This is how today’s intraday action unfolded in Nifty Futures:
And this is how the EOD picture now looks:
"Do not take life too seriously. You will never get out of it alive." Elbert Hubbard
I have been a kinda busy with my business and was out traveling. Missed out on regular posting, but will be back with renewed vigor from this weekend onwards. A good friend and a fellow blogger Sunil Saranjame of Timamo has decided to take a long sabbatical because of some important assignments which demand his immediate attention. SS as he is fondly called has been a great teacher to me. Infact when I had embarked on this journey called trading he had welcomed me with this short poem by Robert frost. Well this post is dedicated to him.
Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveller, long I stood
And looked down one as far as I could.
To where it bent in the undergrowth,
Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear,
Though as for that, the passing there
Had worn them really about the same,
And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way
I doubted if I should ever come back.
I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I --
I took the one less travelled by,
And that has made all the difference.
Dow moved as anticipated and finally stalled at the earlier discussed resistance but it did give some anxious moments. As one can see from the weekly chart (sufficiently annotated) below we seem to have made a shooting star right at the resistance. Breaking below 7200 can go on to test 6950.
Where as on the daily we seem to have made a hidden bearish divergence and the Price seems to be trapped between the 50 and 20 periods moving averages. Anyway we seem to have risen from the lows in one straight move, so in all probability Price would go down to test those lows or at least partially retrace half way down, like I mentioned above 7000/6950 is up for testing times. And as for all things bullish I would just wrap this post by mentioning that any push (lets call it a shove!) above 7550 will lead for another 300 pointer upmove.
"As you think, so shall you become." Bruce Lee
A young, new preacher was walking with an older, more seasoned preacher in the garden one day. Feeling a bit insecure about what God had for him to do, he was inquiring of the older preacher. The older preacher walked up to a rosebush and handed the young preacher a rosebud and told him to open it without tearing off any petals.
The young preacher looked in disbelief at the older preacher and was trying to figure out what a rosebud could possibly have to do with his wanting to know the will of GOD for his life and for his ministry. Because of his high respect for the older preacher, he proceeded to TRY to unfold the rose, while keeping every petal intact.
It wasn't long before he realized how impossible it was to do so.
Noticing the younger preacher's inability to unfold the rosebud while keeping it intact, the older preacher recited the following poem:
Another week goes by and now we enter into the derivatives expiry week, things will tend to get a bit volatile now. Nifty has given some good points to the longs and equally frustrating moments to the shorts. The triangle on the weekly chart below is still in play, albeit this pullback is shaking the faith of quite a few bears. The LH and LL sequence is still on. The price on the weekly has closed just shy of the 20 periods MA at 2823(Shorts should have tight stops between 2835/50). I personally would like to hold a bullish bias if I see a bullish divergence on the MACD (Sorry I confess I have a fetish for Divergences!). I have annotated the chart with abc move in MACD where c is still far fetched from reality nevertheless a possibility.
The daily chart shows the broad range where we have been in the last 5 months. Between this range, there are smaller ranges (right now 2680/2880 is in play with 2700 as important pivot). Nifty has been struggling with the 20 and 50 periods MA. As of now we are still moving in a downward channel and the lower highs and lower lows is also clearly visible on this chart. The RSI is again at those precarious levels from where we often pulled back after making tops! 2835/50 remains a good resistance on the daily chart whereas the support lies at 2715/2700/2680.
This brings us to the hourly chart, which is the only chart that was showing a bullish trend making Nifty; short term up (remember its weekly down and daily down). The gap down resistance marked in red has held well so far. As for the supports, shaded in yellow, is at Fibonacci confluences, the first one at 2765/55 has the 200 periods MA just lined below it with 50 not far below either. The second line of defense is at 2715/2700 level. What is more intriguing is that there is large gap below (shaded in blue) which remain untested and unfilled. I personally feel this ought to be tested and partially filled.
"An ounce of action is worth a ton of theory." Friedrich Engels
The Touch Of The Master's Hand
Twas battered and scarred, and the auctioneer
Dow’s had a fantastic week, a good rise (the weekly candle is sure a sight to sore eyes), albeit the volumes are still not very convincing. Look at the plus side; we have a positive divergence developing on both the RSI and MACD. Calling it a bottom will be too premature, we have a good resistance band overhead as marked on the chart, the nearest MA, the 20 periods is still way above. The only thing the price can do is now start consolidating sideways so as to bring down the MA to a more attainable distance. The supports; none but yes to quote a figure, 6500 for starters should be retested and held, to let it be of any significance!
The daily chart below shows that the price is hovering around the 20 periods MA and the overhead resistance lays in the form the trend lines and the 50 periods MA all forming a strike out zone from 7450 to 7600. Whereas the likely support/ retest zone looks like at 7030-6930, personally I would like Dow to come down to this level and then take a jab at the trend line and the 50 periods MA above!
"Vision without action is a daydream. Action without vision is a nightmare." Japanese Proverb
Na just wasn’t interested to write much about Nifty this weekend, so decided to just post the charts with my incoherent ramblings on the sidelines. So here it goes;
The Weekly Picture:
The Daily Drama:
And The Hourly Break:
"Do not confuse motion and progress. A rocking horse keeps moving but does not make any progress." Alfred Montpert
A year ago I started with this Blog, infact when I started off I never knew I would get this far. Well here I am and still doing pretty okay with my writing and yes improved a lot on my trading too! This is the link to my first post, the one that set the ball rolling!
Enough of self praise let me get back to business at hand; Nifty! The weekly chart below is a picture that would scare many a Bull, what we have between the two (red and blue) trend lines is one helluva triangle of almost a 1000 points, and if all goes well for the bears than this line of action goes something like this 2500 straight down to 2280 straight down to 2200 and then…..eeeks, I am even sacred to write further! The only thing that fails this triangle is if the price closes above the upper (red) line of this triangle making this whole formation a figment of our imagination. Wishful thinking??? Yes pretty much, considering the fact that the 2825/50 zone is the pullback and retest of this formation, both the lower (blue) trend line and the 20 periods MA aligning there. So far we have held well vis a vis the international markets. But one just one close below 2500 will be enough for all the analysts screaming BLOOD ON THE STREET (I bet some have already started screaming!).
The Daily isn’t any different from weekly, we had a small H&S break down and now a retest of neckline at approx 2680 is not ruled out. The blue support line drawn at 2525 is kinda sanctum sanctorum for the BULLS! The overhead resistance is at 2660/80 and finally the 20 periods MA at approximately 2780.
The hourly below has a nice channel enveloping the price action. The 2660 mentioned above is nothing but the channel resistance coupled with the 50 periods MA on the hourly chart. This is the level which should witness some action coz breaking above this is a straight 100 pointer move! A retest of 2570 area is not ruled out infact personally I would like this to be revisited and strengthened before we convincingly try to break the 2660 barrier. Infact any thing below this should be strict stop for longs if any initiated on Friday. Anyway trading would be light and cautious on Monday considering the fact that we have two consecutive holidays on the Tuesday and Wednesday.
"It is never too late to be what you might have been." George Elliot
Friday’s five minute intraday action was almost a replica of Thursday’s action in opposite. It was also a day where one did have a few good trades on the long side. The charts (Nifty Futures) below in order of appearance were the ones that I posted on flicker while I was trading. Thought would post them here in the blog for friends who would like to know that how the Support turns Resistance and vice versa can generate some good exits and entries
This is the first one which set the tone for the day;
This is the second one, a nice pattern play;
And finally the third one which is just to highlight the exact replica of moves in different directions;
"Little strokes fell big oaks." Benjamin Franklin
This chart was just forwarded to me by a friend, and I in turn forwarded it to quite a few numbers of friends. Many were of an opinion that we are in stage five, but then one lone dissenting voice said; this cycle has become random! So what do we do, I suggest we take a print out of this chart and stick on the door and throw darts at it to determine which cycle we are in. Isn’t trading all about Hits and Misses!!! Amen.
"It's choice - not chance - that determines your destiny." Jean Nidetch
Nifty had done practically Nothing all through the last week, infact take a look at the last weekly bar and you will know what I mean by Nothing! So far we have just avoided falling in tandem with SNP/DOW but I really wonder how long will we hold on our own. The broad weekly range is shaded in blue. I have very often commented that whenever the price stretches to far away from the MA’s, it always reverts to the mean or moves sideways so as to enable the MA’s to come to a strikeable distance which further enables a valid crossover or generates a reaction. I have illustrated this in the weekly chart below. By the way all through last week we were talking about 2850 as a resistance to reckon with, well the 20 periods MA on the weekly is right about there!
Like I mentioned earlier nothing in particular to write about Nifty, the levels it seems are very clear 2850 and 2700 for bullish and bearish bias respectively. The daily shows the coil which is almost defunct now since we have moved to close to the apex, while we have the 20 and the 50 period MA’s almost placed horizontally overhead to provide adequate resistance.
The hourly is self illustrating chart, nothing to explain in there, the resistances are already marked with fibs and MA’s. And as regards to supports the less said the better, coz frankly speaking there isn’t just any REAL support. Personally I wouldn’t be comfortable trading Nifty right now but for people who are positional long 2680/2700 is a good place for Stops!
"Nothing great was ever achieved without enthusiasm." Ralph Waldo Emerson
This the monthly chart of DOW, gloom and doom, this looks overdone, and I guess we need a reprieve now in form a nice rally. As you can see the RSI (on the top) is at levels not witnessed earlier. And speaking of the MACD, this has been a sharp and deep cut below, it will take a lot of time to turn shallow and then up(Warren Buffet just commented that 2009 and maybe a lil longer is going to be tough) so no hurry there!
In my last post also I have been saying that we need to get positive divergence on the weeklies to have a meaningful up move of any reckoning. As you can see the weekly chart below, we seem to be on the way of getting one. By the way we are stretched out too far far away from the falling MA’s that its time for reversion to the mean. This will be either in form of a nice sideways consolidation move, to let the MA’s come down and then maybe take a dig at them when they are strikeable distance (the 20 in green in this case!).
Finally the daily chart below, I have made some kind of channels, for that dramatic effect, and to add a lil bit of theatrics I have even put alphabets and numbers (makes me at least look intelligent eh!). A nice bounce back is in order, perhaps till 7450/7500, and the road ahead can be gauged on how we react there.
And the last chart; the BDI and SNP, is just for filling in the blog space and it also shows what a hard work is gone into this post...phew!!!
"It is wise to keep in mind that neither success nor failure is ever final." Roger Babson