Chain of Love

Bryan saw an old lady, stranded on the side of the road, but even in the dim light of day, he could see she needed help. So he pulled up in front of her Mercedes and got out. His Pontiac was still sputtering when he approached her.
Even with the smile on his face, she was worried. No one had stopped to help her for the last hour or so. Was he going to hurt her? He didn’t look safe; he looked poor and hungry.
He could see that she was frightened, standing out there in the cold. He knew how she felt. It was those chills which only fear can put in you.
He said, “I’m here to help you, ma’am. Why don’t you wait in the car where it’s warm? By the way, my name is Bryan.”
Well, all she had was a flat tire, but for an old lady, that was bad enough. Bryan crawled under the car looking for a place to put the jack, skinning his knuckles a time or two. Soon he was able to change the tire. But he had to get dirty and his hands hurt.

As he was tightening up the lug nuts, she rolled down the window and began to talk to him. She told him that she was from St. Louis and was only just passing through. She couldn’t thank him enough for coming to her aid.

Nifty reverses with a positive divergence.

A close above the 5 day ema will propel it towards the 5000+ zone. Real buying will emerge when we see a positive divergence in the daily which has not happened yet. If it is a 4th wave up, it will break the channel and then resume the down move in the next few days. 4th wave offers big trading opportunities. Nifty is in the "Untraded zone" of 4750-5000.

The channel break gave a confirmation of a reversal after a positive divergence as well as a "5 wave" move from 5293 to 4766.

I have included the monthly Pivots too now. Will fine tune the averages. Closing above the "Hour Low ema" was the first indication of the end of down move in "Hourly time scale".Closing above the "Hour High ema" was the next step along with the break of the channel. And finally closed above "Daily Low ema" which could result in a rally towards "Day High ema".

Nifty Intraday update.

Monthly data also incorporated.
4757 - market has paused to complete this 3rd wave down and may have started a 4th wave towards 4900-4950+..This is as per a perceived EW analysis..
One could wait for the arrest of this down momentum by an hourly close above the "Hour Low Ema" before acting.
Chart updated @ 2.20PM:

Nifty PreMarket View.

I am really sorry to have given a "Conservative Long call" yesterday when the market is in major downtrend.
Presently, only a channel break can give an aggressive intraday longs.
Exit the longs.
January 29, 2010 9:02 AM



If the channel is decisively broken, selling can be considered @ 4930-4950 also..

Nifty slows in momentum though could still move lower.

Trending down inside a channel and continues to trade below 5 day ema. Unless Nifty closes above 4965 tomorrow, carrying longs will not be a good strategy. Risk reward on the upsides are limited with more downsides possibility continues though a sideways trend may ensue for a few days..

A channel break(decisively) can set it up for a relief rally. If not week's S2 @ 4757 could come.

Many attempts to induce an upward momentum failed mainly due to settlement day "unwinding". First day of the new settlement will open with the apprehension of the RBI policy.

Nifty Intraday Update

At 11.41AM: Nifty is resisted @ the channel.
Above 4925, a 25 points towards 4950++.
If resisted, fall to 4900-4888(pivot).
Crucial Hour ahead.

At 11.00AM: Managed to close above the "Hour High Ema".

Nifty PreMarket View.

Few stocks are showing +ve div and many don't. Choppy day ahead. Do not get carried away.If OI experts could post their views on a likely close for the day 4900 or 4800, one could do some intra day trading based on it. If not, save your money to be better employed in the days to come. We have not seen the "panic" yet, though some days away.
As the Technical study suggests,
1. Trendline violation would have fetched a bonanza.
2. Directional but lag indicator would have directed you in the right direction.
3. The lead indicator would have led you into an enriching fall.
4. Trend following methods would have shown you the trend in time.
5. Moving averages would have moved you to the right path....

all these would have happened if you have not resisted these. In life too, things should flow like a river and when you resist them, the result will be "imbalance" and missing of opportunities(that are obvious).

So relax and let the market and its derivative indicators/ methods guide you in future. There are more opportunities ahead.

The 4th wave ahead will be hugely choppy in the coming days. Hence, trade those points keeping a broader range for which the remaining two days will throw up the bottom range.

Nifty in a hurry to reach south..!!

Last time Nifty made a sharp reversal from 4807. Would it consider the same now. May be briefly or may be not, being the settlement day can be wild.. The weekly set up has now changed to a serious reversal.The settlement day will be a serious one with huge choppiness. Only the "harvesters"(Positional Shorts) will have it good. High volume selling could be of only delivery selling which may not attract rallies. Only if there are "shorts" in a big way, will it result in a sharp rally. As my critic puts it, "Stuck longs will come in to unwind on every small bounces to cut their losses".

There seem to be a positive divergence developing in hour charts but the manner in which it is developing(sharp falls) do not give it much credibility. A good +ve div should have an exhausting index/ stock where as Nifty seems to be sprinting fast..

The serious minded positional shorts may book profits either @ the multiple tops of 4700-4750 zone or when Nifty is able to close above the "Day Low Ema". Let me add this: this is not a foolproof reversal but a likely sign of "pause".

Nifty Intraday Update.

Updated @ 3.00PM: Still Trading below "Hour Low Ema"

Nifty PreMarket View.

My critic, most often, chides me about the supports & resistances..When a downtrend is on, all the supports get broken till market exhausts it self and never attempt to catch a falling knife.
Similarly when a market is in uptrend, no resistances can be said to be stopping it.
My experience says(EW), if you can understand the nature of the up or downtrend, you can relax and wait for the "potential target" area and in major uptrends, it is quite difficult especially when it makes new highs.
In this downtrend, there are two distinct possibilities and both have, presently, a 50:50 chances.
1. Nifty is likely correcting towards 200SMA(4600 +/-), not in a straight line and then attempt to move higher as a complex "B" wave uptrend.This "b" of "B" can be choppy to say the least.
2. Nifty is correcting into its 3rd leg(C) of this major correction which presently presumed to be a contracting triangle(having 5 legs)targeting 4000-4200+/-.

Nifty pauses again, nearing "oversold"..

Many readers have shown interest and writing to me wanting to learn Technical analysis. For very new beginners, I want to say that it is like going to the market place to buy something or sell what you have. But to get the best bargain, you need to understand the "demand & supply" for that product. More the demand, the prices will be bid higher and more the supply(with less people to buy)lesser will be the price. If you spend some time to figure this one out, you will be in a better position to "buy low and sell higher."
In stock market too, the same logic works. But how do you go about finding this "demand & supply"...Yes..by studying the prices bid in the recent past..how high it was bid., how low it went..and where the last bid closed. I have covered the most minimum basics of Technical analysis and they may be found under "Technical Analysis" in my label section.
Start with:
1. Trend Following
2. Trendlines
3. Moving Averages.
4. Macd (Moving average convergence & Divergence)
5. Stochastics.
6. Tech. Table- Part.1 and Part-2. And the Tech. File.

Spend your holiday time & week ends to go over these study materials and practice them during market hours. The time spent and dedication shown will fetch you very satisfying results. After studying and developing a disciplined approach to trading and investing, the most important lesson you will realise is that " It is better to adopt a wait & watch approach (or sit tight in the direction of the trend) when you do not understand choppy markets and act only when you are satisfied with a compelling reason to employ your money".
Once you develop this "discriminating mind" to differentiate a trending market to a sideways market of different time cycles(week, day, hour), your expectations of the market will be so balanced that you will harvest like a seasoned farmer.
Just stay cool..Don't sweat it out. Simply try to understand the various forces at work. If you are relaxed when you are trading, you will make money. Anxiety has no place in this business..Sort that one out.
If you don't enjoy doing this, watch us play it and being a spectator, you will save all your money and still get plenty of action.

The choice will be resolved by the world markets on wednesday morning.

First attempt to go above the "Hour High ema" was promptly sold into.The day low ema needs to be conquered to arrest this fall.

This is a monthly scenario which has been discussed few months(Nov.09) earlier and its still playing out..Watch out for those support levels."B" waves are "sucker waves" and we are in the "b" of "B"..and that is a worst kind.

Nifty Intraday Update.

Nifty Premarket View.