Monday, June 9, 2008

Bear Hug

Thanks to a 400 point drop in the Dow on Friday evening, the Nifty was all ready to open sharply lower on Monday morning. This came about with a 100 point fall at the open, which eventually became a 200 point decline by mid day. After a low at 4412, the Nifty began a slow process of recovering some of its losses, finally closing the day with a loss of 100 points (better than the 200 point decline intra day).
Here is a Zen story that should be related to today's decline.
Two monks were once traveling together down a muddy road. A heavy rain was falling. Coming around the bend, they met a lovely girl in a silk kimono and sash, unable to cross the intersection.
"Come on, girl," said the first monk. Lifting her in his arms, he carried her over the mud.
The second monk did not speak again until that night when they reached a lodging temple. Then he no longer could restrain himself. "We monks don't go near females," he said. "It is dangerous. Why did you do that?"
"I left the girl there," the first monk said. "Are you still carrying her?"
Well, today's decline is done and over with. Do not thnk about it, or brood over it. Plan for tomorrow. The Intermediate trend is down in the Nifty. Yet, if the US markets remain in the positive, a relief rally could easily start tomorrow morning. Swing traders & Day traders should plan to go long on signs of strength on Tuesday. Remember, this will be a quick, short term trade.
But, the daily charts are not exactly bullish. If the January support at 4450 breaks decisively, we could easily see a free fall since there is no visible support in the Index after 4450. As we are close to the start of such a decline, do not buy for investments.