Tuesday, October 28, 2008

Timeline for a Crash

I write a daily newsletter for my subscribers. I have been doing it for many years, now. The letter is written in the evening. What was I writing when the bear market started ? I checked up my archives, and I am giving below the actual advice given on a day to day basis. Here are the excerpts:

Monday, January 7, 2008. Nifty: 6273
We have to go with the flow. Short term traders should continue to seek buying opportunities. Position traders should wait for a dip. (A correction will come, be sure about it !)
However, all good things must come to an end. Therefore, it is fair to assume that even this up move will soon give way to a consolidation or even a dip. But, that has not happened till date. Therefor, short term traders should go with the trend which is up. Investors or position traders can as well wait for some kind of cooling off before making fresh investments.

Friday, January 11, 2008. Nifty: 6218
For short term traders, the Nifty outlook remains bullish. This does not mean that a decline is not coming. It means that traders should continue to look for buying opportunities on dips. The Index is now in a trading range between 6100 and 6350. If the breakout is above 6350, expect a quick move to 6500 or even 6600. A close below 6100 will be a suggestion to avoid positions in the market.

Tuesday, January 15, 2008. Nifty: 6061
A narrow range fell apart today, with the Nifty seeking lower levels. Momentum is no longer favoring the bulls. Traders should stay away, while Investors are still waiting for a dip. They should hold their patience.
The short term trend has changed to down. This happened today when the Nifty closed below 6100 giving a trading range breakdown.
The intermediate trend is UP. This trend changes to down, if and when the Nifty closes below 5700.

Wednesday, January 16, 2008. Nifty: 5951
The short term trend has changed to down. This happened when the Nifty closed below 6100.
The intermediate trend is UP. This trend changes to down, if and when the Nifty closes below 5800. (This has changed from 5700)

Friday, Janaury 18, 2008. Nifty: 5701
The Short term trend is down. This trend changed to down when the Nifty fell below its trading range support at 6100. This is the trend that should be followed by traders.
The Intermediate trend changed to Down on Friday. This happened when the Nifty fell below 5800. This is the trend that investors should be tracking. In a down trend, avoid making new commitments. Investors should wait patiently for this decline to be over.

Strong support for the Nifty comes in the 5500 area. Think of this as a support zone rather than a number. This support should hold. But, if this zone does not hold, then we are looking at a bear market, that may take us down all the way to 4500. This is a very unlikely scenario. But, traders & investors should be aware of the possibilities.

The Rest, as they say, is History.


rajivhtc said...

namaskar sudarshan ji,
after going through the excerpts of your newsletter i wish i was your subscriber.
by the way what are your subscription charges ? can you please ask your office to email them to me and oblige.
though i cannot assure will consider subscribing if i can afford it.
warm regards
rajiv malik

s.k said...

The best indicator of the end of a Bull market in January this year was-largest IPO ever.It normally happens at the top of the market

Ilango said...


My hearty best wishes to you for a Happy & a Prosperous Deepawali.

We are grateful for your sharing your Market wisdom & inspiring many in the right direction at critical moments.

Best Regards.


Venkat said...

It is a good time to Thank you for sharing your wisdom with us on a daily basis.This wisdom is much more valuable than reading best book on Technical analysis.Thanks