Nifty July 1...

Nifty is holding the channel and trendline well. But OI data shows FIIs selling into these highs. Today it can remain in 5270-5320 and still be in the channel. Maybe a good day to get out of any longs and go short OR wait on the sidelines for further direction this week.

S&P tech table

As seen here, 1070 ( week low EMA ), 1095 ( week 5EMA ) and 1126 ( week HEMA ). All crucial.

Nifty right shoulder forming ?

Is this the beginning of the right shoulder ?

Nifty might be overbought but...

Just as a comparison between March/April and June/July, overbought can be misleading. For example, the whole of March/mid-april, market was overbought but Nifty made new highs. We have a similar situation now, but we have been overbought only for a few days now. Also note that RSI is not showing any negative divergence. So one has to be careful to go short in this market. FIIs have started selling stock futures just as in March but they are still buying in index futures. In April, FIIs went short in both index and stock futures. Then we started seeing the big negative divergences in daily charts. So until then, there is an equal chance for this market to go up as to go down.

Nifty prediction for June 21-25...

This is the first time I am making predictions. One needs to do that to get confidence. So here we go...

So my prediction: This week June 21-25, we will retrace to 5180 and then a runup again to 5250-5290 area.

5300 was exactly the highs formed in Jan. So fact that we stopped at 5300 on Friday, shows a potential H&S forming as shown in chart below. The vertical lines show periods when RSI was less/above 50. Also ADX has reached 20. Maybe the end of the trend.

Nifty staying in channel...

Bulls still in control. Holding 5200 range crucial.

Nifty in a range...

Nifty June 16

Nifty yesterday perfectly traded between the 2 trend lines as shown. Given positive world cues, it is expected to trade higher. Supports at 5185,5150 and resistances at 5245, 5270. Also 5245-50 is the channel's upper trendline. So it is going to be tricky. But uptrend still. Currently the channel looks like a rising wedge to 5340 or so, but if we break the upper line, then this could become a parallel channel. But it still feels like we cannot keep going vertically ( why not ). So a correction might be due to the bottom of the channel to 5150-90 and then go up again to 5350. Today'a action will be interesting.

Nifty analysis...June 14....

A bit complicated chart ( too many lines ), but there is a symmetrical triangle - hence looking for direction, and a developing wedge. Upper side, there is resistance at 5135, 5165 ( approx where 50DMA and the 5300 highs line ) and 5215 ( clusters were formed in previous runs ). Supports seem to be at 5080, 5050, 4960. If we get to 5165, a higher level inverse-H&S also seems to forming.

Awesome trading video

A video by the author of Market Wizards ( please register to watch )...Market Wizards


* To be a good trader, you have to trade inline with your natural personality.

* Successful trading is effortless. So it is all in the preparation.

* Before you get into a position, you should know when to get out.

* Learn from others. But take decisions on your own. Do not play the other person's trades.

* It neves bothers me to lose, but I know I will make it back.

* You should know you have won the game before you start.

* The need "not to make a mistake, not to lose" leads to people losing money.

* There is a difference between bad trades and losing trades.

* You do nothing till you take money off the floor. Wait for the opportunity.

* Amateur traders go broke taking large losses. Pro traders go broke taking small profits.

* Do not be loyal to your position.

* People love doing comfortable things. Markets supports doing uncomfortable things.

* Do you love trading ? It should not be about the money.

* Intuition is experience at a subconscious level.

ROFL...who is Bernanke kidding ?

Question -
"A central bank normally holds sovereign debt, so as to avoid counterparty risk; does the Federal Reserve view mortgage-backed securities as sovereign debt?"


Bernanke replied:


"The Federal Reserve's holding of mortgage-backed securities (MBS) are not equivalent to sovereign debt, but they are fully guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae, and thus pose essentially no credit risk to the Federal Reserve."

Read more

tidbits

* Microsoft issues bonds for a 1 billion dollars. Why would you do that when you have 38 billion in cash. That is how you pay Wall Street for their upgrade.

* We need a big followup day in US markets to think of an uptrend. Futures down slightly right now.

* Euro strong and above 1.21.

* Mortgage fraud in the US - get a buyer, get it priced lower by the bank, turn around and sell.

* Japan debt issues. They just had good production news. Is it now cool to say you are in debt ? Another western influence. Nondebters in the minority. Already paying for it.

* According to Google Finance, Google stock PE and EPS are 22.07. It is their site and their stock.

* ATT exposes 110k email addresses of iPad users. iPad spam protection anybody ?

* BP will end up cutting all its dividends. I hope they end up dissolved.

* GM plans to go IPO. Here is the master plan - screw all shareholders who trusted you for years, declare bankruptcy, get new suckers in.

* As I expected, retail sales plummeted in US last month. Street expected +0.2%, actual -1.2%. Ouch

US current economy issues...

"to erase the 2010 U.S. budget deficit, the U.S. Congress would have to multiply each tax rate by 2.4. Thus, the 10 percent rate would be 24 percent, the 15 percent rate would be 36 percent, and the 35 percent rate would have to be 85 percent."


50 Statistics about the US Economy that are too crazy

Nifty SL theory

My friend who is a very smart day trader has some unique, unconventional theories on the market - which work most of the times ( better than most MFs performance :) ).

In his own words


"I did not apply my SL rule correctly. most long stop losses should be XXX5.05. So it should have been 5105.05 and trigger 5105.90. Most short stop losses should also be above XXX4.90, better XXX5.90. So if u want to short at 5139 - SL should be 5145.90. why that 5.05 and 5.90 rule ? there are common SL hunting algos. have u noticed that days lows are closer to XXX7.XX. Check this link.. if u put a SL close to XXX5.05 - it works quite a few times. yesterday even 5005 was caught. similarly on days when we are in a down trending market. highs will be at XXX3 or XXX4"


Interesting ?

Tidbits from today...

* 5 of the top 6 ETFs based on fundamentals in Investor's Business Daily ( IBD ) list are Emerging markets. The top 2 are India ETFs - Barclay's IPath India ETN ( INP ) and WisdomTree India ETF ( EPI ).

* I finally got the courage to see the BP oil spill video. And it was disgusting. Obama is calling to fire the BP chairman. Doesnt this deserve something much bigger ? Maybe life in prison. What about all the animals and the fishing industry ?

* valuegrowthstocks.com had a promotion where one could send in their favorite stocks and ask for an entry point. As expected, the 3 I sent - very solid companies - still the recommended entry points were atleast 20% lesser than the current market price.

* Euro struggling to hold 1.20.

* Germany/France/Italy control 90-95% of all exports to China from Europe. No doubt the others are dragging the euro.

* Google home page now allows you to set background pictures following Bing. That is nice - but do you really care ?

* After a series of withdrawals of bond auctions and complete failures, finally Europe seemed to have a successful bond auction - Spain, Italy and Ireland.

Why crossovers are dangerous...

Moving average crossovers are a easy, simple trading system. But they are also dangerous if played in shorter timeframes ( day trading ). Attached is an example of a good signal which made a whipsaw and a weakening signal which resulted in a huge run. So watch out...

BRamesh Trading System

I have cut & pasted this verbatim from BRamesh Tech Analysis site. Keeping it here just in case...


Long/Buy Nifty Future
Should Be initiate when 5 EMA > 20 SMA and MACD Line crosses the Signal Line on Upside.
In other words when 5 EMA Line crosses 20 SMA line on Upside and MACD Blue Line crosses Red Line on Upside.

When both of the Following 2 conditions are met we should initiate long /Buy Nifty Future with SL as the crossover day’s Low


Short/Sell Nifty Future

Should Be initiate when 5 EMA < 20 SMA and MACD Line crosses the Signal Line on Downside.
In other words when 5 EMA Line crosses 20 SMA line on Downside and MACD Blue Line crosses Red Line on Downside.

When both of the Following 2 conditions are met we should initiate Short/Sell Nifty Future with SL as the crossover Day’s High.

Avoiding Whipsaw

MACD cannot be used alone. So combining it with the 5 day EMA and 20 day SMA is a nice way to avoid whipsaws
as shown in above Chart.

Please Backtest the System and verify the results before taking any positions in Market

GDP numbers can be misleading...China...

Measuring GDP is mostly the same way for all countries. But this fact about China was interesting -

China measures GDP in terms of production, not sales or revenue generated. So if they build a $1 billion skyscraper that no one rents, it counts as $1 billion in GDP growth. With this in mind, is it any wonder that China’s 2009 GDP numbers were incredible? Think about the impact that $586 billion stimulus package had on China’s economy. Just the stimulus alone could account for 10% GDP growth.

Read More...Can china save the world economy ?

Nifty trading plan...June 9...

The wise man thinks a run to 5020-5045 is possible and that is a potential area to short - and back to 4950 range. So that is good enough for me. Asian markets seem flat.

Indian & US equities I hold currently

India:

IFCI
ExcelInfo
Syncom


US:

UNG
Apple
Microsoft
Lucent ( long story - holding for 10 yrs now - OUCH ).


-- gd

NiftyFifty, JustNifty...amazing calls...

Both of these blogs ( see my "Blogs I visit" on right side for links ), made the call today around 1:30 that Nifty will go down a lot. Before it crashed at 2. Amazing calls. I did not trade them as I was not at my desk. But I doubt if I would have traded because of the infinite questions ( self doubts ) that popup in a typical confused beginner's mind. The "What if", you know what I mean. Takes time and experience. Will wait. I have time as long as I have money to trade.

Good vs Bad News in market currently...

Bad -

US housing mortgage applications bad
US debt almost reaches US GDP
Oil spill bad
Europe pigs - greece, spain, hungary, portugal
Middle East tension
Korea tension
US jobs situation dismal
Stocks down
Dollar strong

Good -
Germany factory orders jumped
US earnings EPS good
India/China growth stories

If there are too many bad things happenning, be a contrarion and go long ?

Cramer...6 things that should happen before becoming bullish

FinReg Reform Finalized
Spanish Banks Stabilized
Unemployment Falling
The Oil Spill Must Be Stopped
A ‘Soft Landing’ in China
Need to See the Euro Hold


Read more

S&P tech table for week ending June 4...

Still in a downtrend till we break 1100 convincingly.
Supports and Resistances as listed above.

+ve News...u kiddin me...

Some +ve news ( this is really scraping the bottom of the barrel ).

* S&P futures comes of low ( was 1.3% down, now 0.8% down )
* BP reports higher oil containment
* Europe touches 4 year low. Maybe someone will start accumulating ( hope - ouch )
* US Employment news was bad - but hourly income and hours worked went up.
* JPMorgan reiterates S&P 1300 by year end. 22% from here.

Trade plan for June 7...

1. World cues negative
2. Asian markets down 1.5-4%. Downtrend today
3. Expect Nifty to open at 5050 or lower. ( 2% )
4. Supports - 5050, 5030 ( 20d SMA ), 5000 ( 200d SMA ), 4960
5. Resistances - 5090, 5120, 5160

* According to the wise man, "4885-4935" may act as an inflection point.

* According to Lakshmi MaaM, "In the very short term the rising wedge and negative divergence may lead to a pullback". But long term, The bias has turned positive and one can trade long with a stop loss of 4950.

Planned descent ?

About the markets on Friday in US...looks like same could happen in Nifty...

I doubt there's ever been a day like Friday before. Panic is usually followed by quick reversals. But calculated, organized retreat means gone for good. This is well-controlled retreat. The calm is scary. A perfect storm is brewing.

Read More

Dilbert invests in BP...

Dilbert creator Scott Adams...

"Technical Analysis has exactly the same scientific validity as pretending you are a witch and forecasting market moves from chicken droppings."

"CEOs are highly skilled in a special form of lying called leadership"

"two truths about investing: 1) Past performance is no indication of future performance. 2) You need to consider a company's track record. Right, yes, those are opposites."

"investing in companies you love is riskier than investing in companies you hate"

"iPhone keyboard is an elaborate practical joke"


Read the Dilbert article

Nifty 2 year trends...

Divergences are not that simple...

I trust the RSI divergences. A bit too much. And I have been hit ( hard ) at times because of that. Especially in the smaller time frames while day trading. It seems to work most of the times, but I dont know how much it will work ( 2 pts or 100 pts ? ). Here is a nice article that goes over these same issues...

"However, most traders fall prey to the concept of divergence and see it as the end or reversal of the prevailing trend of the market. All would be right in the world if markets were to reverse from simple divergence. But there are times when sentiment and momentum are so strong that the market continues to make new highs (or lows), which will keep the RSI at overbought (or oversold) levels for extended periods of time."


http://www.traderslog.com/RSI-Indicator-Trading-Model.htm

.

Support points for Nifty...

Last close: 5135
Fibo 78.6 & upper trendline of downtrend channel - 5060
20d SMA - 5030
Fibo 61.8 and 200d SMA - 5002
Fibo 50 - 4961
Fibo 38.2 - 4930

The US dollar is a terribly, terribly flawed currency...

From Jim Rogers...
"I’m sure the world does need to replace the US dollar. I’m not the only one who knows that. The US dollar is a terribly, terribly flawed currency. The US is the largest debtor nation in the history of the world. Something has got to be done. We cannot continue with a currency which is so deeply flawed and something is going to have to be changed."

"The government lies about it ( inflation ) in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up."


http://seekingalpha.com/article/208588-interview-jim-rogers-on-currencies-and-inflation?source=hp_wc

.

Oops...hungary...

Reuters said Hungary PM said his country had only a slim chance of avoiding a Greek-style debt crisis. No wonder everything tanked. - seekingalpha.com/stocktalks

s&p tech table for June 3...

Day trend is up now. If it closes above 1110, then week trend also could turn positive.

Nifty June 4...some obvious analysis...

Looks bullish with a new uptrend channel forming.

God at work...

From seekingalpha.com,

"According to regulatory filings, GS sold 4.7mm shares ($250mm) of BP in Q1 b4 the spill. < Most curious."

Nifty trading range

5070 is the trendline above connecting the downtrend highs.
5010 is 200 DMA.
Inverted H&S forming with target 5200+ if 5100 is broken.
RSI is over 30. So if Money flow.

No retail investors...who is funding ?

Retail investors have become so scared of the stock market. One quote today...
"It just seems like it's computers versus computers," he said. "This volatility is probably here to stay, unfortunately, but that doesn't mean that the market is going to collapse."

"volatility is likely to continue through the summer in part because some everyday investors who put money into the market before its drop in May are giving up. That leaves the pros who use automated trades to try to profit from moves in stocks."

Question is: WHO IS FUNDING THIS ? High Network Individuals ???? So this is casino gambling for the rich using computers.

http://finance.yahoo.com/news/Stocks-turn-sharply-lower-in-apf-2030354906.html?x=0&sec=topStories&pos=3&asset=&ccode=

Are markets tied to economies or geopolitical situations ?

This is a comment from a user "vtorch" in seeking alpha site which I am posting here...( http://seekingalpha.com/article/207657/comments )

"It seems that markets and economies often move independently of each other. Citing an example in one of Ken Fisher's books, in China, GDP grew by double digits from 2003 to 2005, but at the same time, the domestic stock market declined and investors lost money during a period of rapid economic expansion.

Game Set Match...Wall Street +Zillion, Main Street -20%....

Main Street lost 20% in the last decade. Goldman Sachs makes 100 million/day from whom...Main Street ofcourse...so whose side are the Governments on...Centuries from now, This time and generation will be the reference for stupidity - how human beings were at the beginning of the 20th century - the majority who were poor actually funded the really rich crooked bankers who made back 100 million/day from the poor !!!

http://www.marketwatch.com/story/crash-is-dead-ahead-sell-get-liquid-now-2010-05-25

Follow the wise...

The wise man ( tradeinniftyonly.blogspot.com ) advised me to short Nifty last week at 5070-5090 ranges. Did not ? Why ? Have no idea. Fear - since the market was going up. But I myself saw that there was resistance there. So finally when the market fell today ( and still falling ), I am trying to catch the bottom to get pennies. And ofcourse my SL was taken out. So when I am going to follow the wise ?

-- gd