Calm before the storm

[Agilent]

FIIs have sold around 1178 cr in the F&O market (index futures amd stock futures) yesterday. This is the highest F&O sell figure since 15th /16th May.

http://www.traderji.com/58072-post20.html

Ivan
wonder if u read my post of Friday in response to yr query of same day, but it does look that the guys who sold off last Thursday were savvy indeed !

AGILENT

 

[kuldeep49]

Nifty at a bearish hanging man as per candlestick chart. This signals that there are many more sellers around waiting to sell. If today opens or closes lower, then a bearish signal would be confirmed. Reversal could occur at 3485 or 3540 levels.

The third thing happened. A second doji in a row. 3485 still remains a reversal point as a lot of resistance is being met at this level. If it breaches this level, one can expect movement to 3525, 3540. In case a reversal takes place, then shorting opportunity exists if Nifty falls below 3460. So, we are at an inflection point where opportunities are available in both directions. But, a rule of the thumb in candlestick trading is to wait out till the doji makes up its mind.

Expect that today's open will see falling Nifty. May recover later on in the day, but if the fall continues we may see the fall going all the way to 3300. Stop losses (especially trailing ones to lock in your profit) without emotion definitely on the cards today.

FIIs have sold around 1178 cr in the F&O market (index futures amd stock futures) yesterday. This is the highest F&O sell figure since 15th /16th May.

The storm hit today. As I said earlier, if Nifty falls below 3460, we may see a fall all the way upto 3300. FII's heavy selling in F&O as pointed out by Ivan was the trigger and driver of this fall. Levels that could be breached are 3300-3285-3240. If Nifty begins to reverse its fall, the critical levels would be 3440-3490-3530. Above 3490, one can look to taking long positions.

 

[Agilent]

The storm hit today. As I said earlier, if Nifty falls below 3460, we may see a fall all the way upto 3300. FII's heavy selling in F&O as pointed out by Ivan was the trigger and driver of this fall. Levels that could be breached are 3300-3285-3240. If Nifty begins to reverse its fall, the critical levels would be 3440-3490-3530. Above 3490, one can look to taking long positions.

Kuldeep

Hats off to you ... your warnings and predictions have been accurate ... and never mind if they were a few days early.

One small observation ... when u quote from yr earlier posts , the original date gets omitted , so , for instance in your 3rd quote where u say 'today', u actually mean 8th , and not 11th .

My suggestion is to insert a hyperlink of that earlier post instead (when the date also is clearly shown)


Rgds
AGILENT

PS Ivan ... good analysis too from yr side ... keep it up

 

[kuldeep49]

Thanks Agilent, I will put in links in future.

 

[ivanboesky]

Thanks Agilent for the kind words.
The F&O market provides a lot of clues as to whats got a better than even chance of occuring. And the Indian market behaves very differently from other world markets... as an example, in India, the PCR should be used more as a trend following, rather than contrarian indicator. The reasons, I presume, are obvious enough!

 

[Agilent]

Thanks Agilent for the kind words.
The F&O market provides a lot of clues as to whats got a better than even chance of occuring. And the Indian market behaves very differently from other world markets... as an example, in India, the PCR should be used more as a trend following, rather than contrarian indicator. The reasons, I presume, are obvious enough!

Ivan
Perhaps u can elaborate for the benefit of most of us .. who are novices in F&O

Rgds

 

[ivanboesky]

The Put Call Ratio (PCR) is the Put Open Interest divided by the Call Open Interest. PCR > 1, means more puts outstanding than calls, and vice versa.
Its normally taken as a contrarian indicator coz option selling is normally done by Institutions/ professionals, since option sellers have unlimited liability. Studies have also shown that more than 60% of all options expire unexercised.
More puts being sold means the market/ stock should move up, more calls being sold means upward movement will be sluggish.
In India, domestic institutions are not too well versed with the usage of options, and prefer having a limited liability, so they are options buyers. FIIs too buy options to take advantage of glaring mispricings, I presume!!

 

[kuldeep49]

Markets giving mixed signals. Todays trading should give some direction. So observation rather that entering should stand be the strategy.

 

[Agilent]

Markets giving mixed signals. Todays trading should give some direction. So observation rather that entering should stand be the strategy.

Absolutely, Kuldeep

Only problem is ... direction for next few days may not hold for next few weeks or mths ... Forget abt years

And that's where Dow theory fundas about minor, secondary and primary trends come in.. those who have a good grasp of these will gain more (or lose less) than those who don't

Agree ?
AGILENT

 

[kuldeep49]

Absolutely, Kuldeep

Only problem is ... direction for next few days may not hold for next few weeks or mths ... Forget abt years

And that's where Dow theory fundas about minor, secondary and primary trends come in.. those who have a good grasp of these will gain more (or lose less) than those who don't

Agree ?
AGILENT

Right you are Agilent ... but when I refer to the probability, I mean an outlook for the next fews days (a week max). Dow theory is the harbinger of the climate while I only talk of the storm ... just before it & just after! In another analogy, it is the direction of the battle and not the war!!

3490 to 3510 is the level of reversal that is looming ahead. If 3510 is breached, the move up may continue. Chances, though, are a fall from these levels. Positions may be taken, at one's own discretion, based on these indications.

Happy trading.