Nov 242011

Nifty(4706.45): The move from 5325 has been one of the strongest ‘extended’ waves I’ve have seen in recent times. When a market extends so strongly, relief rally that follows such extensions tend to be quite weak. So given this technical backdrop, the odds of this market exceeding 5000 now looks quite low. The ideal level for the relief rally to stop would be 4985, assuming the low markets made yesterday holds.

Supports remain the same: 4650 and 4530

Resistance are projected at 4790 and 4835

Open position(s):

Silver: Short with revised stop of $33.5 from $34.2

Positions closed yesterday:

Nifty November Long Guts(4900 put and 4800 call): Opening spread 184; Closing spread 250

 Posted by at 3:08 am

  26 Responses to “Technicals 24th Nov 2011”

  1. Any chances of a short covering today given the fact that its expiry today?

    • Fairly good chance since US too is closed for thanksgiving. If you are trying to trade long keep qty small.

  2. Jai,
    Question on technicalโ€™s – pl respond at your leisure

    Do you use any other technical tools than EW to validate the waves, since the wave interpretation differs between different TA’s?

    Do you recommend PF to know the market trend?

    In one of your postings you mentioned Dec 8th to be probable bottom based on time study – what tool do you use for timing the India Market – is there any equivalent to Bradley model for India market?

    Do you take help of financial astrology to predict the direction of the market?

    Thanks for your time.

    • Hi Shiva,

      Financial astrology is one of the under researched areas. It is tough to get material. There is a book by George Bayer on financial astrology – out of print. Had a cursory read at Barbican Library, UK when the book was about to be picked up by someone who had reserved it. Never managed to get my hands on it. If you are interested try getting your hands on this.

      I actually look at a chart first with just candlesticks and volume, no indicators. AND THEN try to see where it is in the EW perspective. Actually that helps a lot. So in reality EW is the supplement ๐Ÿ™‚ The time pivots are based on market rhythm and simple time projections. Bradley is a universal thing – it is a summation series as far I can recall. Even if it was US specific it helps a lot right? ๐Ÿ™‚

      P&F I have felt, its a bit lagged – I could be wrong, but helps in reducing whipsaws.

      Best regards,

  3. Hi jai,

    any calls for the day?any shorts you have spotted in outperforming scrips,sectors?



  4. Jai –

    Remember you told me that markets dont fall in a straight line 1 week ago. I think the technicals are not working here because this is a game being played by FII. I am not an EW analyst but whatever I know from trading in markets for last 3 years (and I have a method), I see a 300 point rally building in Indian markets. Again, not sure if that fits in any EW model but I see it.

    Likewise when you said 5100 will come last week, I could not believe it as I saw 4700 coming. The only mistake I made was to reposition my portfolio according to your view and well I lost on profits on my short portfolio and lost some more.

    By my unscientific crude method, I see NIFTY touch 5000 at least once in December series.


    • Hi Vivek,

      Let us see the Chronology a bit, shall we? Emphasis added in bold.

      (1) From the note: Technicals 17th Nov 2011
      On 17th Nov 2:39 AM said:
      “Iโ€™m also leaning towards the probability that what I have marked as red 3 may actually be subdivision 1 of red 3 and the red 4 may actually be subdivision 2 of red 3. The implication of this this alternate count is that the next leg of decline from around 5150 (or wherever the correction ends) we are likely to see a very strong decline that may even break this yearโ€™s low at 4720.”

      (2) Jai says:
      November 17, 2011 at 2:44 pm

      Dear Vivek,
      Nothing goes vertically down or up, relief rally is coming and will be a sharp one but looks like will do 4860 (just cursory glance) first but 5100+ very within the realms. More in tomoโ€™s note.

      (3) vivekagrawal says:
      November 21, 2011 at 2:56 pm

      Hi Jai,
      I think that there is an alternate wave count going on. the intensity of the fall is suggesting to me that we are in powerful Wave 3 which is not complete. ??


      (4) vivekagrawal says:
      November 22, 2011 at 5:49 am
      DOW is going to gap up tomorrow morning and I expect at least a 200+ point rally in DOW. Dollar index may fall below 77.5 for a small Wave 4 rally I presume.

      Hope that helps.
      Best regards,

      • I’m responsible for the calls I initiate and what I do with those. ALL THROUGH, I have been saying, ” We will look to sell into the relief rally”. If you covered your portfolio shorts be clear that it is your action, and you are responsible for your action.Not once have I said close your Long term sells or potfolio short position.

        Good luck,

        • Don’t get me wrong Jai. Not blaming you for my decisions. Of course I am responsible for my own actions. My intent was to ensure that you emphasize alternates also when sometimes they are not clear / apparent.

          Thanks mate!

          • BTW, the image that you gave me is funny. Looks like I have a tomato on my face ๐Ÿ˜€

          • That is auto generated. Not my making ๐Ÿ™‚ I have options to change to a different set of monsters though but again they are auto generated ๐Ÿ™‚

          • And from my original post ..
            “The only mistake I made .. ” very clearly stating that it was my mistake. And I was asking a question only Jai not accusing you – because in one of your posts you have said all relief rally have been short (i.e. 90 points only).

          • The problem with extensions are that you never know how much they are likely to extend. More often u know only in hindsight. We got out a bit early on Nifty short, I completely agree. The Nifty long guts was to offset the money we might have left on the table and get some dough if there was pullback at expiry. We had booked the guts at 250 but the spread ended at 150 or something at close today. So we were correct here in closing it early but a tad too early on the Nifty short.

            Yesterday too, the ‘inside bar’ trade set up was effective for a good 100 points but I had leave it to each one of you traders discretion (I had to be at a business lunch with one of my hedge fund client). Effectively, these two setups, should have offset the early exit at-least partially.

            Best regards,

    • Hope you don’t mind my putting in a point of observation: (nothing personal – and not taking away anything about your knowledge and methods, which I feel sure are quite good):

      It seems that you are reiterating what Jai has said…

      1. Re: 300 point rally – Jai has been saying since some time that a relief rally is due.
      2. I think Jai said last week as a probability, we may see 5100 – not that it will come during that week.
      3. When you say 5000 will come at least once, again it seems to be a variation of what Jai has said.

      With all due respect…
      Happy trading…

  5. Jai,

    You have often mentioned that when we break 4720, you would like to evaluate from a medium term perspective, where we are headed.

    Would like to hear your medium term views ?


    • I have been of the view that we are headed into the 2009 lows since January of this year. That is getting stronger as we progress. I did a post in August depicting the roadmap for the long term. Will represent it in a separate post after the market close.


  6. Jai,

    The time stamps of your and others comments are appearing to be different from local times. If possible could you please look into this and adjust to India time. This way, the intermittent comments can be followed w.r.t time and therby executed upon.


  7. Jai

    Just came across an article which you might interesting since the date mentioned in it is 9th december ( very close to 8th Decemeber you have been talking about all along ).

    I know technical traders should stay far away from the news but just couldnt stop myself… Would love to hear your views on it

    prateek sinha

    • Hi Prateek,

      Hail Adolf Merkel?? ๐Ÿ™‚ Anyway it’s there in price, the market is pricing in some “event”. On Friday the euro closed less than 100 pips of the crisis low of this year. It’s only a matter of time before that goes. I’ve heard other conspiracy stories – Germany is almost ready with the Deutsche mark, the order to print has been issued.

      We will trade the price, nothing else.


  8. hi jai,
    hope your little one is feeling better, one small request can the sms for calls be given before hand on expected movement and price direction whether buy or sell @ x price, as the markets are volatile and moves fast, the target as missed for e.g your call for buy apollo tyres @64 , i was able to execute it @ 66, which changes the risk reward ratio, for nifty long guts your sms to cover @ 250 was able to execute @ 237.

    • Hi Shabbir,
      Thanks she is better.

      Where possible, I will definitely do that. The Guts was a play on volatility, so there was no way to know where market would finish but we aimed to profit whichever way the market went.
      If you see stock prices running away from the level mentioned, try to commit 1/3rd immediately, and try to add on pullbacks.

      Best regards,

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