Hi,
Its been three days of sitting idle and fiddling with charts to guess whats next. I bet market has kept everyone guessing on which direction the market will move. I've seen 'n' no of trade setups by different analysts giving examples and targets on both side. Its quite surprising when market itself is undecided how can any setup will define the market direction. Ofcourse one setup in either of two direction will hold true and the winner will say as usual - "Look I said you naa that market will move like this coz of ........". Funny isn't it. When our market was at 2550 lvls shorters gave every excuse they can to give sub 2000 tgts like fundamentals of economy, elliot waves, fractals and so on. Its even more surprising that they are the same people who didn't earned much on this 900 points upside rally. Reason being that they were so used to shorting that they couldn't enjoy this rally which is totally news and events driven, or in harsh word I must say it hurt their ego when market moved against their forecast.
So right now we are again on an interesting point and again I read many setups. Surprisingly I read the same setups and excuses for the upside too like fundamentals, elliot(a complete change in setup-they call it wave recount) and numerous logics. You'll be surprised that I don't take any of the views of upside and downside and I can explain how. As per me its the classic situation of a glass which is half filled. So different people see it differently. Some say its half full and some will claim that its half empty and the fun is that both are predicting that it will be full or empty in the coming days. So what am I doing here?? :) I'm just watching on sidelines to see whether its getting filled up or getting dried up. Simple.
Now coming to the point and its a very important one. Everybody has seen views of every market expert be it on T.V or here on blogs and beleive me nobody is perfect. So as a trader you got to trade with a neutral mind and don't jump to be in a league to be an perfect forecaster as there are no rewards in guessing complete market direction because nobody can. So it makes perfect sense to see how things are changing and how market is reacting with news and to make money. Even the legends like Warren Buffet have confessed that they went wrong at many points and made huge mistakes.
How I See the Market- You must be cursing me that I havent spoken a word about the market but pardon me for that as I got to explain all this to make my point. About market in general, I mean global as well as Nifty, we have seen doji once again. Last time we have seen it on hourly charts I guess, and market turned upward. Now its on Daily charts so its quite important. It shows the state on indecision so market can move either way. In my last post I said I was expecting a short session of profit booking and indeed it happened but sadly it was from brokers side so we couldn't see that much downfall as I was expecting. I still hope that profit booking can happen again at current levels or 100-200 points above i.e 3500.
Now the reason why I'm expecting a halt in this rally. Market has moved 900 points in a stretch i.e something around 25-30% on mostly global cues. Now global cues which is most of the times Dow Jones is bullish coz their banks have started performing. Surprisingly Wells Fargo bank declared its 3 billion dollars of profit before the due date. They said that they felt like declaring this news a bit early because they felt like it can improve things. So Americans are now desperately pushy. Market indeed rallied on this but 8000 is the mark which will testify their claims if they are really profitable or not. Catch is here is that U.S government has allowed them to drop the accounting rule of M2M(Mark to Market) and use Fair Value method to record their toxic assets. Which means that If an Asset of $2000 worth $1000 now due to market valuation, now banks are free to value on their own will to mark it at 1500 or 2000 or even 2100(it can be, who knows). So definitely U.S banks will start posting profits on monthly basis, and the truth is that they will make profit if these toxic assets regain their original valuation in the coming times which nobody can guarantee it. So the same profit will turn in loss as its accounting policy to write off losses from profit, and that will happen at future date i.e when they become due. So that's how U.S institutions are trying to save their asses. But market is now so sacrosant all the time and it may react (or may not react). So don't get carried away if other banks will join the league of declaring monthly or quarterly profit.
Now coming to Nifty its been moving in a stretch, quite good thing, but even if we do believe that we will be the first economies to recover, it doesn't make sense that we will move in a straight line in unidirectional move. After all our favorite T.A has explained that it got to move from the phase of accumulation and I do believe that coz accumulation gives the time to market to rethink that are things really improving, and if they really are then we can move ahead. But thing is that I can't trap the market in theories, it has moved up straight in a line recently but to reclaim 4000-5000 levels it has to follow the basic path or else we can claim that our markets are exceptional. Thatz all from my side.
Hope you loved reading it.
Happy Trading.
Note: Please feel free to share your ideas and comments.
