Wednesday, October 21, 2009

Price Discovery @ Higher Levels

Hi,
So finally we retraced back on 12 Oct levels from where we took off from previous range. As we are inching higher and higher we are witnessing a decent amount of profit booking and that is how we discover Price. As of today we are in between the two trading range so cant say decisively that we are back in previous range or not, but past price action completely warns out for carrying shorts for more than 100-150 points. In my view 5050 will be important level to watch and I hope there are fair chances of bounce back in Nifty. If we still linger around 5050 level tomorrow then we can think of 100 points downside from there coz on such gaps there's always some 100 points game to be played on. So lets hope for another interesting morning for some big action and swings.
till then....
Happy Trading!!!

Wednesday, October 14, 2009

Breaking Out in New Trading Range

Hi,
Its cracking Diwali time for our markets as we broke out of range today. I was expecting a decisive close above 5040 which is indeed a crucial level posted at 16th Sep(5030 +/- 10 pips) as well as in last post worked!! and we are ready to trade in hopefully new territory.
See charts how we traded in last trading range....

Now for tomorrow we can see some downside retracements below 5100 which will be best entry points for longs also half yearly results season is also there so me may see some volatile moves typically in Indian style. Upside targets are already mentioned in 16 Sep post hopefully with help of positive global cues and earning season may drive us to new highs.
It will again be premature to guess the high of next trading range but as my upside targets are quite near I'm estimating that we can hit the new top of this trading range to somewhere around 5220 and then we might see some consolidation from there. (projections are based on the assumption that we have left our earlier trading range and heading for the new range)

Hope you loved reading it.
Happy Trading!!!


Thursday, October 8, 2009

Grand Levels - Scenario Building up for BO

Hi,
Today we hanged most of the time above 5k and amazingly closed above 5k too as per adjusted closing!!!!


Morning we got a nice pullback exactly around 4980s levels as suggested in last post a perfect V shape reversal that I expect from my calculated support levels. The most painful thing for bears is that we closed above 5k which is quite surprising. Falling levels did tempted to give a buy but its not quite wise to go against the trend but as things pans out in evening jobless claims data of US is amazingly positive and hopefully we can see a nice rally in the morning trade tomorrow. Any closing above 5040 levels will take up Nifty to some new untouched levels for this season so watch for that.


Hope you liked reading it.
Happy Trading!!!

Wednesday, October 7, 2009

Alternative Scenario - Bullish Breakout

Hi,
For a while I do started preparing myself for upside breakout as its a bit questionable whether we are having a so called long awaited healthy correction or not. When it comes we will see but for the time being it will be wise to prepare bullish opportunity which may be in near term on charts. In Chart below there are possible S/R lines for this setup. Clearly on charts bull backs are quite strong from sub 4950 lvls.



Well here are some buying points, if u do get V shape reversals from these points its a great killing opportunity. If one lvl fails reverse ur positions and target for the next level. (Levels are drawn keeping in mind bullish breakout scenario)

1. 4980 (which was my todays buying point)
2. 4955
3. 4880
Target of this bullish scenario, upside of this trading range.

Wish you all the best with levels.
Happy Trading!!!

Monday, October 5, 2009

Grand Levels - 5030 Break Out Still Bias is Bearish

Hi,
Yes we did broke out on the upper side of full consolidation day but its hardly 50 points above the crucial lvl which suggests so far that 50 point filter should be placed for both side. Clearly on charts trading range was completely stalled and we consolidated again full day on 1st. Now too much consolidation in such short range makes this bull run a bit questionable and gives more fuel to the argument that rallies at the top are steeper. Again consolidation were with low volume and huge divergence in RSI clearly indicating weakness (see the chart).

In my opinion what we are witnessing is sort of steeper moves. Last two trading sessions at SGX again have given sub 5k lvls closing which can be turning points of this rally. Now it will be interesting to see if in the morning how low we can manage to open and how bulls will be reacting on any kind of gap down which is a quite a rare thing for a while.


Hope you loved reading it.
Happy Trading.

Tuesday, September 29, 2009

Grand Levels - Full Day Consolidation

Hi,
So we broke out of symmetric triangle but cant get its break out target and ended below 5030 which shows quite a built up of pressure or in other way it may be a massive move upwards. Anyways levels hold the same for me in my first post. Today nifty had quite a choppy day and traded in the range. As per me it still looked weak(you can think other way too) but a breakout of this range can give the future direction. Interestingly if our market had traded on monday we could have seen near 4900 lvls which could have given us a nice trade.


By rule one must be cautious of this gap up. In morning I wondered that we may not be able to fill the gap today and it turned out true but still we got one more day. If we are really weaker we must close the gap or else further bias will be upward. Lets see how things pans up. Till then....
Happy Trading.

Friday, September 25, 2009

Grand Levels - Setup Holding As Expected

Hi,
If you are tracking the lvls closely setup is doing great and we got all the tailed closes of candles(10 min) throughout the day at 4980. At 1 pm got whipsawed with one big green candle which indeed shooted 14 points from the resistance levels but again got back in the rang leading to another downside fall all the way to 4940. Now with these setup one can trade this interesting symmetric triangle breakout which can give nice directional move.

So as per symmetry too 4980 will continue to hold good resistance and downside targets are getting very much possible as we are getting interesting signals throughout globe if fundamentals are things too go by. Anyways I would love to go by this setup as it is not satisfying all the criteria for a decent downside rally.
By the way in last post I told you about banking sector giving support to this rally and today banknifty movement indeed leaded nifty movements. So one more tool which is giving nice symmetry to the nifty apart from symmetric triangle and ofcourse this whole Grand Levels Setup which I'm trading now.

Hope you loved reading it.
Happy Trading!!

Thursday, September 24, 2009

Grand Levels - Updates

Hi,
Grand fall continued and got a nice pull back at the gap area though haven't completely filled up.
Now interesting part is that we managed to closed above 4980 but at the same time we are very close to these level that I can't decisively say that its end of the corrective wave. On open interest front we have seen nice addition to the 5000 call which again convince that we may plunge again. Odds are banks are supporting this rally (thnx to mayur for bringing into notice and watching bank nifty in the morning helped a lot to cover positions) but evens are that reliance and crude is looking quite weak. So keeping fingers crossed price action around 80s lvl will decide the game so watch for it. One more imp thing is we are stuck at 61.8% lvls which is a game changer in such kind of moves.
So to play positional long we must close tomorrow above 76.4 lvls. Till then I'll keep my bearish strategy on and look for price action.

Hope you liked reading it.
Happy Trading!!

Grand Levels - Snow ball started

Hi,
Last night was again a thriller as dow tanked 9900 after fed announcement which almost choked my heart but in a very dramatic way crude plunged and dow closed below 4750 which assured me abut the snow ball effect.


See SGX quotes above Made a high of 4980 exactly replicating lvls of crucial reversal by me in the last post. Now that gives a good sigh and relief for the time ahead and lets hope we roll further in this snow ball.

"Life is like a snowball. The important thing is finding wet snow and a really long hill. "
Warren Buffett

Hope you loved reading it.
Happy trading!!

Wednesday, September 23, 2009

Nifty: Grand Fall - Grand Lvls

Hi,
Today is been a thriller day as huge unwinding of 100 points is seen from the Grand Lvls. Last night as I got no signs of weakness across the globe and morning was also a mix bag too. And that gave full control to our traders to actually go ahead and decide their positions and as expected snowball effect worked well in the last hours. Interestingly the fall gave some good clues about the further moves.


With Huge fall 5000 put open interest decreased 1825750 indicating that tomorrow expiry got to be way below 5000 on volume front Nifty future declined with good volume. It gone through tight consolidation with quite low volume and gave a nice breakout at last.


As I call this a Grand lvl in last two post now I can say that we have entered into a nice corrective wave and retracement to the upside should be carefully looked for. For a while a decisive move above 4980 will prove to be a whipslash for this wave which I am looking for(don't confuse it with elliot wave as I'm using wave in conjuction with a particular fibonacci setup which is under testing in this wave). So Price actions around the said levels will be interesting thing to watch.

Hope you loved reading it.
Happy Trading.

Tuesday, September 22, 2009

Nifty Testing Grand Levels

Hi,
Well its quite premature to call these lvls (5030) as grand but instincts and calculations still convince me that there got to be major moves from these lvls, only thing is that I don't know the direction of the flow.



See the above chart price action was almost exactly as expected from a decent resistance/support. Today we got tailed kiss to the resistance lvls and we managed to close 20 points in the ending, but catch is that adjusted close moved nifty to 5020 and at the time of writing this post still no solid signs anywhere to confirm any big grand move. Only reason which I can put in mind is some unwinding of positions which may result in some snowball effect. Anyways it will be interesting to watch price action in the coming days.


Till then.....
Happy trading!!!

Wednesday, September 16, 2009

Long Time No See!!!

Hi,

Its been a long time which put me away most of the time from trading and ofcourse blogging. Now finally resuming my active Nifty trading. Nifty movement have been quite interesting now a days. I all my posts I've had a bearish bias coz of my resistance lvl 4700 breakout of which told me that in market you got to consistently update your view with changing situation. As a trader one should not get attached to lvls. To be honest my bearish outlook changed once a while way before 4700 when iip data came and beat most of the lower estimates by quite a margin but that time china bear wave hampered my view and I continue to hold my bearish view till 4740 got breaked. I was so bearish that I didn't participated in further rally and was a silent viewer.


Well now I'm back again to plunge into the Nifty:). Going through the recent developments sentiments and fundamentals seems to have joined their hands together. Now for Nifty I've planned to move with open mind as correction is due but nobody knows when. For upside I've two lvls and price action around these lvls are extremely important as they may act as support and resistance for the rally.

First lvl is 5030 +/- 10 points.
This is my one of the major lvl can say like 4740 we can either get a corrective wave from here to all the way to our earlier support of 4740s or we can further move to next lvl.

Second lvl is 5330. Now this is the second major lvl if we can get past 5030 decisively.

So not claiming anything anything as usual just watch price action at these lvls. I'll keep posting charts and lvls further.

Happy Trading!!!


Thursday, July 30, 2009

July Expiry - Nifty giving 261.8% retracement of H&S

Hi,
Sorry for very delayed posting. Actually was doing a lotz of travelling now a dayz n secondly doing a lotz of trade in stocks. So these 2 lotz of things kept me away from posting blogs.
So will start my new sessions with nifty and stocks as well, will try to experiment some new things this time so please bear with me.
Okzzz about todays expiry its a lotz of fun like every time. Volatility is seen as market moved like a pendulum this time. Interestingly Nifty giving a perfect Head and Shoulder target of 261.8% retracement. Obviously fibs lvls were worth watching as on closing it gave reverse retracement lvls approx to 100% lvls(see high of candles).



Now about Nifty my views are same as they were before going above 4500-4700 is very unlikely. I see current rally as consolidation and nothing much to predict. I see it as failed double top on EOD charts, so guess what would be the target will be :)
Hope you loved reading this small post.
Happy Trading.


Wednesday, June 24, 2009

Still No Signs of Releif

Hi,
Things are almost same and nothing has improved so far. Global scenario is dicey and no clicker news so far in domestic front to move the Nifty up. Now for the downfall I'll keep posting my lvls. Down trend is still intact despite a quick move by nifty yesterday (I see it as just a technical pull back and no resumption in the main trend which was or say is up). As long as our Index stay below 4300 we can get further targets of 4050-4080.

Oh well about the 23.6% retracement I think it is itself taking its last breather. Since it is out in a big way through ET, I hope it'll not work this time (huh thtz strange logic from my side). Ok honestly we got a shadow on 23.6% retracement which breached it quite well but as per my new studies the game is over. Nifty is moving quite well in a well mannered downfall following some different rules of the game this time(will tell you only lvls this time) and if it moves further in the same trend which I wish will hold should give us near 4000 lvls this time. BTW yesterdays low is definitely a big problem for the downside lvls. once taken out it will be Eureka!!!!

Hope you loved reading it.
Happy Trading.

Tuesday, June 23, 2009

Finally Reversals Everywhere....

Hi,
So far most of us are waiting for the confirmations whether the current downtrend is actually a kind of retracement or reversal. Yesterday I read an article http://economictimes.indiatimes.com/Features/Investors-Guide/Nifty-Can-the-tough-get-going/articleshow/4685600.cms?curpg=1 by ET which gave arguments of DMA and Fibs Retracement martix by bloomberg for the Nifty support which coincided with my 23.6% retracement posts earlier. Now surprising thing is that this time 23.6% retracement is most likely to break as our exchanges are linked with global indices.

Earlier in my dow jones related post I've given 500 points range as a benchmark for accumulating pattern for Dow which moved it in the same fashion exactly for 4 times starting from 7500, it has moved in four waves of 500 points each and finally coming down yesterday by breaking 8500. Also it failed to make range high of 9000 which was beleived to be a major resistance. Now its subjective to say that dow has broken its 500 points range and its a reversal, but yes range breakout can be seen as first sign of reversals, finally time will tell that it was a deeper correction or reversal.

Back home Nifty also seems to breaking out. As on Monday it failed to stay above 4300 our benchmark lvl for upmove and closed to the crucial levels of 4230's which is indicating that this time it is going to breakout.



It might be too early to say that Nifty is heading for break down as some are likely to be looking for budget which is expected to hit market by 3rd of July but still kind of volume, patterns and global indices are showing signs of topping out. Remember in last post I was waiting for the signs from Dow for concluding to have a call for retracement or reversal. So we've seen this weeks starting with dows cracking and Nifty hangind out at crucial 4230 lvls. Now if it breaks this time decisively (you know wht decisively means :) ) we can very well see sub 4K lvls soon.

Hope you loved reading it.
Happy Trading.

Saturday, June 20, 2009

Nifty:Retracement or Reversal....


Hi,
Game is still on between bulls and bears. Still can't decisively say that these are just retracements or reversal signs. But yes in short run we had an intermediate bear run from 4700 to 4200 approx means 500 points rally. This may turn to further weakness below 4200 if broken but on weekend it managed to stay above 4300 crucial mark indicating bulls have something for the next week.

(PS: basically what I mean by support n resistance is that you get wick/shadow or body bounce of 10 min candle from your lvls, not all the time u get lvls exact but if you are lucky enough to get then always go heavily for it as I do....this is the first test of support/resistance calculated by any method second test is that if support broken it should act as resistance on the respective time frame) hey btw please add your observation too in comments, will be glad to hear that coz i love experimenting and may be i can add something to your methods....so what r u waiting for make it a two way process...

Ok going by last post we have 2 swings from 4300 support of 50 and 70 points each. But nifty couldn't hold 4300 long and breached the support to test next support of 4230. See charts 4300 support acting as a resistance when broken. I loved trading in this range. Honestly most dramatic move was on last hours of Friday. It breached 4230 but couldn't extend further losses and later in the last hour we get a body bounce from exactly 4230 lvls which broke 4300 on upside and also managed to close above it. Now sometimes these are the crucial swings for a day trader like me as it is hard to decide if support/resistance is taken out or not. But if u can observe the charts closely then u can see that once a complete 10 min. candle leaves crucial lvls(i'm talking about support n resistance lvls be it fibs, pivots, moving avg or any other) then most likely it will trend in the direction of candle. Its not exactly some thumb rule but just an observation :) use it at your own discretion. There are many methods to avoid whipsaws like filters but I would like to keep things as simple as possible.



Interpretating above charts if Nifty successfully holds 4390 and reverts back then this time we can head southwards and can break recent lows. I'm just experementing with lvls on both side but yes if it goes in this order its a sort of reversal for sure.

Nifty Retracements

Here we go once again. Everytime when candles around 23.6 retracement people doubt this time its going to break down. My say is that even if we get one more daily candle in upper direction we may see a new high!!! Everytime its V shape recovery from these fibs lvls. Lets see how long can you hold Mr 23.6 (ha ha)


Hope you loved Reading it.
Happy Trading.

Thursday, June 18, 2009

Nifty: Retracement or Reversal continued....

Hi,
Interesting Nifty is giving frantic moves in June too. So in the last post 4300 lvl was being eyed by me and we did retraced to a low of 4332!!. Downfall was imminent but such a fury was a rare moment of delight specially if you are prepared for shorting.



Now Nifty has duped many with such moves earlier too. So continuing this Retracement or Reversal thread further(btw a retracement is a profit booking percentage before moving further up and reversal is all you know i.e discontinuation of previous trend say for long or intermediate term.).

Sooo here we go. Today of 18th June watching market would going to be very interesting. I'm not jumping into any conclusions (anyway why I need to). A pull back is well expected and pullback got to be in order 4390 - 4410 - 4450. 4460 Being the maximum pullback and current falling should resume if we go in ideal step by step breaking down.

Now I know things never go as expected falling is clearly on the cards so traders can pull market further down which can be a possible scenario so 4300 is last resort and if taken out we can well se 4230 as a place to stop and reverse.

Bullish Scenario: I'm not ruling out my 20% retracement rule which constantly proved to be best buy since this rally started just check out past charts for the performance of this rule. Bulls may take sub 4300 lvls to use buy on dips and we can see a fabulous pullback. Remember Dow is too at its crucial support of 8500. Now Dow did managed to breakout 8500 lvls and managed to stay just on boundry line last night. So we are on the verge of breaking out or resuming to uptrend (50-50 chances for both).

Anyways logic says that we must pull back above 4400 and see how market reacts further as last hopes of bulls i.e budget will keep bulls busy as I said in last post and who know bulls will be waiting in the bushes to attack bears anytime......

Hope you loved reading it.
Happy Trading.

Tuesday, June 16, 2009

Nifty: Retracement or Reversal

Hi,
Its been days since I last posted. So once again Nifty formed a new high and again it is heading for some 20 - 23% odd retracements.

Now around 4500-4700 is a quite expected zone for correction for nifty as per most of traders(as if I knew most of traders....just kidding), reason being stocks valuation being too high. One more reason is that most of the big events internally and externally are over. Budget being one of the hopes for bulls which is keeping them busy but besides that I don't think there is any reason to buy at such high valuations until and unless we can see some confirmation from the side of quarterly results.
So if its just retracement then we must buy near 23% fibs retracement if budgets are anything to go by.

Now talking about second possibility there are signs on charts about the reversals(yeah I knew earlier signs have failed). Interestingly this time fibs retracements or waves are moving down in a pattern which confirms reversals. So if we consider the second scenario that its a reversal or minor correction then Nifty should not breach 4535 to 4550 on upside and should continue making lower highs. For an intermediate term it must continue this correction atleast till 4300. Breaking further will validate the bigger correction of this bull rally.

Hoped you loved reading it.
Happy Trading.

Friday, May 29, 2009

Flavour of d Day - Divergence in Nifty

Hi,
Today Divergence was perfectly spotted in Nifty. Best indication was on 1 minute charts. I'm posting both 1 min and 10 min charts. Its unusual for me to post my day trade Nifty charts but I still felt like posting it.....



Its amazing, charts can be traded in 'n' no of ways you just have to focus which technique to apply when. Patience and Discipline and results will be definitely yoursss.

Hope you loved reading it.
Happy Trading.

I wish I could Trade Dow Jones!!!

Hi,
Its been quite a long time since I posted nething about dow, but I confess I love dow and sometimes I wonder trading in dow would have been much easier than trading the dynamic and volatile Nifty. Honestly speaking I've been watching dow since a long time and my trade setup and technicals work perfectly with dow(ha ha when you paper trade dow you always claim big things like this). Ok jokes apart, watching dows movement is quite crucial for every world market as per my beleif its one of the leading indicator. Now the scene is dows movement are quite steady and working perfectly. I'm a big fan of Dows theory and Dow Jones, and I really mean it. Every t.a(technical analysis) technique has it roots linked with Sir Charles Dows theory, no doubt in that. Last post http://niftyswings.blogspot.com/2009/04/dow-jones-in-sync-with-dow-theory.html where I tried to reason out accumulation phase of 500 points range worked well. Again we are trading in the same kind of scenario. See the chart:

Amazing isn't it. Give me a break plz I want to trade on Dow............
Uncle Sam could you hear me!!!!

Hope you loved reading it.
Happy Trading.

Wednesday, May 27, 2009

Expiry Fest Again!!!!

Hi,
As promised back on the verge of expiry. Hey by the way nebody gone long on Tuesday. As I was expecting in the 22nd May post link market did retraced to 4100 line!!! actual low being made was 4092 not bad at all.


Well upmove got triggered on the note of FNO expiry and US market screaming enough of profit booking as dow shot overnight(honestly nobody can catch gap ups but yes I kept guessing as our market was nearing 4100) . As I was expecting something strong by govt but all we got is a note by our FM.

"Finance Minister Pranab Mukherjee today said that a sustained stimulus to economic growth is possible by next round of reforms. He said reviving growth momentum is a top priority for the government adding that fiscal prudence will also be kept in mind.

Mukherjee said the government will stick to fiscal deficit target of 5.5% of GDP in the current that ends on March 2010 (FY 2010). He said the government is committed to fiscal consolidation in 2-3 years."

So tomorrow is the expiry and I hope another 100 points rally is on for us. Anything above 100 points will be a fun watching also it will ensure that I win prize of guessing closing nifty lvl of May on iCharts ( ha ha winning is a real fun, its more than money for me).

Hope you loved reading it.

Happy Trading.



Monday, May 25, 2009

Me Off 4 Sometime......

Hi,
I'll be off from the market for some coming days due to some consolidation sort of things in my life(he he). will definitely join you probably at expiry of FNO or in June. Till than wish you a Happy Trading.
C ya.

Friday, May 22, 2009

Retracement Game Again!!!

Hi,
Everytime we make a new top everyone knows we go ahead for retracements. So we are heading you yet another retracements which as you know I always take lows from our historic body low of candles. This setup is again amazing and is giving retracement around 4050 lvls. Hmm so I guess we may see 4100(4100 being a long support line) to 4050 range for the coming days and that retraces our Big Gap up candle by nearly around 50% approx, not bad for profit booking after all Indian investors are getting chance to have some relief after a long time( One year a long time??? ehh) neways they might not be getting the stocks which are valued at 21 k historic highs but still some bottom fishing must have given them some averaging sort of things. All in all coupled with weak globel cues and still some time to form a government 4050 is not so far. Our Dow Jones too falling in a 3 days loosing streak so things are perfect for retracement untill some anouncements from government cheer up the market and may trigger some buying.

Hope you loved reading it.
Happy Trading.

Wednesday, May 20, 2009

Nifty Swings - Day Traders Delight

Hi,
So Tuesday was definitely the day traders delight as Nifty gave the wildest swings in the day giving almost 100 points in each swings and generating the largest turnover ever in the history. Nifty seems to be making all the records this may thatz why I said earlier its Heated and Promising May.
One more history which was repeated and was obvious too was its retracement. Read the post below I gave a 20% retracement rule ( sorry I couldn't gave example of what I was explaining earlier due to time constraint) which gave the perfect entry point to go long when Nifty opens with a big Gap up.


Its interesting to see if we could again get close to our perfect entry point again or not. Till then we are in may and its still heated and promising as well.

Hope you loved reading it.
Happy Trading.


Monday, May 18, 2009

Elections Results -- One of The Biggest Event in Our Markets History




Hi,
So Nifty is all set to make new records on Monday the 18th, afterall a clear n favourable verdict is there after a long time in Indian history. Targets like 3800 or 4000 looking very much achievable in this leg of bull run. Interestingly it will be dows turn to take cues from the Indian market on Monday as Dow seems to be stabilizing around 8500 its short term resistance line. Post election rallies historically are one sided and it will be interesting to see how much buying frenzy of people can be seen on Monday onwards. Opening targets of Nifty are guessed from 100 - 200 points. I'm expecting the opening gap up around 3800 lvls. It will be crucial to day trade after such a huge gap up coz most of the cream will already be taken up in the Gap up, but for further trades one got to look for some retracements lvls. As seen in all the similar gap ups Nifty alteast retraces (from the bottom to high of the green gapup candle) 20% approx. It may do the same today as well as selling at higher lvls can be seen in the market.
Road ahead will be guided by the momentum indicators. To keep the guesswork going before the opening how much Nifty will rally post Monday is quite crucial as Global Indices are slowing down and going into technical correction mode. It will be interesting to see either global market taking curs from Indian market and resuming their uptrend or our market correcting around 4000 or 4200 lvls. Lets hope we manage to decouple for sometime from the grim scenario and can set new records for our dear Nifty.

Hope you liked it.
Happy Hunting For Coming Dayzzz.


Wednesday, May 13, 2009

Butterfly Strategy - Rewards 4 No Movements in Scrip

Hi,
Options r the wonder instruments when it comes to stock. Strategies can be best worked out for Stock options given they got to be liquid and values are fairly priced for itm and otm options.
Among many strategies Butterfly is one of the beautiful strategy which gives maximum returns with minimum investment provided you know the range of the stock and at expiries it gets trapped in that range. The second beauty is that both extreme sides risk are limited. See how we can work it out:

Butterfly in its pure form can be designed by a simple thumb rule.
1st: Make sure you know the range of the stock.
2nd: Strategy is designed for expiry(u can square it off if u r getting better returns but tht too will happen near expiry)
3rd: Make sure you buy and sell options at fair prices, coz at times of day they are priced at weird prices which can upset ur butterfly setup.

Strategy is simple when u r expecting a stock in the range note down the extreme range which u r expecting at expiry. Now you have to sell 2 At The Money Call/Put, Buy 1 Out of the Money Call/Put, Buy 1 In the money Call/Put.

Here is the live example of DLF. I'm using butterfly expecting price will stay in the 210-250 range. Current Spot rate of DLF is around 235.



I'm making Butterfly strategy using puts, and same can be made through calls too.

Here:
At the money put will be 230 P.A.
Out of the money put will be 210 P.A.
In the money put will be 250 P.A.

Imp: Here I've selected 210 and 250 in anticipation that range till expiry should be within these two extremes. So you make a killing if it stays near your At the money put which you have sold.

Calculations:

Sell 2 ATM put of 230 strike: 2*22=44 ( You receive Rs 22 per lot, lot size of DLF is 1600)
Buy 1 OTM put of 210 strike: 14 Rs ( You pay 14 Rs per lot)
Buy 1 ITM put of 250 strike: 34 Rs (You pay 34 Rs per lot)

So your net investment is : 34+14 - 44(tht u received by selling put)
Net investment comes to Rs 4.

Now your payout on expiry:

Payout if DLF trades at 200 Rs. ( here is the problem coz it moves out of range.)

On OTM put 210, your profit will be: 210-200=10Rs
On ITM put 250, your profit will be: 250-200=50 Rs
On ATM put 230, your loss will be: 230-200= 30Rs*2= 60Rs.
Overall P&L=60-60=0
So overall the loss will be of the net investment of Rs 4 you made.

Payout if DLF trades at 220 Rs (now you are in the game, scrip is trapped in your range)

On OTM put 210, your profit/loss will be: 0 (all puts below the spot will be zero)
On ITM put 250, your profit will be: 250-220=30 Rs
On ATM put 230, your loss will be: 230-220= 10*2= 20Rs
Overall P&L= 30-20=10Rs

Net profit will be 10Rs - 4Rs(initial investment) = 6Rs.
1600*6=9600 on an investment of 1600*4=6400. Coooool isn't it.

Likewise you can calculate payout at every level in advance like at 230, 240, 250, 260.
You will notice the nearer the price stays to your ATM puts at expiry the more profit you'll make. Exciting thing is your investment is very low. While making strategy you can fine tune the rates of buying and selling puts during trading hours. You can make the same butterfly with calls too. See the problem in making strategy with call. In chart above 210 call is highly priced at 45 which can upset your whole setup. Ideally that call should be priced at around 30-33 Rs.

So one can make a killing if price stays very near to the put/call which you have sold. Optimum results can be achieved at expiries.

Hope you loved reading it.
Happy Trading.

Monday, May 11, 2009

Nifty in Correction Mode!!!

Hi,
So we all started on a sentimental note and it seems we are correcting again on the same sentimental notes. It may be too early to say that the top has reached coz I, like many had upper side targets of 3790. Till elections nothing can be ruled out, upside tgts are very much possible but Nifty is showing for the first time real weakness. Clearly on graphs weakness started on Friday, but since we are in trading range hopes were alive till today for pullback. But todays last moment touching of 3540 and a very weak pullback confirmed that for the time being bullish hopes are out of scene.

Bullish market has always been range bound breaking its range with amazing gap ups or fierce rallies. Similarity during these range is that they never breached their 200 points trading range on the downside.



Now for some time the range has contracted clearly, giving 100 points range(see the rectangle for 100 points range), and thatz the first signal for weakness (completely ignored by me). New thing this time is that earlier there was buying at every dips but today only nobody was buying at dips which is quite clear at the closing time of Nifty. One more point to notice is that range is always broken by either through gap up or through big green candle. This time we got big red candle breaking up this 100 points range.



Fundamentally speaking there was nothing wrong in todays market, we got a firm opening in cues with asian market. We got positive news for our two nifty heavy weights SBI and ICICI Bank which holded Nifty initially but lost due to heavy selling pressure. Only negative today was Dows future trading 90-100 points discount. Now this happened earlier too, but this time its purely sentimental may be because of election worries or traders not willing to give more premium to stocks at current lvls.


Interesting Gap Filling Coming Up

Trading Gaps are always fascinating and this time we got a big gap to trade. If you are familiar with gaps than you must know that Gap are excellent support. Gaps are never penetrated, and once if their range is touched then Gap filling is for sure, n thts what was seen at todays chart.


Red rectangle above is touched by todays candles and day closed very close to the Gap indicating that high probability is there that we can fill the gap tomorrow. Generally it is seen that price either reverts completely from the gap or fills it in coming sessions. So its a high time trading this Gap either we see a complete revert( most unlikely in current scenario coz we got enough time today and couldn't revert) or a complete filling of the gap. So a complete 100 points game from here. Btw Gap target is 3480.

Scenario 2

See current down surge is just due to hopes that lvls are highly overbought or at a very high premium. Nothing major has so far hit the market. Infact U.S jobless data has shrunk a bit and other stats are positive too. Coming to our Indian market picture will be clear by 17th of May and we might see some stable government coming into power which may lead to a surge again. If that will be the case then we are most likely to find support somewhere around our favorite fibs lvls. Also Nifty got a track record of finding support @ 23.6% retracement lvls (chk earlier posts), this time it can find support at the same lvls(its highly subjective but true so far, also fibs are one of my best lead indicators). And if you are some hardcore bear then for your kind info if Nifty retraces to a greater extent without any much fuss or major bad news, then it may find support @ 3280 which is the next fib retracement lvl or @ 3300 which is major support. One more interesting support might come from Trend Diviation signal line @ 1. On smaller tf TD has broken its signal line indicating weakness, but real test will be on daily charts, will be interesting to see in the coming days.


Hope you loved reading it.

Saturday, May 2, 2009

Heated May!!! Volatile But Promising

Hi,
After we are done with our FNO expiry successfully on a bullish note, May is definitely a month that every trader is eying for. Now for May I'm surprised to see some bearish day dreaming. Seems like people are obsessed with shorting and everytime when market takes some breather or reacts to short term global cues for downside they got caught in the feeling of de ja vu. But the thing is that markets are not the same everytime. We've seen last quarter results they are almost the same or rather I see them improving, but the major weightage that market takes while determining prices are sentiments and this single factor is ignored by majority of us. Now if sentiments got some solid backing they become market drivers for the time being.

An extract from ET which I'm quoting here coz it looks more convincing to me:

"India’s chief statistician Pronab Sen said, “Keeping in mind the fact that a majority of the corporates have only deferred their investment plans and have not scrapped them altogether, I would say that if the global scenario improves, the growth rate in India will pick up at a fast pace.”

Going by a survey conducted among manufacturers, industry bodies like FICCI too share the optimism. In the current quarter, prospects look better for the Indian manufacturing sector, with six out of 12 sectors likely to witness positive growth.
These are textiles, metals and products, machinery, cement, FMCG and miscellaneous industries.
You can go through the article here



Above chart of Nifty suggests that this time there can be a possibility of breaking out of this range. Now most of analysts are arguing that we got a very stretched rally and it needs some correction. Really? On charts we have spent 13 days call it a breather or correction in the range of 3300-3500. Now assuming that we have formed a base in this range and scenario is bullish chances are fair for breaking upside given quarterly results of corporates are satisfying and global cues are supporting there is no reason for a emerging country like us going back to our month old bearish range of sub 3100.


A look at recent charts of DJIA gives fair indications that despite of their banks put through stress tests market is not willing to leave its 8000 marks rather we've seen surprisingly solid attempts to breakout upwards. The results from stress tests of the 19 largest U.S. banks are expected to be released on May 7, till than we can see the DJIA giving nice moves on both side, but looking at charts it seems that that banks are going to pass the stress :) Have a look:



Gold an Inverse to Equity



If we have a look at last quarter or the above 60 day gold prices clearly we can see that it is inversely related with equity or say people are parking their fund into equity by pulling out from gold. Atleast for the current scenario it holds true as exchanges are rallying upward nobody want to be left out. Lets pray gold dips further below 880 to keep bullish ticks alive!!!

Crude Bottoming Out


Crude is one of the major indicator for the world economy's health. Why? coz we can easily relate economic activities more better now than earlier. Analogy is simple major production activities are carried out on crude be it production or transportation, so if countries are really producing anything and trading their goods crude is the thing which they definitely need. So keeping an eye on crude if economic activities are beleived to be resuming we can see the demand of crude spike up in the coming months.


So finally Election season is ending in the May. It is interesting to see how much weightage does our stock market gives to it. Definitely untill results are out things are going to be volatile and money can be made in this 3300-3500 range through straddles. Keeping the scenario that we are again going to have an unstable government downside range can be fairly shifted to 3150. Rational being that if world economy is consistent enough, in no way we can go back to sub 3100 levels afterall it is unanimously beleived that whenever be the next bull run BRIC countries will be first to witness growth. So discounting the results of coalition government we still be in bullish channel. As per me a complete set back to bearish level will be in scenario if we fall in line with global indices and slump below 3150 level. That time will be interesting to see - "Abandonment of Hopes". Till the its wise to ride on Slope of Hope.

Hope you loved reading it.

Tuesday, April 28, 2009

Trend Line Shifting Continued......

Hi,
So trend line shifting is one of the nice concept seen at every exchange, be it Nifty or DJIA.
Shifting rules of trendlines are quite handy. You just have to take into consideration 2-3 broad parameters and you'll be done.
1st - You got to know which phase of the market we are in. Like talking about Dow its in the phase of accumulation and after a sustained bullish rally it is seen in the range of 78-7900 to 8000-8100 range. Now point to note here is that when an index or scrip rallies so much it needs to take a breather, so it continues to move upwards or stays in broad upward channel but shifts its bullish trendline to a bit on lower side. See the below chart:


2nd: Its strange but true when everything is going fine bad news eventually fades. Now once we are on bullish trend you'll hardly witness any major blows anywhere in the world. So Indices stays in profit booking sessions and its the best time to mint the market as you can easily make bucks simply by keeping up with the range created by market trading on either side until the major news or event occurs which might shift trendline upward or downwards.

3rd: Shifting trendline is easier and quite obvious through charts. Once the market corrects intraday let it reach its downside limit and once it makes two consicutive higher lows just draw a parallel line which got to be in sync with the previous upside trend line. Same thing holds true when we are in bearish market.

Minting is an Art:
As I said above if you know which phase of market we are its easier than ever to mint money. Here is the intraday chart of 27th April - part of the 5 day chart above. Once you know the range techinicls will help you in minting money. Only you need to be in frame of mind that market is not going anywhere and you know what is happening (easier said than done but its true!)

Note: same concepts can be applied in our loving Nifty too. :)


Hope You Loved Reading It.
Happy Trading.

Trendline Shifting - DJIA

Just a chart I drew in free time but real time. I call it trend line shifting :)

Friday, April 24, 2009

Perfect Reversal - Market Beating Expectations


Hi,
Yesterday was a day of strong trend reversal beating most of the technical charts and theories. Market has proved again that it indeed relies on sentiments than anything else. Market opened with selling pressure which was in line with global markets as usual and at one point it seemed that it may retest 3300 support. But as the good winds kept coming throughout the day market never looked back those lvls even for a minute. A good point to note that we didn't had gap down on the first case which gave the first bullish notes and as the market has done previously a thumb rule can be made - That when market is in bullish channel and having good winds any hint of good result can drastically change the direction of market. Same rule can be applied when market is in bearish channel (remembered sub 3100 lvls when anything which smells bad has beaten the market again n again).

Honestly speaking surprise results of companies were not a real surprise as we have seen in previous sessions that some I.T companies have beated the market expectations, and exactly same thing repeated in the morning too. Expectations of Nifty as well as non nifty companies kept the market cheering up and investors poured in money ahead of their Q4 results. HDFC bank and Reliance were the classic examples. Surprise was from Reliance's as their net profit was down but it has beated most of the forecast of greater declines. Reliance has always been promising on these crucial points and I can recall that last quarter bad results were expected and shorters and many research report have given sub 1000 targets for Reliance Industries. But despite all reasoning it held up firmly and people took it as an opportunity to value invest in their portfolio. So todays Reliance move was a delight to fundamentalist as well as an technical analyst who can correlate Reliance with Nifty. Do it either way and it gives you the same results.
Fundamentally Reliance showed that its Beta is indeed working. Lets see how:
Reliance has a beta of .85
Reliance gained in the day by 2.6%.
So Beta targets of Nifty comes to 2.6/.85=3%
and Nifty indeed gained 2.8%.

Isn't it amazing. So its clear that Reliance has got a perfect working Beta and the stock got to be looked on seriously as it has got a great weightage. So one can hedge its positions with Reliance considering its working Beta status. You can back test Beta resluts for the past Nifty movements and can apply it to coming days as well. So its clear that market is quite bullish on Reliance stock and it if Nifty has to go past 3500 reliance must breach its crucial 1800 mark in coming days. And I hope its not a big deal on assumption that corporates continue to surprise the market with their earnings (I really don't know how much books are cooked for giving surprising results ;) ) and short covering week ahead.

I would also like to give my fav fibs charts which once again came to rescue with its crucial 23.6% profit booking factor.





Phew!!! 23.6% you're spot on!!!

Hope you loved reading it.
Happy Trading.

Wednesday, April 22, 2009

Bourses Outlook

Hi,
So yesterday was much awaited day for our market as Rate cuts hopes keep market speculating.
We had a nice gap down in the morning which was in sync with U.S indices almost falling more than 3% each. So a gap down was obvious in sync. Interestingly whenever market falls analyst give different reasons for it to make it look quite obvious to their logics, like I came to read an article of ET here link. I would like to quote an extract for those who don't want to go by link -

"Accounting norms have been tweaked to permit zombie banks to pretend they are alive and solvent. The hope is that the public will swallow this fiction, animal spirits will revive the economy, and the consequent growth of bank profits will eventually suffice to write of the toxic assets. Very optimistic!"
btw article is very interesting to read do check it out.

So here we go, for every fall reasons like these and many in the articles can be taken for reference. Now its a matter of time how market give its own verdict on the policies and rescue measures. Interestingly dow recovered today closing at above 7900 keeping hopes alive.



On our Nifty front too a sort of same thing is going on. People haven't abandoned the hopes as market did rallied after rate cut news, but results were mixed as RBI cuts rates on repo and reverse repo but CRR one of the major rates was unchanged. We had a gap down opening and the gap was nicely filled up in the day as I discussed at iCharts shoutbox. Amid mixed reactions we peaked 3400 and managed to close down at 3365. Now an important suppord did held today which was 3300 (multiple support I must say - trend line, open interest and fib suuport of 38.2%). So as my last blog goes Nifty retraced more than 23% but candle still shows that its not in a hurry to move either downwards. Upper channel of Nifty is still intact but Open interest which is built up for the first time on 3400 and 3500 calls are giving clear signal that we might end up in 3200-3500 range as nothing major is happening. Q4 earnings are a bit of mixed bag as Infosys gave the indication that I.T front will be gloomy but TCS and some other software companies defied it amazingly reason may be their hedging policies, but yes they beated the market expectations. Hero Honda declared its results post closing and was in line with expectations. So on Automobile front we can be damn sure that they will post good results and same things can be expected from our Oil majors like Reliance and ONGC. Now its highly debated whether crude is breaking out or not but still these companies are performing better and expected to post decent results atleast better than their last quarter. Remember last time market didn't broke out on Reliance results and now this time its all good winds so a decent profit figures could cheer up the market as it is for the look out of anything good. So retesting of 3500 can't be denied at the month end and ofcourse yes we have our monthend fest named "Short Covering" which will be interesting to see. Till then lets see how volatile can market go.

Hope you loved reading it.
Happy Trading.

Sunday, April 19, 2009

Breakouts Everywhere - DJIA, SNP, NIFTY & Major Stocks


Hi,
Last week was crucial for me with respect to catching market movements.
One for the reason that 3500 was my last calculated lvls for the nifty this month(can verify with SB archive at icharts :) my official record book and my earlier post http://niftyswings.blogspot.com/2009/04/so-whatz-next.html). Well not claiming anything big but yes by all my logical reasoning and retracements theory I reached on that lvls and was anticipating correction on the wake of Q4 earnings. And yes we've corrected twice from that lvls and I was also looking further downside retracement but the first correction caught my eye and its a complete brainwasher for me. Honestly speaking last week gave me a new insight regarding market and I'm sharing the same.


Nifty Retracements - Can it Do again.


Fibs retracements are amazing and the key to master them is tweaking lows and highs. So earlier when nifty retraced for the first time by 23.6% I dared to say that that was just a profit booking retracement and not a trend reversal, how I concluded that??? Just past observations and my fib experience which I really love by heart. Now Same thing happened at the end of this week. Nifty corrected by 23.6%. So if the saying goes true by this time that History Repeats Itself, we can see upmove from here. And ofcourse the next day we indeed got the bounce from 23.6% retracement lvls but failed to sustain (coz of profit booking, nobody wants to loose profits at the end of the week -another nifty trivia). And closed above yesterdays days low. So I'm still eyeing opportunity for the next week and yes reasons are many, not only fibs but also hopes of RBI rate cuts, Global news flow which is expected to be positive, and still some time left for Q4 earnings, atleast till then we can see some swift movements upward.



Check this graph and see if we can make out similarities out of these moves.

Global Indices

Interestingly its a time for breakout everywhere. Oops did I make an offensive comment which defies all logics given by big guns all over. Whatever be the case analyst are divided most of the time. I've read ET articles and its the same story everytime, half will say boom and half will say bust. But neither of them can be true and one has to win despite of all pros and cons. So my sixth sense or understanding supports what is going on currently and I got to overrule the logic that recovery can't be so fast despite of poor performance. As market has a tendency to discount all news in advance say some 6-7 month ahead or even larger. So possibly things will improve with a period of time, but best rational thing is to go by charts and watch for breakouts.





Now coming to Dow Jones, see the charts it has successfully managed to stay above 8000 mark, atleast the last two candles says so. In my earlier post I've thought of it as Accumulation period of say some intermedciate period and it seems it going nicely. So who am I to frecast ahead of trend that its all fake or bearish, let them break key levels downside and then make the fuss. Till then we can safely move with market isn't it. So clearly dow holding nicely its upper levels which is supported by the profits by its banks. In my earlier post I've talked about Wells Fargo bank which posted profit a bit early than expected (first it was hard for me to believe coz of Fair value concept which gives freedom to banks to value its toxic assets as per their wish) and other two major banks Morgan stanley and Citi group declared profit. Now not going deep into the citis type of earnings and all the concepts the fact is that American Banks have joined the spree of declaring profit and that's holding the market, atleast for a time, and the charts will tell how prudent their earnings are. Some major stocks like Google is also doing well so all n all its a boom boom thing for the american bourses.

SNP Outlook
Just Check this out
http://blogs.stockcharts.com/chartwatchers/2009/04/daily-ema-combo-turns-positive.html
Now this is the stuff to ponder, I read John Murf's blog in which he advocated SNPs breakout. Now I don't need to tell how good he is at charting than anyone else, but surely with his experience and explanations it can be concluded that SNP is set to breakout and if it does it is expected that Dow Jones and Nifty will follow suit. So to sum up its party time all over and if not we know what we got to do, right......
:)

Hope you loved reading it.
Happy Trading.

Monday, April 13, 2009

Closing Bell - Nifty

Hi,
So market behaved as expected and formed a doji pattern. On EOD its double doji. Profit taking can be clearly seen on the graph and considering the Q4 results it got to correct more from here.
So whatz special in todays post. Well nothing new but would like to point the punching of Nifty values on NSE site. See the graph - It shows todays open at 3342 which it assumes from the previous days close. Now for statistics its ok for recording purpose but from T.A perspective its a big blunder. Why? 1st It ignores the gap up and down opening which is very very important to every techincal analyst. 2nd If you draw EOD candles by taking NSE values it will give altogether different picture. Like today if we go by NSE we will see a star pattern but actually its a doji candle and everybody knows how important on charts a doji is.


Here an Ideal Chart got to look like : thnx to iCharts.



So point here is Nifty has not gained 1.21 % today and from the analysis purpose its a flat closing indicating some correction coming up ahead. Its interesting to see how 3300 breaks in coming days.

But they also adjust there data Post EOD and this is how the charts look on daily:



So I had discussions with ST(icharts moderator) about this and he said that they had to readjust the data as per NSE. I asked him about the first punched figure of Nifty's Opening and He gave a figure of something like 3378. So for analysis purpose market hasn't moved anywhere it started and ended flat. Same things are witnessed at Yahoo charts too. But a clear and non biased way to catch this is to just look for 5 or 10 minutes time frame on yahoo or iCharts and you'll notice a clear gap up there.

Hope you loved reading this.
Happy Trading.


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