Friday, September 23, 2011

Intermediate trend is in control

Once the Nifty fell below 5050 which was the low of the wide range bullish bar, to me, the intermediate trend asserted itself, with the relief rally over. I have trend short positions continuing for the past many weeks. A panic bottom is probably required to reduce short side exposure. So far, that has not come about.

Failed patterns: The Nifty was making a bullish head and shoulder which did not come about. In the same fashion, a number of stocks were having similar bullish patterns. With the collapse of the Nifty, individual stocks have (a) gone through similar failures or (b) have seen declines but prices remain above the right shoulder therefore the pattern is not yet cancelled. In either case, it is the Nifty which controls the overall sentiment, therefore, buying is best avoided.

The Nifty has seen two successful ORB (opening range breakout) days - on Tuesday, and, Thursday. This is as good as it gets. After trend days, intraday choppines is usual. While there is no rule, I would think that we may be in for a number of days with choppy intraday movements.

5 comments:

rohit said...

But for extreme short term is it not a good idea to buy because dollar index rsi above 70 and nifty rsi around 30 indicates overbought and oversold levels, although it is not gauranteed, but after a fall of about 7%, i.e. considering mkts fall another 1-2% today, we may get a 2-3% bounce-back. In futures that becomes 20-30% returns.

Meshach. M said...

dear sir,

i would like to appretiate that your analysis and more than that the way you present it is helpful in me learning a few things in trading. I admire your simplicity and humble approach... just wanted to say THANK YOU...

Nirav said...

Sir,

You have said that "I have trend short positions continuing for the past many weeks." Is this means that your trend following method sugesting you to short position few weeks back and you were not out of the trade in this up move from 4700 to 5170?

Meshach. M said...

ur 15 min rule has helped me in reducing the size of my trailing SL on profitable positions ...

rocky said...

sir, what kind of strategy you followed in today market if we used orb strategy our stoploss trigrred twice till 11 both on long side as well as short side... can you discuss how to trade...