Many more bridges to build..!

Once upon a time two brothers who lived on adjoining farms fell into conflict. It was the first serious rift in 40 years of farming side by side, sharing machinery, and trading labor and goods as needed without a hitch.

Then the long collaboration fell apart. It began with a small misunderstanding. It grew into a major difference. Finally it exploded into an exchange of bitter words followed by weeks of silence.

One morning there was a knock on the older brother's door. He opened it to find a man with a carpenter's toolbox. "I'm looking for a few days work," he said.

"Perhaps you have a few small jobs here and there. Can I help you with something?"

"Yes," said the older brother. "I do have a job for you. Look across the creek at that farm. That's my neighbor. In fact, it's my younger brother. Last week there was a meadow between us. Then he ripped a hole in the river levee with his bulldozer. Now there is a creek between us. Well, he may have done this to spite me, but I'll go him one better. See that pile of lumber curing by the barn? I want you to build me a fence, an 8-foot fence, so I won't need to see his place anymore. Cool him down, anyhow."

The carpenter said, "I think I understand the situation. Show me the nails and the post-hole digger and I'll be able to do a job that pleases you."

The older brother left the farm for the day to go into town.

The carpenter worked hard all that day measuring, sawing and nailing.
About sunset when the farmer returned, the carpenter had just finished his job. The farmer's eyes opened wide. His jaw dropped!

There was no fence there at all. There was a bridge ... a bridge stretching from one side of the creek to the other! A fine piece of work, too, handrails and all ... and the neighbor, his younger brother, was coming across the bridge, his hands outstretched.

"You are quite a fellow to build this bridge after all I've said and done."

The two brothers met in the middle of the bridge, taking each others hand. And then they spontaneously embraced.

Hearing a noise, they turned to see the carpenter hoist his toolbox on his shoulder. "No, wait! Stay a few days. I've a lot of other projects for you," said the older brother.

"I'd love to stay on," the carpenter said, "but I have many more bridges to build."

Nifty's decisive week's strong reversal

Nifty has just been pushed off the "Cliff"...more to come. Any one who sold all his holdings can sit on his "CASH" and plan at leisure what to buy..and in the mean time add to his wealth by writing calls on every rises... Looking at the intra movements and playing the small moves, you may develop amnesia on the bigger picture..Let us allow the market to find some bottoms, see more "REDS" in week as we are seeing in the "day"..
A pause may be @ 4577 zone. This kind of relentless selling can only be "Fund Selling" after duping all investors to buy for "Long term" in various medium. Notice how Nifty has been holding on to the 5-day avg(Blue) and climbing down steadily..(I like to call it Indian rope trick)


This shows in context the fall (small so far) compared to the relentless buying of 12 months. Excesses are being wiped out..
Now it has closed below week low ema too..

Nifty update..5th down wave in progress...

This was the chart posted at the end of yesterday's trading. As per this, due to positive world cues we got the opening bounce and now going down in the 5th wave towards sub 4700..Next supports come at 4685, 4650 & 4600.

I misread it.
When in downtrend, if world mkts are positive, go short only..Sorry, guys.

Nifty Intraday update.

Nifty has made a low & high of 4798 or 4815 to 4850..Place your stops accordingly.
A shrp gap up, followed by "fade the gap" to 4818 has happened. 4805-4810 should hold for this uptrend to continue.
Nifty is still below 5-ema, etc..As it has gapped up, it needs to consolidate before moving higher. Let us give it some time..

Nifty premarket View

Ajit asked: u mentioned call writing 4900,5000 for nifty.that shud be done on bounce towards what nifty level? u write grt.hats off! do you take private clients for real time trading?
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"Ideal level to write calls is when Nifty retraces either 50% or 61.82% of the fall in the early part of the series. Then you have some comfort levels to hold the "Sell" positions.

50% is @ 4960(Gap Down area)
62% is @ 5012 (Struggle area before market fell big time swiftly).

I share my thoughts and I do not take private clients. If you follow the markets along with me, you will grow in confidence and if you act on them when you are confident, then you are on your own to the success path."

Act on what you believe in..

The one success formula in the stock market is "Believe in what you see and act on it on time having faith in your own views".
Whenever market is above its 200DMA and you see a continuous 5 days of fall, you buy there, then you are likely to get very good short term gains. While Nifty trading above its 200DMA(3930) fell for 8 days with a small pause in one day in between had offered such an opportunity. And it may offer again too.
The following stocks were recommended to buy @ the mentioned levels yesterday in "Stockwealth" blog and all of them except Aban got bought at those levels. The selling of the same can be done at more higher levels as world cues are positive.
Tata Steel: 461-475++.........503--
Suzlon: ....69-70++...........75--
RCapital : 720-735++.........795--
RCom : 185-195++.........204--
Essar Oil: 130-132...........145--
Cairn : .262-265...........276--
Icici Bk : 770-780...........826--
Aban : 1285++...........1400--

Sensex chart by Pankaj.

Pankaj Shah has suggested a possible "5"th wave in Sensex and the same has been explored here.

Nifty's in one way street

Nifty Premarket View..

A more scary short term picture which is a probable scenario depending on 4727-4744 zone holding..

Nifty Premarket view.

Nifty has not shown any positive divergence in either 5 minute or Hour charts.
When a major reversal is taking place, Oversold markets may remain oversold for more time too.
Trying to play the bounce against the main trend will make you miss the major moves down.
Once you let go off your positions, trying to get back in will be harder because the entry level may have looked relatively lower yesterday but you would wish you held on to that for tomorrow it gets lower.
A major trend line break brings in more selling from even the medium term players.
Auto stocks are starting to fall in a big way...Maruti, hero Honda, M&M..
If the previous top @ 4727-4744 arrests this fall temporarily, you may have a short term bounce from oversold levels.
Playing the bounce is a high risk game as fast falling markets tend to extend their waves..
A strategy is being developed for a possible relief rally that may develop in a day or two. It is highly possible that I am 2 days early with this strategy.
Those who are holding Shorts should trail it down till an exhaustion is seen in the prices in the short term.Some stocks strategy is posted in "STOCKWEALTH" blog.

Nifty bleeding red since Diwali..!

A pause in the fall. No bottoming sign anywhere. Range trading may continue on settlement day unless global cues are quite negative. Europe may have done a 5 wave done and due for a bounce soon. As most of the F&O action is done yesterday with high volume, global cues may come into play.
An ideal set up is shown here. Will review it in the morning. Quite a lot of stocks look for a short term "Buy" for cash investments..say for a week.

Look at that 5-week ema(4867) and see today's high.. Will it touch 5-day low ema (4890) tomorrow..?? Last support is @ 50-ema @ 4758.

Nifty Intra day update.

At 2.05PM: I am logging off..
May be a short term bottom is in..
OR after a bounce to 4880-4890 by tomorrow, it may start down again.
*************************************************
Nifty reversing from 4860-4878 zone.
Selling pressure increase below 4840 for new low attempt.
Staying above 4840, it will gain strength.
Ideal sell level is 4900+.

Nifty Intraday update

Nifty has taken support at "4786" mentioned in the Pre market view..

It should go towards the Pivot of the day 4878 "ideally"...

Trending & Sideways market Trading

Every trader needs a trend to make money. If you think about it, no matter what the technique, if there is not a trend after you buy, then you will not be able to sell at higher prices..."Following" is the next part of the term. We use this word because trend followers always wait for the trend to shift first, then "follow" it.
One of the first rules of trend following is that price is the main concern. Traders may use other indicators showing where price may go next or what it should be but as a general rule these should be given less weightage. A trader need only be worried about what the market is doing, not what the market might do. The current price and only the price tells you what the market is doing.
Money Management: Another decisive factor of trend following is not the timing of the trade or the indicator, but rather the decision of how much to trade over the course of the trend.
Risk Control: Cut losses is the rule. This means that during periods of higher market volatility, the trading size is reduced. During losing periods, positions are reduced and trade size is cut back. The main objective is to preserve capital until more positive price trends reappear.
Rules: Trend following should be systematic. Price and time are pivotal at all times.
A Predictive market trading algorithm or Trading System is defined as a calculable set of trading rules that uses either technical analysis and/or Elliott wave analysis and results in entry, exit and stop loss trade price points. Trading algorithms are not exclusive to swing trading and are also used for day trading and long term trading. Trading algorithms/systems may lose their profit potential when their strategies obtain enough of a mass following to curtail their effectiveness: "Now it's an arms race. Everyone is building more sophisticated algorithms, and the more competition exists, the smaller the profits,"
The markets are said to be trending sideways most of the time. During this time they can be quite volatile. It is for that reason that many traders have come to loath them. However some traders actually prefer sideways trending markets over trending markets.
The bulls and the bears are in this together, scratching their heads and wondering what’s going to happen next. Up and down, down and up. As soon as you think you know where the stock market is going, it doesn’t…An increasing amount of money has been flowing into fast-trading (and often short-selling) hedge funds that may be whipsawing the market with their staccato trading patterns…What’s a small-time investor to do? Perhaps it sounds facile, but the best thing to do with a sideways trending market is “not much.”
Sideways trends can be found inside support and resistance levels that are near each other. Inside the trading trend line the price still fluctuates, but with rather small ups and downs. A sideways trend is said to be broken when the price goes outside the previous limitations of the trend line. You might like to make sure that the price goes outside the barrier of the trend line twice before being sure the sideways trend is broken.

Nifty PreMarket view.

Previous top @ 4727-4744 seem to be a temperory support for a relief rally which might be tested either today or tomorrow. There are other supports like 4786(First pause after the break out past 4727-4744) and 4813 -13 week avg.
My guess is a test of 4786 and an intra bounce and another fall below 4786 to complete this sharp fall from 5033 to be succeeded by a sideways move.

Nifty's near term view.

Markets spread is likely to come down as the bulk of the selling has been done for the series and that does not mean "buying" will emerge.
Every intra rallies will meet with selling pressure.
Buying should emerge only below 4800-4780 and selling @ 4860-4880-4920.
Once this series & the selling pressure eases while holding above 4750, a relief rally into the next series is likely to emerge which should offer an opportunity to create "Shorts" only after allowing for at least a time correction for this steep fall.
Markets, on the contrary, may decide to continue falling without much of a bounce too. As weekly set up has changed decisively down, no support will hold for long time and multiple resistances are being created as we head down.
You can see some stocks update in "Stockwealth".

So on every rise, Write "FAT" calls of NOV. SERIES.
4900 call closed @ 122; 4800 @173; 4700@ 228. This premium may increase incase of a relief rally. Write them whenever Nifty moves above 4880, 4920 & 4950.

Nifty's 3rd wave down..

If the 1st went down from 5182 to 4968 and the second (5052-4962-5033) to 5033, the third should reach 4819 minimum ( 5033-214=4819(5182-4968=214)).
That is a waterfall effect of a down move. Previous top @ 4720-4745 is a logical support (Previous resistance becoming support during a fall).

Nifty intraday update.

Aggressive trade: Bought 4845 NF, SL 4830.
(Exit at close).

Nifty- 5 minute +ve divergence.

At 1.10PM:-Positive divergences continue..Nifty is quite close to its major support of 50 DMA @ 4845-4855 for a relief rally..???

Nifty shows +ve div in 5 minute time scale. Aggressive traders can go for a small trade here..(Against the main trend)..

Nifty Intraday Move.

At 12.10PM: EXIT all Longs @ 4910. Will review at 4850.
**********************************************************************
Conservative trade: SL changed to 4890.
Aggressive trade: Long @ 4915.
Target 4970-4990, SL 4890.
NIFTY may be doing an ending diagonal in the last move from NS 4958.
First Trade 5 points lost;
2nd trade 10 points lost.

Nifty Intraday update.

Conservative trade: Long @ 4930. SL 4900.

Aggressive trade: Long @ 4930.
Target 4970-4990, SL 4920.

Nifty Intra update

At 10.14AM: ORB for future is 4945 to 4932(Too narrow to my liking).
However, my SL for long is 4930 now.
***************************************************************
Conservative trade: Closed shorts @ 4935.

Aggressive trade: Long @ 4935.
Target 4970-4990, SL 4890.

Nifty Premarket View

LH & LL are continuing. Once Nifty starts to trade below 4900, more pain to the bulls.

Nifty trades sideways for the 2nd day after 3 days of sharp fall..

Satya asked, "Where is the negative divergence @ 5030.??"
"Biggest money is made in the markets with divergence play, both positive & negative".
Negative divergence results in quick money as fear spreads very quick and the falls are always sharp and they are generally sudden.
Now, we should look for a positive divergence to develop for a short reversal..
Nifty after falling sharply at the open, rallied to the resistance zone suggested @5025-5050 and resumed the fall to close at the lowest level. Have you sold at the resistance zone..???This 5 minute chart has proved the efficiency of channel trading and a minor negative divergence at the top to boost your confidence to sell the rally...It leaves us with few options once again..3 options confuses, two would have made it easier. We should know by morning how many are left.
Resistances can be picked out of this tech table ....4990-5015-5070. Last support around 4920-4930.

Nifty Intra update.

Aggressive :- Exited @ 4992..
(I am off to attend some personal work) NO POSITIONS..

Nifty Intraday Update

Conservative :-
Shorts of 5140 Closed @ 4970(When spot moved below 4968)
Aggressive:-
Shorted below 5010 and covered below 4968NS (45 points)
Long @ 4970NF for a target of 5025-5050 SL 4967NF.

ORB recorded is 5012 - 4963..

Nifty Premarket view

Nifty is "Oversold" in the very short term. If it makes one more low, it will complete a 5 and we could confidently go long for a bounce.
OR it has done a 3 as in "a" and still it can go on a rally to 5090-5110 or more.
OR it may struggle to move up to 5050-5060 and crossing it to 5075-5085 and can come down for the 5th too.
OR it may get resisted @ 5040-5060 area and fall down to make a new low below 4968 and start rallying up from there.(Ideal, I prefer..)
And so many possibilities..Hence, it was suggested to close the shorts atleast partially in the closing hour. 5010 is crucial today..


Conservative: May book @ 5000-5010(optional) and reshort @ 5080 & above with a Sl @ 5125. OR simply hold the shorts.
Aggressive: Trade the 5010-5020 base to 5050-5060 or 5075-5090 move.(Trade Short below 5010).
All in all, trade light.. Below day's Pivot @ 5011, it will turn weak.
(I may not be available)

How to combine EW with macd

RENU asked about reading EW with macd:

Illustrated here with "IOC" & "Nifty" chart:-
(I have chosen IOC as it is not manipulated, nevertheless widely traded in its sector)
1. When the down trend is nearing its "oversold" &" public apathy" & "Panic" situation, you will notice a +ve div in the down move's 4th & 5th wave down OR in "b" & "c" down OR in "c4" & "c5", there by identifying the start of the 1 st wave.
2. First wave generally gets exhausted with the macd moving into +ve area and this can be fine tuned with the help of hour charts. In underperformers, macd may find it difficult to get into positive territory but moves closer to "0".
3. In the Second wave, macd moves back into negative once again. In outperformers, macd may stay above "0" but moves down closer to "0".
4. Third wave upmove takes macd strongly up to the extreme upsides. Then. in outperformers the macd may move down with prices continuing to move up and as the macd moves up again, prices move much higher. This is where the "novice" investors/ traders read the direction of the macd with prices quite literally and miss a huge upmove..Exhaustion in this uptrend can be gauged from the "gaps", "volume" as well as following the 3rd wave subdivisions in the "hourly charts".
5. Fourth wave moves become triangles to carry out time correction if the third wave was very steep and swift Or an alternation to the second wave(if 2nd is flat, then the 4th is zigzag and vice versa). In underperformers, the macd moves into negative while in outperformers it stays above "0" but comes well off its high reading to set itself for a negative divergence base.
6. Fifth wave or the "froth" or the "speculative move" will bring in mostly the retailers with a herd kind of move to new highs while the macd making a lower high thereby developing a negative divergence. In a strongly trending markets, the 5th wave gets extended with series of negative divergences frustrating the bears and confounding the bulls and the falls happen with a sudden reversal when complacency sets into bulls.
7. During the reversal, the first wave down takes the macd into negative territory and the second wave up into positive and the cycle repeats itself in the opposite direction.

Sounds simple..But as you watch the prices move on your monitor, you generally tend to forget all your lessons. Best EW practioners have "military discipline" in them..those who mean business ...be it in any phase/ aspect of life.
When a trading competition was held in the USA for EW practitioners, most of the toppers had military background which gave them the edge over others in carrying out the commands without questioning.
All the EW followers will admit that the most difficult part of EW practice is "to believe in what one sees" . Correct labeling of the charts once the moves are over for posterity is easy . Needless to say here that "you are right only when you make money" and that is "act when you should without questioning".

Strongest Dad in the World

How do you define a father? It's simple. You take Dick Hoyt's picture in the dictionary and let the rest of the world follow his lead.

I try to be a good father. Give my kids mulligans. Work nights to pay for their text messaging. Take them to swimsuit shoots.

But compared with Dick Hoyt, I’m lousy.

Eighty-five times he's pushed his disabled son, Rick, 26.2 miles in marathons. Eight times he's not only pushed him 26.2 miles in a wheelchair but also towed him 2.4 miles in a dinghy while swimming and pedaled him 112 miles in a seat on the handlebars -- all in the same day.

Dick's also pulled him cross-country skiing, taken him on his back mountain climbing and once hauled him across the U.S.on a bike. Makes taking your son bowling look a little lame, right?

And what has Rick done for his father? Not much -- except save his life.

Nifty weakens further with a negative weekly close.

NIFTY Update.

Close Shorts..Partially as market is not breaking 4984. Any close above 5000 may lead to recovery on Monday.

Nifty Intra update

At 2.51PM: SL for aggressive shorts @ 5020NS
*************************************************
Booked out of PUTS partially.
Only a trade above 5020 will give some strength.
Will add to puts above 5015 & 5040.

I am Back

A " 5000" close today will confirm a weekly sell signal.
So expect a good fight at "5000"...
Weekly fast macd is turning down with a severe negative divergence.
*********************************************************
I was disconnected for a while.

I am slowly buying some 5000 puts here. Upsides upto 5065-5070 in an ideal situation. How's the reality going to be..
Yesterday's initial lows of 5025 finding it difficult to hold..

Disconnected..!!

I generally put forth my views in my blog which many miss due to time lag or impracticality of refreshing them continuously. This might prove to be more efficient...

in reference to: Google Sidewiki (view on Google Sidewiki)

Nifty Intraday update

Nifty is trading way below its short term average(5 & 10DMA).
A small bounce may materialise if 5005 (Pivot) is held to target yesterdays high(5059) and may be a bit more.
Sell 5000Calls and short Nifty at that moment.
Aggressive can do a small long trade from here(5020) to 5059+. and initiate short at higher levels, when Europe gets into green.

Nifty Premarket View

As there is +ve div in 5 minute chart and "Oversold" status in Hourly time frame, a bounce will materialize with +ve world cues. One can go long as long as it stays above the Pivot @ 5005.
A likely range would be 5010/5025 to 5065-5085
Staying above the Pivot, Nifty would easily get to R1 @ 5042 with +ve world cues. But the crucial resistances will come in from yesterday's high of 5059 to 5091(supposed to be a "i"st wave bottom. If it clears 5091, then Nifty is doing an "abc" correction with "b" targeting 5110+ before falling further down in "c".
Closing below "5096" will keep the weekly momentum down and bears active into next week. Only a close below 4997 will be a major weekly "SELL" for this friday.


"Yogi" asked about Trendline(I missed your last comment): Software will accept all the freak quotes and hence it is possible the trendline in them could be different. I upload my data manually and all the freak quotes are deleted to get a correct view.
Square or rectangular??. I did not get that. But suffice to say that trendlines are those that connect critical pivot lows or highs. They are valid as per the time cycle price moves and lose their relevance later.

Nifty breaks the major trendline supports

Sujit asked about "Options": Play the options the same way you would a future with the exception of the "sentiment drive".
Buying options are good during trending times (like from "Mahurat day", when the "top" & "a reversal" was anticipated) as well as during the last 5-8 trading days of the series. "Sentiments" drive the option prices faster than the index at certain key moments and one need to take advantage of such price extremes.
If you have a target price, book out of your options promptly.
"Patience" too play a very vital part in maximising your returns.

Mayur asked about "EW" anamoly in Banking stocks":- I have just posted an elaborate reply with many charts in my "Stock Blog".
http://wealthinnifty.blogspot.com/2009/10/banking-stocks-bogus-last-rise.html

We have broken below a major trendline in a very decisive manner. And presently closed below the likely "5-week ema". The last support visible is around 4900 - 4935.
Nifty need to break soon "4935" for a faster retracement to confirm a strong reversal. In the best positive scenario, Nifty may attempt to go between the last two highs <>.
There is some positive divergences in the 5 minute chart which can give a small relief rally. For more sustainable rally, hour charts should develop some positive divergences. Until then more lows will be seen.
From the Pivot table, R1 @ 5042 is a logical resistance if it trades above the Pivot @ 5005.