Thursday, November 6, 2008

So much volatility, Market resembles a Casino

The market continues to exhibit excessive volatility. The Nifty recorded a low of 2860 at 1320 hours. A rally then started, which saw the Index move upto a high of 3005 at 1445 hours. This is a gain of 145 points in 1 hour and 25 minutes. The gain is five percent (5 %) in 85 minutes. This 5% is not for some penny stock, it is for the blue chip Nifty 50. That's not all. The Nifty then proceeded to fall, this time back to 2875, in 25 minutes (at 1510 hours). This is 5% up and 5% down, a 10% move in just two hours - for the Nifty which is considered the barometer of the nation's economic health.

The market is now behaving like a casino. This is worrying ! Such volatility is usually a sign of impending disaster. I hope I am wrong.

7 comments:

suseem said...

yes mr sudarshan,its like trying to play a game of darts and trying to hit the BEAR's EYE(we have already shot the bull within us) and delightfully so,i say delightfully because things seem to be only getting cheaper and the huge swings tell us to be sitting and sleeping on cash till the opportunity rings our door bell.

jskservices said...

Volatility should be used by an intelligent and disciplined trader...learnt this from you !

Anuj said...

Hi Sudarshan ji

Well it was a really tough day to trade today in the end I was exhausted as if I have played a game of football for hours. It was perhaps the first day of my short trading career that I felt the heat of volatility. It was impossible to catch the moves in the afternoon trades. Prices changed so fast that I could not believe the rate as I saw them Lots of trading but ended with no profits and no gains just paying a good sum of brokerage!!!

Markets indeed are behaving like casino, only yesterday I was watching world poker tournament on zee sports late at night…the way money was changing hands from one person to another, was pretty much the same how today shorts replaced long and shorts again in day trade

Sudarshan ji you said that…”Such volatility is usually a sign of impending disaster.”
Can you explain this in some detail if possible with some historical references
Volatility is seen at the top of bull market as a reversal pattern just as we saw during October,November,December and January..How is it a disaster sign in a bear market?(are we still looking for a fall like we saw in january despite of market correcting so much and light futures market?)

Thanks and best wishes
Anuj

Mind Without Fear said...

I thought I heard or read somewhere that extreme volatility is the market is approaching a top or a bottom ....

If that is true, what implication does it have? We are experiencing high volatility and we are certainly not at or near a top (unless 50% retrenchment is considered "near").

Would be grateful if you can shed light in some future blog ....

regards.

tushar said...

Sir u were the only who had said that 2000 is major support after 3800.
Now people on streets are saying this is extreme bear market never seen before.

So how can this bear market be over without testing major support i.e.2000.
My question is what is next support below 2000?
From my side I am sure that 2000 will be tested.

Kaushik said...

Hi Sudarshan,
You mentioned "volatility is usually a sign of impending disaster". Can you please explain in few lines why we think so?

Thanks and your efforts appreciated
Kaushik

trader1211 said...

Hi Mr Sukhani,

I am an avid reader of your blog.

What I feel some mechanism is being manipulated to cause this erratic behavior of this market.Can it be from Govt itself so that the reflection of a better,recession proof economy can be created somehow before the election? if its true then when the real picture will come forward it would cause disaster.It seems like artificial respiration is in process for a dead cat.

Thanks
Anupam Majumdar
Kolkata