Tuesday, September 30, 2008

The Morning After Dow's Plunge

Readers should be aware that short selling is banned in 975 financial stocks in the USA. Yet, the Dow fell by record percentages (so did the S&P and Nasdaq). Then, who was selling ? The nswer is obvious: markets decline when investors / holders of stocks decide to sell while there are few people left to buy. Short selling is a convenient scapegoat.
It seems fair to say that the Nifty will open today, below 3800 support. Below 3800, there is no technical support till 2000. I am not suggesting that the Nifty will fall to 2000. It should not, and will not. My point is: now the market will have to determine its support levels on its own. It can stop wherever it wants.
This is not a good time to trade. Wait for stability, for volatility to come down. Support must emerge.

5 comments:

prabhat said...

If i like to go by stock specific which one is the best one and which secttor i have to watch.

Anuj said...

Hello Sudarshan ji,
I really hate when such steps like banning short selling happens, no body banned short selling in oil futures when it crashed from 145 to 92 dollars…Short selling is really important for market to be called matured capital market…only if investors in India are educated on how to short in market crash like the one we saw in January can be averted…because people just invest/trade in one direction(bullish) we have this kind of systemic failures…
Today I would like to have a coffee with “respected” treasury sectary Mr Henery Paulson and ask my favorite question…Kaisa lag raha hai aap ko?? …
On markets I feel there will be another short covering rally back to 4100-4200…all this is disastrous for small investors and investment sentiment…
This package will eventually pass…and US of A call itself free market???

Anuj

s.k said...

Today was a whipsaw orchestored by FM/Bhave.It was an artificial pull back.Or was it a natural bottom testing?Only time will tell

jskservices said...

Anuj's frustration does look genuine but I think there is a lesson to be learnt here - where there is money there is greed and fundamentals are USED only to support the BIG players' positions.The best that guys like you and me can do is read every word of Mr SS's blog and try and pick the trend.Only if we are in line with the BIG guys, we can make something worthwhile...

rajivhtc said...

sudarshan ji thanks for your very valuable guidance and commentary.
please keep blogging in the interest of investor. pray for more power to your pen.
warm regards
rajiv malik