Friday, August 15, 2008

Nifty: Friday evening review

This entry is written at 8:40 PM on Friday (the date stamp should confirm this), without the benefit of hindsight. This means that US markets are still trading, and, we do not have the benefit of knowing how they closed. So, the analysis is based on the Nifty, not influenced by American markets.

A correction was anticipated. This has come about. At 4430, the Nifty is much healthier than it was at 4640. So far so good. My technical tools suggests a price and time target for this small correction. This is given below:

Price Target Range: 4355 - 4225
Time range: August 18 to August 21

This suggests that a low point should be made between 4355 and 4225 in price, and between August 18 and August 21 in time. Usually, one of the two targets(time or price) are hit, in a small number of cases, both are touched.

Now, these targets are just that - numbers. There is no assurance that these will be met. Empirical evidence suggests that these targets have some forecasting value, but require proper money management to be of any benefit.

There is also the concept of overshoot. If the Nifty were to fall below the lower end - 4225, the signal will be more weakness since support did not hold.

On the chart, the Index has significant resistance at 4600 - 4700 which will not be easy to cross. The basic theme then is a range bound market. At dips, there is a buying opportunity since we have the possibility of some up move till it reaches resistance. Near 4600, avoid any buying.
I should point out that my short term trading is based exclusilvely on mechanical trading systems. The targets given above are used to develop a directional call for swing trades & for taking up option positions. This means, currently, I do not have any long positions in my swing trades. Next week, I will try to build some long positions if I get buy setups, since a short term cyclical low may also be expected. I keep a stop for all swing trades, always.

How will I get buy setups ? Search for stocks in an uptrend which are currently seeing a correction. Few stocks may qualify but that's okay. There is no need to venture if there are no signals.

As usual, my request is to keep visiting, I should add more during the weekend.

I have a new entry on Trading Plans at the Wealth Blog. Read It Here

3 comments:

Deepak says sudershan is Best said...

I just dont know what to write ,I am speechless after seeing accuracy and your knowledge...

I am trying to get the knowledge and working of Share market so sit in front of CNBC almost 5-6 hours daily ,So usually I notice everybody and try to judge the time people are correct in their judgement so I could realised market movements and sentiments & whom to follow......

But I cudnt remember anybody cudnt trust anybody if he is giving opinion against you.. whenever I see you on CNBC I just Cudnt stop myself from following you and doing what you said......

I am amazed with the time and accuracy you are correct Examples..
You Predicted new lows at 4900 -4950 market reached 3800..

going short after Trust vote next day after 4550 market reached 4159.
Going short on hdfc bank and icici bank ...

resistence at 4600 just few examples...I can write many more ...

Everybody gives opinions whether they know or not correctly but the main difference is confidence and clearity of thoughts..which in you are amazing you predicts the market spontaneously ,you say yes or no you know or dont

It seems so easy for you as Schumacher drives,Phelps swims,federer plays tennis...I know you must have given immense hardwork behind this and still thinks alot about market .....

sorry I just cant stop myself again from writing all these things because whenever i see your post I get filled with gratitued toewards you and just feel like writing all these things ..

I wish i could be a relative of yours so I could spend sometime with you and learn from you about market movements( your few tips are worh more than encyclopedia) and how to be such a nice person who can give time to write blogs even in festivals busy times.....

Thanks for being Sudershan Sukhani.....

krunal said...

i've to agree sudarshan is 1 of the best & neutral spokesman i've seen on cnbc, not like the others who are hopelessly optimistic bout everything.

p.s. Thank u sudarshan for writing this blog we are privileged :)

gurvi said...

I respect two gentlemen First My Sudarshan Sukhani another is Mr S P Tulsian.

I like listen to your views and also visit your blog daily. I would be more happy if you provide some stock specific analysis (The one which is given by you on Sasken) which will help retail investor like me.
Thanks for your help!!

-Gurvinder Singh