Last 3 days, we have enjoyed a long weekend and from tomorrow back to action. As we have seen, the last 100 points on the Nifty was beyond my expectations. Till then everything moved as I thought. But then its stock market. Markets are supreme !!!
Since I have already said what I wanted to say and my targets thereof, I wont be repeating those same lines. Rather, I will wait patiently with partial hedge to my and my clients' portfolios. I have observed the following and thus would like to share with all my readers....
1. The current PCR lies at 1.69 (in terms of trade quantity) and 2.46 (in terms of open interest).
This is something very rare in the market.
2. Nifty is moving up with daily decreasing volumes.
This shows a negative price-volume divergence.
3. FII's are constantly buying with daily upward price movement.
This may not be a very good sign since it will only take a minute to dump the entire quantity. Just before the elections, we saw similar buying but then the price didnot move up and remained stable. That showed accumulation with consolidation. But now the case is not the same.
4. India VIX is at 25, its lowest levels.
VIX denotes the fear factor in the system. Currently, there is no fear in the system with continuously increasing prices. This shows that investors are feeling rather secured and wont hesitate to buy at these levels. Contrary to this, when markets were going up 1 month before election, we saw VIX rise to highest levels causing panic. The markets hence continued going up with circuits.
5. So many waves are forming bearish patterns.
With the above 4 points in mind, I find at least 3 bearish waves created and also the 4th one moving up with a rising wedge structure. Compare the current wedges in Nifty with those formed in Jan 2008 on the backdrop of 10 days of continuous FII buying.
I, personally, dont think that this upmove is sustainable, but then markets can always create a new picture in front of us. Obviously, we dont want to miss out such beautiful rallies when individual stocks move up 20% in a day and biggies like SBI going up 70 points daily. Under the circumstances, my personal advice would be to remain hedged at least 50%. Hedging can be done in several ways like buying alternate Nifty futures or going long on stocks with short in Nifty or by selling OTM calls.
Considering the expiry in 3 days time, we may not see a low being struck in between but after 24th anything can happen. I am preparing myself for everything. Maybe the best decision would be to wait and watch.....or at least "Be Safe Than Sorry"......
Since I have already said what I wanted to say and my targets thereof, I wont be repeating those same lines. Rather, I will wait patiently with partial hedge to my and my clients' portfolios. I have observed the following and thus would like to share with all my readers....
1. The current PCR lies at 1.69 (in terms of trade quantity) and 2.46 (in terms of open interest).
This is something very rare in the market.
2. Nifty is moving up with daily decreasing volumes.
This shows a negative price-volume divergence.
3. FII's are constantly buying with daily upward price movement.
This may not be a very good sign since it will only take a minute to dump the entire quantity. Just before the elections, we saw similar buying but then the price didnot move up and remained stable. That showed accumulation with consolidation. But now the case is not the same.
4. India VIX is at 25, its lowest levels.
VIX denotes the fear factor in the system. Currently, there is no fear in the system with continuously increasing prices. This shows that investors are feeling rather secured and wont hesitate to buy at these levels. Contrary to this, when markets were going up 1 month before election, we saw VIX rise to highest levels causing panic. The markets hence continued going up with circuits.
5. So many waves are forming bearish patterns.
With the above 4 points in mind, I find at least 3 bearish waves created and also the 4th one moving up with a rising wedge structure. Compare the current wedges in Nifty with those formed in Jan 2008 on the backdrop of 10 days of continuous FII buying.
I, personally, dont think that this upmove is sustainable, but then markets can always create a new picture in front of us. Obviously, we dont want to miss out such beautiful rallies when individual stocks move up 20% in a day and biggies like SBI going up 70 points daily. Under the circumstances, my personal advice would be to remain hedged at least 50%. Hedging can be done in several ways like buying alternate Nifty futures or going long on stocks with short in Nifty or by selling OTM calls.
Considering the expiry in 3 days time, we may not see a low being struck in between but after 24th anything can happen. I am preparing myself for everything. Maybe the best decision would be to wait and watch.....or at least "Be Safe Than Sorry"......
1 comment:
Hi Saptarshi,
Do you expect the profit booking that came in the last half hour to take the markets to 4700 levels or simply 4880 from where they could bounce back?
A
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