What may come and what may we see....

My article on 2nd of May stated "Sell in May and Go Away"....and I had presented all the reasons for saying so....And when everything was falling into place, there came a 1-day knock of Nifty on 10th May when it retraced exactly 61% of the fall till then....And came shouts and slogans from the audience....Some remarked "I went to Goa after selling my portfolio at 5000. What to do? while some remarked that may be I could have saved my readers if only I listened to him and bla bla...."

But then market is no one's property...Its a dynamic system which obeys no one's command....

Anyways......let see what happened......

First the false break out takes place on 13th May. Its crosses the resistance line (marked in red) but hits the 34ema line and closes on a Doji pattern....

Consequences: People forced into fresh long positions (trying to average loses) and a deep red bar formed the very next day....

Reasons: People wanted to believe what they hoped. A complete sense of denial of the fact the the broader market was weak...

and now what can possibly happen from here on.....

I had already presented my views about what could possibly happen....but still I will write what I feel at this point of time.....

4820-4830, being the lower end of the parallel channel will defintely act as a support zone...Further, on the 30min chart, the wave completes at around 4820-4780 zone. If that zone holds or Nifty recovers and closes above that zone after initially breaching the level, a bounceback til 5050-5080 is quite possible. This is in confirmation the wave patterns and the diagonals drawn.....Obviously thats a possibility on the 30 min chart....

The broader trend still remains negative and as one see the charts posted above, the ultimate target could well be arounf 4400 zone....So that means the bounce, if comes, is going to be a short lived one but a sharp 1-2 days type of rally....

Advice:

Try your luck at bidding for dream figures....Try to buy what you desire to buy....Put buying bids at dream prices which may be 20% - 30% below market prices....

Happy trading and keep reading for the next article.....

Sell in May and Go Away

Well, I was having an overall bearish view in the markets since the beginning of April 2010 after Nifty hit that 5398 on 8th. Since then, Nifty was only moving with a negative bias and closed the month at 5262 some 2% off the highs, which theoritically is nothing but we need to look into with a broader perspective. For the past many days, we have seen the broader market underperforming or rather the unknown small caps oe what one calls 'kachra' stocks zooming 10-20% a day. Sometimes this continues for quite a decent period but then generally that calls for a short term intermediate correction or otherwise the large caps need to push in the accelerator to break past the market resistances. Now, my view is that we are poised for a steep correction may 15-20%........

Now I had already presented many reasons for my bearish views in the last couple of articles. Still have a look a the following chart.....

This clearly suggests....

1. SST (Saptarshi Swing Trade) generating a fresh SELL signal on 30th April.

2. Nifty Futures creating a Doji after 2 days relief bounceback due to April series expiry....

3. The parallel channel still exists with NF hitting the upper band and moving towards the lower end of the channel.

4. Currently, just holding above the 34ema in a critical situation. With Dow closing in deep red and SGX Nifty trading at 5231 suggests that 34ema should get broken on Monday morning. But then I shouldnot be speculating on that fact before it actually happens.

5. Also PCR moved from 1.34 in the morning to 1.07 in late Friday trading. And this volatility has been observed in the past many trading sessions indicating some nervousness.

6. On a fundamental side, the Greek and the Euro issue coupled with some other small small triggers may be a good enough reason for some unwindings of long position in the US markets, which otherwise have been quite resillient to any bad news. But then, this is just an assumption...

and finally,

The month of May has been quite an eventful month in the history of Indian Markets. Either it zoomed up 10% or fell 10% on most occassions. Like last year we all know the 20% upper circuit and again who forgot May 2006 when it crashed like anything. Now history suggests that its almost a 1 yr - 1yr pattern or a 2 yr - 1 yr alternate pattern. So whatever the outcome be, one should be cautious enough to avoid getting stuck in the wrong side. Last year, I suggested a Buy in May but...........

This year my theory is "Sell in May and Go Away".....
As for an advice, I would suggest to be on cash as much as possible.....

Happy trading !!!

Now SST generates SELL signal on daily charts....

Nifty still continues to be a bearish grip. Whatever views, I had posted yesterday remains valid even now. To add to it, FII's started selling both in the cash and futures market.

Now remember one thing.....
FII's has purchased some 15ooo crores in cash market over the last 2 months. If they start liquidating it, nobody will be spared even with the DII's trying to support it.

Today, my own indicator SST has generated a 'SELL' signal in the daily charts and that too in the bearish zone. Even the weekly charts have broken intermediate support lines.

So my strategy remains a short on any pullback, given that a gap has been created in today trading.

Correction in process...Stay liquid....

In my last article on 8th April, I categorically asked to exit long positions....Since then, we saw the Nifty slump to 5250 from its highs of 5400. In fact, I had also mentioned that a bounce till 5278 was possible and clearly NF found resistance around that level on 9th, before succumbing to selling pressure.....

Now what? A severe breakdown or breakout above resistances....

What I find on charts may not much to all's liking but I find bearish moves on charts. Whether you consider the 'Mirror Image Pattern' or you consider the 'Wave Theory' or you consider the 'Parallel Bar formation', you will find a correction in the making. The targets defined by these corrections are very stiff in nature ranging from 4798 to 4400 in panic situations. As we have seen VIX, after hitting the all time lows of 17, has retraced to 21+ this week indicating some volatile path ahead. Also if you analyze the PCR on a running basis, you would have noticed it fluctuating between 0.96 to 1.5 (Trade quantity basis) and 1.2 to 1.55 on open interest basis. Such wide fluctuations suggest that something is hidden behind what we can see.

Have a look at the following Nifty charts....

I) short term trend broken, II) Parallel Bar formation

III) Long term support around 4798

The above charts are self explanatory. Further one may refer to the US charts where an expanding divergence is formed on price patterns which suggest a fall till 10000 on Dow and 1076 on S&P500.

Everything may get negated if markets start trading above the recent highs for 2 consecutive days. Otherwise stay in cash or short at any bounce with recent highs as stoploss....

Happy trading.....

Selling pressure building up....Exit Longs....

Yesterday, I just advised Caution and you could see the result. Markets started to tank amidst the bad news in Greece. But that was visible in charts to some extent that a problem is nearing the corner. I will now explain my views in a more technical way.

1. A bearish wave in the making. And this one is a big bearish wave whose 6th point lies somewhere around 4300-4400. Sounds terrible? Yes it is. We are poised for a big and major correction. I repeat a major 'correction' and not the end of the bull run. The final northbound rally will happen only after this correction. The top of the current rally has probably occurred around the highs of 5398. Maybe after todays dip, we will see a bounceback. Probability says that the bounceback will last till 5368-5378 which was the closing highs recently. Now that may get extended to even 5450 +/- but thats something only the markets knows. What I know is that we are ready for a massive correction with panic selling.

2. Again look into the "Mirror Image" theory.

The points encircled in both sides marking the resistances and supports in red and blue respectively. So far the mirror pattern held true with only deviation in the time scale. So, unless there is any price pattern deviation, we should be holding on to the hypothetical theory.

3. Thirdly, the FII's bought in huge quantities in the last 2 months which need to be ofloaded at some point of time. Whenever that happens, the supply pressure will be too high to create demand based support. Also, the favorites of last year or the so called retailer's interest seem to have been a forgotten chapter as of now. Even when the index ran from 4600 to 5400, many stocks were 30% down from the January highs. So unless the retailers are out of these scripts, it will be difficult for them to move up. I guess, if Nifty comes to the zone which I presume, most of the scripts will be free from holding pressure and they would then propel to new highs......

4. Also, VIX is again at sub 17, which is the historical lows. A technical bounce is expected there as well.....

So, just be cautious and trade accordingly....

Happy trading!!!