Saner thoughts..& Strategies for next week.

Markets are efficient but 90% driven by emotion.

Markets are technically strongest after a sharp decline and technically at their weakest after a sharp advance.

Most important intellectual quality for successful investment is the ability to keep an open mind. The biggest mistakes are made by those who " do not know what they do not know".

Genius is nothing but a great aptitude for patience.

Speculative markets are unpredictable. We can not predict. He who predicts is lost.
Why Markets go up and down?...There are fluctuations of supply along with public and institutional demand for commodities, stocks & bonds. These are inturn influenced by myriad of other forces.
Markets are made of emotion. They are influenced by the irrational behaviour of lunatics. Markets reflects all kinds of thinking, from the very smart to the ineluctably dense.
Nature's Law (Elliott's) represented the distillation of human activity. When suitable data is compared with the cyclical pattern discovered by Elliott, the waves then become visible to the experienced eye.
All human activities have three distinctive features - Pattern, Time and Ratio all of which observe the fibonacci series.
The Rhythms of the Mind:
Elliott recognised the true forces behind the share-price behaviour. Most attempt to relate the stock market behaviour to current events whereas those events have little to do with future stock market performance. This aspect made Elliott's Wave principle that much more important. Markets movement is a psychological phenomenon. This law behind the market can be discovered only when the market is viewed in its proper light and then is analysed from this approach. Simply put, the stock market is a creation of Man and therefore reflects human idiosyncrasy.

A look at present scenario: This fast falling market will definitely has in it some extended waves and in the coming weeks , we are likely to witness iv of 3 followed by 'abc of 4th implying a likely choppy movements.Any lows made on Monday(or Tuesday)will be followed by rallies followed by selling while holding the lows of Monday(or Tuesday).

For Bulls:- Buy into every dips/ plunges and book profits on rallies and do not hold overnight longs till the daily signals a bottom and a buy.

For Bears:- Book out your shorts on every dips/ plunges and sell into every rally and reduce the quantity of holding overnight shorts as the risk / reward ratio is diminishing.

The range of choppiness will be quite big considering the falls of previous few weeks.

Continue with the strategy of buying good stocks that have fallen to 11% value of their peak value. On friday, some such stocks like Bajaj Holdings gave 20% return in a single day.

Some such stocks...Asian Electronics, IndiaBulls Securities, IndiaBulls, HDIL, JSW Holdings, UB Holdings, DS Kulkarni, Walchand People, Wire and wireless.(These are taken from the Moneycontrol List)..You may find some stocks of much higher quality available at 70% off their peak value for quick returns..Highly leveraged F&O stocks that have fallen very steeply in the last two weeks( Eg. Suzlon, Bajaj Hindustan, Essar Oil,Chambal Fertiliser, DLF, GMRINFRA, Unitech, HDIL, Indian Hotel, Omaxe...to name a few) will also offer swift bounces. Buy on declines only for a very short duration as they may fall again from higher levels to end Oct series near their lows.

CAUTION:- I am not suggesting here the "END" of the downtrend but only a pause..and that pause will offer very good trading opportunity. Use your trading tools to maximise your gains..

Good Luck to all.