Wednesday, September 16, 2009

Conversations

This post is mainly to reply to a number of comments.
Shazia says: "The markets have raced from 8000 odd levels on the sensex to 16600 today covering what it did in 05 to 07 that is 2 years in just 6 months. Is this the correction of last year's correction, implying in a way that there shouldnt have been any at all. What is the level where one will say for sure that the bull maket has returned?"

Well, Shazia, I do think we are in an uptrend. I do not know if this is a bull market, since bull markets start with long bases. But, this is an up move. Your earlier question, I think, is: was last year's decline a mistake and has this up move corrected this mistake? This is an interesting thought, with philosophy and a sense of history. Good for you to think out of the box. But, I do not have the answer to this one.

Men asks "could you please explain how one should trade on days of gap up/down? What should a person having longs do in case of a gap up?Secondly what to look out for a trend reversal apart from fiboancci levels."

My Notes: On a gap up day, if you are short, then you get out following the 15 minute rule. If you are long, then you wait patiently, for more gains. Move your trailing stop , maybe at the midpoint of the gap. For trend reversals, fib levels may not be useful Fib levels are use to identify support when we are in an uptrend (like now) or resistance, when the trend is down. To identify support in an uptrend (really the end of a correction) look for one or more of these: (a) Oscilaltor divergence, in the oversold area (b) Long lower shadows, followed by white candles (c) a decline stopping at an earlier support (previous high or low), (d) prices developing into a consolidation, and, subsequent breakout.

jagjit has a number of questions, two of which are:
What is your expected targets for the Nifty in the coming two weeks?*
Is it wise to still hold our stocks which are in really huge profits?

My Notes: See, price targets have very little relevance in trading. Who am I to tell the market that it has to go to xyz level? Yet, we like to have the comfort of knowing th future, therefore, most of the traders love targets. So here is my idea: The Nifty should be touching the 5000 - 5500 zone in the next few weeks. This seems to be he current target. Remember that strongly trending markets can surprise us. They did so during the decline, and may continue to do so on the upmove.
When you have large profits in stocks, it is wise to take some money out of the market. You shuld sell a part of your holdings.

2 comments:

GUNTAS said...

A COUPLE OF DAYS AGO YOUR ANALYSIS WAS OF THE VIEW THAT A DIP IS VERY MUCH IMMINENT BEFORE THE NIFTY CROSSES 4900 BUT THAT NEVER HAPPENED
IN MARCH WHEN THE NIFTY WAS HOVERING AROUND 2800 LEVELS YOU SAID THAT ITS JUST A MATTER OF TIME WHEN NIFTY SINKS BELOW 2250.THAT TOO NEVER HAPPENED.
THEIR ARE MANY MORE INSTANCES LIKE THIS.
DOES THIS MEAN THAT YOUR ANALYSIS IS MORE A FLUKE RATHER THAN TECHNICAL IN APPROACH?

Shazia said...

Sir,
I am ever so obliged to you for answering my queries, which means a great deal to me and gives me encouragement.
Remain indebted.
Thanks
Shazia