My last six posts have been on market psychology (to use a generic term). They have not discussed the current market conditions.
This is so because each trader must find his/her own method of trading in the market. Adapting to the market is an art, so this column tries to help you become a master in the art.
I assume that many readers are keen to read my views on the market. So here it is.
Last week the Nifty started a down trend. The five week up move failed to cross the previous intermediate high. Therefore, the intermediate down trend remains intact. If and when the Nifty goes above 3115 - 3165, an uptrend will be confirmed. The immediate target for such an up move will be 3500, while the trend could go on to 3800.
Will this happen ? I do not know. Frankly, I do not need to know. The trend is down until the resistance levels are crossed.
Will the Nifty make new lows ? Maybe.
Remember, markets can do many moves that can puzzle us. For example, it is possible that the Nifty may go above 3165, signal an up move then fall to reach 2100. Again, I am just saying that the market can do whatever it wants.
We trade by defining our responses to the market. As an example: I will go long above 3165 with a stop below 2950. I will move this stop up by 25 points after every day. If the Nifty touches 3450 or close by, I will take profits on at least 50% of my position.
We Never say: I have bought today and I will sell at 3800. Why did I buy today ? How can I say that the Nifty will reach 3800? What happens if the Nifty starts falling after I buy ?
Have Fun!
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4 comments:
Hello Sudarshan ji,
I'm your ardent supporter and anxiously wait for your blog everyday. Good job and please keep it up.
Thanks.
Gurvinder.
Would like to share an interesting note.
Why the DJIA likes 8500.
http://caps.fool.com/blogs/viewpost.aspx?bpid=123952&t=01008434070146374147
Sudarshan ji
Yes, it is day market for the day traders only. I belive that no body is confident about the economy that it will grow up further and his commitment is profitable, that is may be the reason his commitments are confined to the days risk.Many do not wants to carry the postions,yesterday the nifty futures average is at 2955. my risk level is to that point only.if nifty comes below that i will get out.
Thank for your valueble comments.
Expect Big Bang if NIFTY crosses 3250(from my observation and past experience).
The reasoning: I had notice that while market was falling, it felt sharply from around 3818 on 3rd Oct to a low of 2252 on 27th Oct. I had observed, (at that time and not any post mortem, and went short too.) that on 6th Oct, when NIFTY closed @ 3602, the lowest strike price PUT option available was for 3600. Any one who had the courage and the will to go long at that point, had no hedging option available in the shape of PUTS below 3600. So there was no buying demand from those who wanted to go long, but hedged and not naked. And this created a trap for those who did not want to keep their existing long positions, un hedged. Thereafter, caught in a vicious cycle and as similar situation prevailed at every fall, we saw no buying support at all and contrarily led to massive liquidation by existing longs who had nothing to hedge on, leading to a free fall. Now see the reverse side of the coin. As NIFTY has climbed up to 3000 from a low of 2250, and if at some point it moves higher and above 3250, there are no CALL strike prices available above 3300-3350 to hedge any existing or potential shorts, thus preventing fresh shorts to some extent and squeezing those who do not want to keep their existing shorts, un hedged. "Please post your views too."
dear Mr.Sukhani,
i visit your blog often and follow it seriously. thank you for this great effort to educate traders on a continuos basis.
wishing you a year full of health and wealth in 2009!
cheers//mvp
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