Wednesday, February 25, 2009

Nifty Recap For The Day!!!

As I had mentioned earlier on the RIL post, that today was just the day which was long and frustrating. Below is the hourly chart of Nifty(please do scroll down and see the hourly I had posted on my weekend views post), we can see after the opening surge we just tried to surpass the 50 periods MA and spent most of the day there before giving up. This has once again led to a small reverse divergence on the charts. It’s like this, we all know that Momentum precedes price, in this case we have seen Momentum going higher and price failing to follow the Momentum. We have stalled exactly at the shaded area shown in my weekend post; this also was the 38.2% fib retracement from the recent lows. Now the price is nestled between the 20 and the 50 period MA, where as the 200 periods at 2825 and the 2850 above are the real challenges if one has to have any serious bullish fantasies. As for the supports if the 2715 doesn’t hold well then this time we are once again going to test the 2650 or perhaps lower.

So far we have held well vis a vis Dow, I wouldn’t worry much for DOW, as this is now testing and confirming the bottom going on. We are going to get the positive Momentum divergence on the weekly chart and hopefully things will become clearer then.

"Success usually comes to those who are too busy to be looking for it." Henry David Thoreau

My Ril Trade....A Lesson In Patience!!!

Today was one of those days where it was better off doing any other chores than trading. It was just not the day, with Nifty barely moving, things were static, Ril was no exception either. I decided to do a quick scalp trade by shorting the Ril Fut. Below is the first chart I put up when I initiated the trade. I was wrong here for many reasons; I tried to preempt the move, I didn’t wait for some more confirmation, in short I thought I was SMART.

Now look at the second chart at the end of the session, I did achieve the target what I had in mind. But to wait for these 15 points for the whole day was just not worth it. Anyway I got out at breakeven earlier in the day. The reason was simple; I had a Scalp trade in mind and it just didn’t move immediately as planned, so I guess I considered it as a Time Stop thingy and got out. Though it never breached the Stop I had, but the wait was frustrating. Infact I have annotated the second chart as to where I ought to have shorted to have the desired result; time wise and target wise. Any way no damages done just a lesson learnt learn to control the URGE!!!

Tuesday, February 24, 2009

NH-NL Index and Nifty!!!

Divergence At Play! A Satisfying Trade!!!

This is the chart of Nifty futures I had sent to a couple of friends when I decided to enter a long trade in the morning. It’s self-explanatory, so not adding anything more to it.

And this is when the day ended, as you can see, with a little patience you can get very good low risk opportunities.

"Ability is what you're capable of doing. Motivation determines what you do. Attitude determines how well you do it." Lou Holtz

Monday, February 23, 2009

Weekend Views On Nifty!!!

Na… I aint in a mood to do a Nifty this week, its not only getting to be frustrating but more importantly its even getting confusing. The coil is getting tighter; the wait for breakout in either direction is getting painful. No wonder they say PATIENCE is a virtue one should have aplenty when trading. Nothing fancy in today’s post just posting a daily chart below, it also has an inset of line chart. The idea is to show how the range is getting smaller day by day and how difficult it is getting to take a clear call.

The hourly below as usual makes a things wee bit easier, the two bands in red at 2780 and 2850 are pieces de resistance! All the MA’s are lined up in perfect bearish order, the 20 (green), the 50 (blue) and the 200 (red). A small positive divergence is in the making due to the oversold nature which is likely to result in some kind of a pullback. Maybe shorts would like to take off some money here off the table and look at higher grounds to short further?

Like I had said earlier, it’s getting really difficult to trade Nifty, and it’s better to concentrate on individual stocks which are generating some good swings. Maruti, GMR and Aventis Pharma are a few stocks which are showing good relative strength vis a vis Nifty.

"The difference between the impossible and the possible lies in a person's determination."

Tommy Lasorda

Ril Views!!!

Reliance is one of the heavy weights in Nifty, known as the KING among the traders, below is a weekly chart of it. As you can see that it’s in a coil, it’s just managed to kiss its 20 periods EMA and reiterated from there. The weekly impulse is red, not permitting us to buy (its either short or stand aside), if long is your play, wait for it too turn blue. Another thing worth noting is that 1450 and 1500 is a strong band of resistance on the weekly chart. I have shaded the area red, as you can see we have a fib cluster there, we have the 200 period EMA, almost horizontal there and of course the 20 and 200 periods cross also lays there. All this makes it one helluva resistance, if this gets broken on the upside….you just imagine what will happen!!! But we will come to that when get there, as of now lets just respect it and fear it. 1150/80 remains a good support.

The daily chart below shows that, we have managed to close below both the 20 and 50 periods daily EMA’s. We’ve had one false breakout, and now all things long should be looked into on taking out 1280/1315 band convincingly. 1280 I feel has been a very relevant pivot in the past, need to see how we behave there. The daily also supports our earlier views about 1150 odd levels.

The action is better witnessed on the hourly chart shown below, as we can see we are a bit oversold and a pullback is in the order. It’s sitting right on the trendline support. The 1280 I mentioned earlier is also seen here in the shape of the flat 200 periods EMA (in red) and the 20 is also there! The LL and LH formation is on; it gets reversed only when we take out 1315!

"Success is the small sum of efforts, repeated day in and day out." Robert Collier

Sunday, February 22, 2009

Dow Views!!!

What you see above is the weekly chart of the Dow, heading towards the 2002 lows or perhaps lower…good, infact very good! This I feel will finally be a bottoming out process, but that’s not what I am looking at, I am looking for a divergence on the weekly chart to finally happen, making a case to go long. Anyways as things stand they are pretty oversold and perhaps a short covering rally (a lil bouncy) is in the order.

The chart below is the daily, once again I have highlighted a favorite setup of mine; the Divergence. In this case the red arrows marked, are an example of reverse divergence or as some prefer to call it hidden bearish divergence. I wouldn’t say it’s prudent to short here coz we are already way below the value zone (stretched below the MA’s), infact its time to cover your shorts or at least be agile with your stops to protect those profits. In Short (pun!!!) there is no place for baby bears right now!

Like I mentioned in one of my earlier posts that a friend of mine commented about the divergence between the Baltic Dry Index (chart courtesy Investment tools) and the SNP, I thought I might as well put up the chart here. What the heck with this divergence and hoping to get a positive divergence on the weeklies, who know we just might have ourselves a nice rally!!! Wishful thinking??? Yeah it is…didn’t I tell you once, that hope lays eternal in a Bull’s heart!

"I can accept failure, but I can't accept not trying." Michael Jordan

Wednesday, February 18, 2009

Pas De Deux! Dollar N Gold!

Below is the Gold and Dollar chart, normally they have an inverse relationship, but off late both can be seen doing some synchronized moves (see the shaded area). Gold rising is an indication of people hedging but Dollar rising is a bit confusing (anyways I am not even qualified to comment on this!). I think very soon they will revert to their original deviating ways…..the question is which goes where??? A passing thought, a dear friend of mine pointed out there is a bit of divergence happening between the SnP and Baltic Dry Index!!!

"O gold! I still prefer thee unto paper which makes bank credit like a bank of vapor." - Lord Byron

Nifty Recap For The Day!!!

I am back after a long break from the markets and I am glad I didn’t miss much! You see sometimes money in hand is money earned too! Well it’s been quite an eventful weak (pun intended) we’ve had, the much awaited stimulus package is out, our own interim budget presented (nothing noteworthy about it though) and now we are almost done with the results also. So what’s next? Nothing! My guess is as good as anybody’s. We might now play day to day or as some would say DOW to DOW!

One look at the daily chart of Nifty we can see that this is the third time we have knocked at the blue trendline; third time lucky or just bidding for our time? Anyway this was a small opportunity to play long with a very tight stop just below the trendline. The immediate resistance staring right at us is the 20 periods MA at approx 2818 and the 50 periods at 2880. I guess its time to play take small risks for small profits, a penny here and a penny there makes a POUND!

The hourly chart which encapsulates the real action shows why I had these fantasies of going long. The price is at demand (support), it’s a low risk trade and what the heck it’s worth taking. The over head resistances are very nicely lined up at 2818(20 periods MA), 2840/50 (hmm this is lil worrisome, the 50 and 200 periods MA’s are in tango with the 38.2% retracement).

"Our greatest joy is not in ever falling, but in rising every time we fall." Confucius

Thursday, February 12, 2009

Taking A Break From Blogging!!!

I have not been updating by Blog for almost a week now, will probably do it on coming Sunday. Been busy with business; season time for me! I am in business of Fresh Flowers so hoping that the Valentines Day and the few upcoming dates for marriages would bring in good business! Meanwhile I leave you once again with the sanest advice for a trader, listen to the song, hum it, enjoy it but remember the good old advice “You should know when to Fold em”

"Ability is what you're capable of doing. Motivation determines what you do. Attitude determines how well you do it." Lou Holtz

Saturday, February 7, 2009

Confluence At Work...Patience Required!!!

This is the chart of Nifty Futures, The Trade I took on Thursday, actually just couldn’t resist it. These kinds of trades is what I call the Screaming types; screaming at you to take em! Such setups which result out of confluence have a very good risk reward ratio. Another point I want to make here is that rather than going crazy for those 20 odd intraday points, one should wait for these kinds of setups to emerge and get on board. These setups aren’t rare or mystical, it’s just that either we don’t wait for them or we simply try to preempt them (I have been guilty of this on many an occasions). Like someone commented that in trading, the three important P’s are Patience, Patience and still a whole lot of Patience! And I believe patience PAYS! Any takers for this philosophy????

"The future belongs to those who believe in the beauty of their dreams." Eleanor Roosevelt

Gold Views!!!

Nothing has changed in Gold in terms of my last week’s perspective on it. Its volatile, its playing truant and its just refusing to make its mind where it wanna head. Remember Gold is the Pessimists equity, quite an irony here, but like I previously commented when in despair see YELLOW! Speaking of pessimism and despair, well the new US administration is doing all it can to assuage the fears of the investors. If we are to go about looking at the strange gyrations of the DOW, we can understand why Gold too is behaving kinda lost! And once again I repeat the smart have taken off their money in the longs and maybe will reenter on a meaningful retracement around $875 or perhaps at $850! As mentioned earlier, a stop for all things long is around $875, I believe one can move it ahead to tad below $890(protect those few extra greenbacks too). Just leaving this post with a plain vanilla bar chart, showing a wedge and a small insignificant bearish H&S(shaded in red). As regards to why I said $890, is because if this wedge is to be believed (rather it should behave as we believe it to behave) then Gold failing, to hold the previous significant pivot ($890) is likely to go down $875 and $850! The new baby bulls get to keep their faith as long as Gold holds above $900!

"Don't judge each day by the harvest you reap, but by the seeds you plant." Robert Stevenson

Friday, February 6, 2009

Ten Financial Reasons To Turn Off Your Television!!!

While surfing the net, I came across this interesting blog, which I think is worth exploring a wee bit more. Anyways I am recommending an article (although there is better stuff on this site) written there on why you should shun your television; nice take on the issue, read it all about by clicking on the logo below!

Thursday, February 5, 2009

Traders Dilemma, Dust Or Stars!!!

Once again nothing to write home about Nifty, the range is getting tighter as if the spring is wound tighter day by day; the recoil should be swift! I was just playing around with the hourly chart so thought I will post it here.

"Mistakes are the usual bridge between inexperience and wisdom." Phyllis Theroux

Wednesday, February 4, 2009

Nifty Recap For The Day!!!

At 2850 there resides a Bear and at 2780 a Bull lays there, both led a lot of pigs to the slaughter house, by taking the Nifty nowhere (the laddie is turning into a poet eh!). Blessed are the pigs for they alone shall be called the BROKERS DELIGHT! Nothing much to add to the Nifty update posted yesterday. The range is getting tighter and one favorable trigger can lead to a surge on either side. The daily chart on the left is stalling at the 50 periods MA, similarly the hourly on the left seems to be meeting it nemesis at 200 periods! Nothing is happening in Nifty avoid being a pig; avoid nifty till you get a clear direction.

"All things are difficult before they are easy." Thomas Fuller

Tuesday, February 3, 2009

Gold Views!!!

Gold has been quite volatile and not easy for the weak hearts to digest its moves. The real bulls had entered much earlier and now most of them are happy sitting on the sidelines with money off the table. Gold has always been a safe haven for risk averse investors, in times of despair all roads lead to Gold!

The weekly chart below shows that Gold has made multiple tops (A and B) at $930 odd; the RSI is once again at resistance. One thing worth observing is that while the RSI has made a Higher Top, the price has failed to carry up (above the previous top) with the momentum and stalled at $930, hinting at reverse negative divergence! Presently the $900 looks like a good place of support but for all practical purposes $875 should be used as logical stop for all things long, coz below that I personally feel it might be testing times till $835! On the other hand a strong break above $930 would signal the GLITTERING $1000!!!

The daily chart below has all the three 20/50/200 MA’s lined up nicely at approximately $875, $850 and $838 respectively, hinting at support areas to be on a lookout for. The daily chart looks kinda overbought, the RSI has made a small double top above 60, the Stoch is holding on to 80, and MACD is plain neutral. If this weakness (rather a pause) persists then one can watch how the $870 holds before deciding on the bull or bear bias.

"If it is to be it is up to me." Origin Unknown

Nifty Recap For The Day!!!

A Bull today, a Bear tomorrow when does it ends a traders Sorrow! A bad attempt at poetry I guess, but then this is what’s happening. It’s all boiling down to now a day on how Uncle Dow behaves overnight. We have just not gone anywhere; sitting pretty good inside a narrow range, Nifty seem to be testing the conviction of both the Bulls and the Bears! Time to stay out and once again if you’re the fastest finger first types, trigger happy guy, just grab some pennies intraday (though is not easy as it sounds!).

Nifty seem to be holding out near the confluence of the 20 and 50 periods MA’s on the daily chart as shown below. The inverse H&S which many of see can be an Illusion, at least the odds favor it, nevertheless with patterns one needs to only take a view when you have a convincing breakout; in this case 2880! A break above this can give another 70 points to begin with.

The hourly chart shows that Nifty is facing some tough resistance at the 200 periods MA. An important level of activity (shaded in blue) is concentrated between 2770 and 2780. A break below 2750 can test 2710 for starters!

Many of us, including me, rely on a lot technical indicators for our analysis, here’s a nice article on how to go about using them judiciously, read it all here.

"To be successful, you must decide exactly what you want to accomplish; then resolve to pay the price to get it." Bunker Hunt

Just Some Info!!!

Babu Kannan of Wealth Bull plans to conduct a workshop on Fundamental Analysis and Value Investing in Delhi sometime soon. If Fundamental Analysis is your favorite poison other than Technical Analysis then you can drop him a line at and express your intent on attending it!

And speaking of Technical Analysis Icharts also conduct short and sweet workshops on Technical Analysis. Now Icharts doesn’t need any introduction because it has already about 25000 registered members. Its one of the best real time chart provider, and helpful to those who don’t have a regular charting software with real-time feed. It’s a veritable source of knowledge in itself all you need to do is explore it yourself!