle with 5 legs because after a Diagonal Triangle a sudden change in trend is observed with a steep immediate rise that make most of the charlies to miss the bus.
That is what my opinion is and I could be wrong.
Cheers!
SS
Hi!
The last three sessions were a kind of cut-throat murder for many, and I am sure that the small timers might have burnt their fingers if they had remained long on any one of three days. And if they have not remained long then, but have remained short on the close of Friday session, that is not a good idea anyway.
What modification I have done in the afl is a mystery to myself because the Green Arrow showing the Buy on Friday’s close did surprise me. All the formula usually give indication after one day but here, there seems to be some error from my side.
And assuming that the markets start their recovery on Monday 26th Sep, I do not expect them to move above the immediate resistance zone around 4910-4930 area. Even on Friday 23rd that the spot Nifty did visit that region the rebound from it.
I also expect the rate of US$ to fall to around 52 Rupees a dollar, there by indicating an outward flow of the foreign exchange resulting into some more fall in the Indian markets. Therefore, we need to wait for the spot Nifty to violate the 4730 area support and go and close below that level. Thereafter, if the spot Nifty finds it difficult to easily climb up to go above this 4730 level again, then further fall to around 4435 is eminent.
In the event the US$-INR rate goes to Rs 52 and later falls and the spot Nifty is yet to fall below 4700, then 4700 may hold. If the UD$-INR rate goes above Rs 52 and keeps increasing, then 4435 may almost become a surety.
The Nifty Options OI indications show that there is a marginal fall in OI for 4700PE & 4800PE but a considerable reduction in OI for 4600PE. So, if the support around 4700-4730 breaks, the Nifty is like to go fall a steep fall.
But if the spot Nifty either manages to remain above 4730 level or goes below that level, but recovers smartly to come and trade above this level, then the picture may become different and shall need a fresh analysis, especially if US$-INR rate is above Rs 52.
Therefore, the key here, is also to keep an eye on the US$-INR rate.
In the past, it has been observed that most of the time, the fall in the stock markets is followed by some kind of recession. This is expected to take place in the US & Europe. In India, mainly the IT companies [which come under the services sector] and to some extent the Metals, may get affected and may have to face a slow down.
The better side this shall be the reduced inflation, and the RBI shall then have to start reducing various rates that shall make the buying of assets relatively easy.
In one of my earlier messages, I had mentioned that in the worst case, the spot Nifty may go to 4435 levels. The weekly chart, however, is also giving an indication of the subsequent likely targets of around 3920 & 3260, that would remind everyone of the 2008 lows.
But that only is an indication and we need not worry about it right now. For the moment, one thing appears certain from the daily EOD chart. It shall be extremely difficult for the spot Nifty to cross the region around 5160-5177. Only when the correction is healthy and complete, that the recover could start with a bang.
But all of us should remain healthy by then. So avoid greed to remain away from the fear. That shall keep you healthy, both physically and financially.
Cheers & Good Luck!
SS
The last three sessions were a kind of cut-throat murder for many, and I am sure that the small timers might have burnt their fingers if they had remained long on any one of three days. And if they have not remained long then, but have remained short on the close of Friday session, that is not a good idea anyway.
What modification I have done in the afl is a mystery to myself because the Green Arrow showing the Buy on Friday’s close did surprise me. All the formula usually give indication after one day but here, there seems to be some error from my side.
And assuming that the markets start their recovery on Monday 26th Sep, I do not expect them to move above the immediate resistance zone around 4910-4930 area. Even on Friday 23rd that the spot Nifty did visit that region the rebound from it.
I also expect the rate of US$ to fall to around 52 Rupees a dollar, there by indicating an outward flow of the foreign exchange resulting into some more fall in the Indian markets. Therefore, we need to wait for the spot Nifty to violate the 4730 area support and go and close below that level. Thereafter, if the spot Nifty finds it difficult to easily climb up to go above this 4730 level again, then further fall to around 4435 is eminent.
In the event the US$-INR rate goes to Rs 52 and later falls and the spot Nifty is yet to fall below 4700, then 4700 may hold. If the UD$-INR rate goes above Rs 52 and keeps increasing, then 4435 may almost become a surety.
The Nifty Options OI indications show that there is a marginal fall in OI for 4700PE & 4800PE but a considerable reduction in OI for 4600PE. So, if the support around 4700-4730 breaks, the Nifty is like to go fall a steep fall.
But if the spot Nifty either manages to remain above 4730 level or goes below that level, but recovers smartly to come and trade above this level, then the picture may become different and shall need a fresh analysis, especially if US$-INR rate is above Rs 52.
Therefore, the key here, is also to keep an eye on the US$-INR rate.
In the past, it has been observed that most of the time, the fall in the stock markets is followed by some kind of recession. This is expected to take place in the US & Europe. In India, mainly the IT companies [which come under the services sector] and to some extent the Metals, may get affected and may have to face a slow down.
The better side this shall be the reduced inflation, and the RBI shall then have to start reducing various rates that shall make the buying of assets relatively easy.
In one of my earlier messages, I had mentioned that in the worst case, the spot Nifty may go to 4435 levels. The weekly chart, however, is also giving an indication of the subsequent likely targets of around 3920 & 3260, that would remind everyone of the 2008 lows.
But that only is an indication and we need not worry about it right now. For the moment, one thing appears certain from the daily EOD chart. It shall be extremely difficult for the spot Nifty to cross the region around 5160-5177. Only when the correction is healthy and complete, that the recover could start with a bang.
But all of us should remain healthy by then. So avoid greed to remain away from the fear. That shall keep you healthy, both physically and financially.
Cheers & Good Luck!
SS
PT,
Irrespective of the result of any analysis, it is always advisable to trade in tune with the trend of the market for the day. From the past experience, no matter how I am sure about the trend of the day, I shall definitely square off my position on the same day and will not carry it out to the next trading session. This is a kind of control over greed.
Some people, however, are over confident, and carry out their long/short positions at the end of the day, hoping for more profits the next day. This is a kind of greed.
If someone is short and the next day the market has a gap-up opening, the guy is instantly worried, that induces fear in his/her mind. The case shall be the same, if someone is long and market has a gap-down opening. If the greed would have been avoided, the fear would not have existed.
It does not end there. If someone is short and market has a gap up opening, instead of using the stop loss and book the losses, such persons many times keep waiting with a wishful thinking that the trend shall change to their suitability that shall lead to a profitable position for them. It does not happen and as the losses start mounting, the fear takes over totally. This could have been avoided by following the use of a proper stop loss. But somehow, I find that people hesitate to book losses when the index/scrip reaches the stop loss level.
You are a seasoned man and probably would have seen this happening in reality. I have only put it down explicitly.
Cheers!
SS
Irrespective of the result of any analysis, it is always advisable to trade in tune with the trend of the market for the day. From the past experience, no matter how I am sure about the trend of the day, I shall definitely square off my position on the same day and will not carry it out to the next trading session. This is a kind of control over greed.
Some people, however, are over confident, and carry out their long/short positions at the end of the day, hoping for more profits the next day. This is a kind of greed.
If someone is short and the next day the market has a gap-up opening, the guy is instantly worried, that induces fear in his/her mind. The case shall be the same, if someone is long and market has a gap-down opening. If the greed would have been avoided, the fear would not have existed.
It does not end there. If someone is short and market has a gap up opening, instead of using the stop loss and book the losses, such persons many times keep waiting with a wishful thinking that the trend shall change to their suitability that shall lead to a profitable position for them. It does not happen and as the losses start mounting, the fear takes over totally. This could have been avoided by following the use of a proper stop loss. But somehow, I find that people hesitate to book losses when the index/scrip reaches the stop loss level.
You are a seasoned man and probably would have seen this happening in reality. I have only put it down explicitly.
Cheers!
SS
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