Jul 192011

Yesterday's session for the US markets was an important one. If the fall from the May highs was corrective yesterday's low on the S&P 500 should have stayed above 1298. The fact that it did drop to 1296 is an indication the rally from the June lows was possibly an artificial rally manufactured by the powers that be. If you know a little bit of Elliott Wave you would know why this area should not have overlapped.

S&P 500 Daily Chart

Also the Phily Banking index, nose dived below the June lows.

Philadelphia Banking Index

We already have a Dow theory non-confirmation in July - transports made a new high while the Industrials did not. So if these interpretations are correct, over the next few days we should see further down sides for the S&P which potentially could go below the June low of 1258.

  15 Responses to “Signs”

  1. Dear Jai,

    July has been a really narrow range month for NIFTY as of now – do you anticipate break-out on either side in the coming few days?

    I’m short on Banknifty as well, does it look like it will lead this downtrend?

    Thanks & Regards,

    • Hi Parag,

      It will make sense from the point of options market if the range breaks occurs in the next series but nothing says it cannot occur this month. In the bank space – it looks like it will be the private bank space that will lead the way lower.

      Good luck,

  2. Yes it appears markets will soon resign from their up moves and sign in to down moves 🙂

  3. Hello Jai

    Seen you quite a few times in tv , would like your advice as I have taken call options as nifty breached 5600 levels but now am in a fix.What do you think i should do.

  4. If nifty will go down, it will go down, but if it goes up, it will go up, please value this prediction for the upcomiing week

  5. Jai,
    In my understanding of the charts this run upto almost 5740 was a given. Now that we have seen this, I feel this immediate fall might lead to 5300 minimum. Your thoughts ? Any obvious weakness in stocks ?


    • Rut,

      Anything beyond 5430 will increase the odds of 5200 breaking. It will mean it is not a simple correction to the rise from 5195 to 5740; it would become a new leg down. That is why I asked you to watch the speed of the move last time.

      Good trading to you.


  6. Dear Jai,

    Now with global markets in a jittery state, even indian bourses would decline for sure.

    I wanted to pick your thoughts on some Multi-bagger ideas – can you name a few stocks that could be looked as buying opportunities from medium to long term?

    Thanks & Regards,

    • Parag,
      I do not think it’s time to think about multiple-baggers yet. Will alert you if things change.

      Good trading,

  7. Dear Jai,
    Now an out of market request – How can I follow you through facebook? Please provide us your facebook link.


    • Hi Arun,
      I do not have a page for cashthechaos on FB yet 🙂 I have the plugin ready for it in this blog though. Will set one up soon.

  8. Jai,

    I have shorted Titan and gone long in Praj. Any views.

    On another point – after weeks of confusion, US has agreed that to reduce debt, they need to reduce spending. Brilliant idea. Now…… all is well. again the US has saved the world. Bravo !


  9. Dear Jai,

    Just wanted to pick on your thoughts about the current weakness in markets – I’m definitely short in NIFTY. Do you think there could be pull-back rallies taking NIFTY above 5500 before taking it towards 5200-5300?

    In other words, whats the best SL for NIFTY shorts.

    Thanks & Regards,

    • The region between 5480-97 should offer resistance, if an oversold ensues, I see it being capped under 5550. Holding a call for protection or writing a put while being short in futures are also strategies (you close this option leg once the move is in your direction). Read up and see if these will suit your risk profile.

      Best regards,

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