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Technicals 7th Mar 2012

Mar 072012

Nifty(5222.40): An erratic day that finally settled lower by little over 1%.

Nifty Daily Chart

If the top at 5630 is a significant top, the counter-trend top, i.e. B wave correction to the 2010-2011 decline, there are two ways this can play out.

1) Nifty blows through 5090-5077 area - if this scenario happens, we have a powerful wave on hand and Nifty could drop straight to 4950.

2) The current decline stops at above 5077 - then there is a bounce coming through that may take Nifty to 5495 to 5510. Post that a bigger decline begins. There is some support at 5139 and 200 DMA at 5165. Hence, be willing to extinguish some short positions closer to 5100 Nifty.

Will be closely monitoring the internals of the move if the second case pans out - it needs to be in 3 steps , else the B wave stands a chance of moving higher to 5900 (see earlier post ). As the structure unwinds, Ill update in plain english.

Current positions:

Apollo Tyres Long at 78, 3/4ths booked at 85 (I'm aware many did not get the SMS due to network Jam - this is for those who got)

Short Nifty Fut from 5450 spot, partially booked

Long Nifty March 5000 PE @32-33, partially booked @47-49

Long USDINR at 49.8 spot Tgt 52 stop 48.8

Previous position:

GMDC stopped out at 194.

Technicals 29th Feb 2012

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Feb 292012

Nifty(5375.50): Nifty saw a bounce back after 4 sessions of decline. We have a "Inside Day" pattern on the daily charts and considering the wide ranged bar on Monday this was expected.

Nifty- Daily Chart - Inside day

Nifty is correcting the decline from 5630 to 5268. This is basically phase of 2 of the move that started from 5630 and counter trending. Phase 3 will be a equal to the 4 sessions of decline from 5630 or sharper than that. The level of 5077 is a 4th wave of previous degree and we should ideally see Nifty descend there if not lower. A couple of Fibonacci clusters also come in slightly above here.

Hence we should be looking to add some short positions on Nifty in a staggered manner at or around 5450 and 5495 (may be as early as 5410). If the momentum seems strong and blows through these levels - keep your powder dry. We must see some kind of stalling around these levels. Ill anyway be monitoring the intraday action.

New Positions:

1) Long Apollo Tyres 78 Sl 72 at close Tgt 89

2) Long GMDC 207 SL 194 at close Tgt 240

Technicals 27th Feb

Indian Market/Stocks, Premium Content 9 Responses »

Feb 272012

Nifty(5429):

Nifty Weekly charts

A dark cloud cover on weekly charts on Nifty - this a reliable pattern but we need to see a follow through to this pattern. Momentum agrees with price so far. So we must look for a corrective decline to 5200 or 5077.

IF we see a bounce to 5490-5510 in the first 2days of the week, it might shorting opportunity for the extreme short term.

Supports:5390, 5210 and 5077

Technicals 23rd Feb 2012

Indian Market/Stocks, Premium Content 6 Responses »

Feb 232012

Nifty(5505):

Nifty Daily chart

Indian benchmark indices saw a key reversal day on the indices (see chart above). A new swing high followed by a strong rejection of the new high. This is usually very bearish but momentum points to an unfinished move. So, we will prefer a corrective decline followed by a another leg up.

BUT, if we see a "FIVE" along with this correction, we may have to conclude differently. As shown in yesterday's chart, the bigger B wave can end either at 5650 or slightly below OR closer to 5975. Yesterday's high was very close to 5650. Keep tabs on USDINR - if it crosses 49.8 that would the first warning sign for Bulls that things may not be smooth for them.

Supports: 5480, 5325 and 5077 (so watch for correction to get some support here - I prefer a decline 5325 to 5077)

Resistance: 5650

Technicals 22nd Feb 2012

Indian Market/Stocks, Premium Content 8 Responses »

Feb 222012

Nifty(5607):

Nifty weekly charts

The above chart is the 'case 2' we had outlined several days back in this month's morning note. Beyond 5975 Nifty it would be 'case 3'. We are very close to getting some very important clues as to what the Indian Nifty is going to do. USDINR - cross above 49.8 will be the first clue that USDINR will stretch to potentially 52 and as a consequence will indicate a corrective phase for Indian equities.

Sorry for the very short update - not fully recovered but will be able to respond to questions you might have on this chart.

Gold, the Buffett slayer

Uncategorized Comments Off

Feb 172012

A recent business insider article calls 'Gold bugs' thin skinned misanthropes because Warren Buffett "..devotes a few paragraphs to gold and the fools who worship it" in his upcoming annual letter!! Regular followers of this blog know that I had turned cautious on Gold around $1700's and bearish in September 2011 - just establishing I'm no gold bug.

In my May 2010 post, I had highlighted how such fancy theories can be quite flawed and prevent you from arriving at the best investment decisions. Now to Mr Buffett's renewed Vitiriol against gold:

1) The cube of gold will produce nothing in the next hundred years

My answer: No one makes investment decision for next hundred years

2) The cube of gold will not pay you interest or dividends, and it won't grow earnings.

My answer: So will be the case with a boat load of stocks. The S&P has gone no where in the last 13 years.

3) You can fondle the cube of gold, but it won't respond.

My answer: Yes, witty. Hence I'll try to be funny too. Mr Buffett should know what to fondle. If you own lots of gold you do not need to fondle, 'they' will fondle you 😀

The reason for Mr Buffett's bashing? Well, whatever I say would purely be a guess but I would let the performance of Gold speak for itself:

Gold's return for the last 10yrs - 488.19%

BRK's return for the last 10 yrs - 67.77%

Gold continues to wallop the performance of Berkshire Hathway by a GIGANTIC 420% over his preferred time frame of 10 years.

And if you had listened to Mr Buffett's Annual letter of last year, you are in the elite company of those who missed the best performing asset class of 2011 - long dated bonds that returned almost 30%.

Here are the words of another billionaire who is in the same business. "At the end of the day, your job is to buy what goes up and to sell what goes down. So really who gives a damn about PE's?" – Paul Tudor Jones

Technicals 15th Feb 2012

Indian Market/Stocks, Premium Content 14 Responses »

Feb 152012

Nifty(5416): Markets despite being overbought, continues go up on receding momentum. The move from early February is like an automobile coasting on residual inertia of motion even though the vehicle has run out of gas.

Nifty(Left) and Bank Nifty (right) - Daily Chart

While this is very unhealthy and the markets will sooner or later drop vertically once the residual inertia is over, prudent risk management and patience is an absolute must. The retracement will completely erase the last leg of this short-term move. That leg started at 5077 and that will be some sort of guaranteed level we are going to see once the correction sets in. We will watch for a big one day reversal pattern or 5325 for confirmation - do not know which will be the case.

Having said that this move is clearly a powerful wave in the short term. What does it mean in the higher time frame? Is it a sucker rally that is correcting the entire decline from Nov 10 to Dec 2011 as I'm assuming it to be? OR is it the beginning of something bigger? The answers for that will come through ONLY when the correction starts. Stay tuned.

Nifty support : 5325, 5210 and 5077. Resistance: 5440 and 5495

Open Position: Long Coal India @326-328 Tgt 360 Upgraded stop 320 at close

Couple of snapshot’s

Indian Market/Stocks, Premium Content 12 Responses »

Feb 132012

INR Weekly Chart

We have bullish engulfing candle on USD/INR weekly chart. If you want go long on USD place a stop below 48.5 and hold. IF USD/INR hits 52.2 it would prove beyond doubt that the decline from 54.5 was corrective and a new high way beyond 54.5 is coming. I'll be looking at the intraday price movements very closely in the coming days.

From a contrarian point - there are quite a few signals that are coming through for the US markets.

1) Larry Fink of Blackrock says Invesstors should be 100% in equities!!

2) Roubini's firm has turned bullish

3) Barron's magazine has Dow 15k on its cover and says even 17k is a possibility!!

So either a decline of significance is about to start for US markets (i would prefer Dow 13k or S&P above 1370 and then a fall) or the decline may have already commenced on Friday.

Technicals Feb 8th 2012

Indian Market/Stocks, Premium Content 13 Responses »

Feb 082012

Nifty(5335) - Resistance 5415 and Support 5300 and 5240

USDINR has found support at previous 4th wave of 48.5

INR daily charts

INR should weaken to 50.2-50.6 but we need further evidence from the movement here to signal that a bigger move is beginning for INR. There is a small possibility of one more leg of strength for INR .

New position: Chambal Fert Short @ 86.5-87 Target of 77 stop 92

Technicals 7th Feb 2012

Indian Market/Stocks, Premium Content 3 Responses »

Feb 072012

Nifty(5361): Price is ignoring the stretch and the warning signs from momentum indicators and we are seeing Nifty movin up relentlessly. More than anything we need to look at the longer term now. Let me outline 3 possible scenario

Case1: A new bull market is underway:

In that case Nifty is headed north of 7000

The problem with this technical structure is this - the bottom at 4530 has been an atypical one. The speed of the move though is in favour. This is our Outlier case.

Case 2: An uptrend for the next 6 weeks and then a drop equal in amplitude to the drop from Nov 10 to Dec 11 resumes.

Nifty is headed for 5650 or 5950 with some pull back if this scenario is going to unfold.

Case 3: The bear case

Nifty ends its rise today or max tomorrow and targets a break of 4530.

I will expand on this with charts and labeling when I get more inputs from Commodities, Currencies and other inter-related markets.

My base case is SCENARIO 2.