Friday, September 9, 2011

Now it looks like a trading range

Well, we had a down day today, so the 4700 support and 5200 resistance appears to get a bit more confirmed. I believe we remain in a bear market. Bear market rallies can be sharp and swift. At some point, these rallies will face resistance. If we go above 5200, the market will be giving a message of strength, at least in the short term.

I am not appearing on TV since I am taking some time off - a few weeks.

Ananthan Thangavel writing in Seeking Alpha (read it Here ) says that the Gold market may be ready for a decline. He gives these reasons:

1. Market Sentiment Too Bullish
2. Volatility Too Great
3. Retail Buyers Too Bullish
4. Buyers Expecting QE3
5. Equities Not Negatively Correlated to Gold

Mr Thangavel concludes:

We believe maintaining a neutral stance on gold at this time is a prudent posture. We would look to establish short exposure on a sustained crack in prices, but with current gold volatility at an all-time high, such a position is risky. Unfortunately, shorting hysteria is ten times as difficult as buying fear, and picking an entry and exit point on a short gold trade is very difficult. However, as the September Fed meeting approaches, the gold market should begin pricing in the reduced chance of quantitative easing, and prices should begin to fall, possibly using the catalyst of the Fed’s September statement.

My Notes: Maybe. If Gold starts to make a top, it should come up on the charts. Also, it is not easy to go short in a metal which is prone to so much volatility. Much easier to exit out of long positions.

5 comments:

Nirav said...

Dear Sir,

Is it true that Trend Following techniques are more profitable in Commodities where as Swing Trading is profitable in Equities?

Thanks.

abishekrav said...

is silver too topping out..or gold underperforming from now and silver starts an outperforming stage

sudhin said...

What will be the sign of a bull market
1. Nifty >5200.
OR
2. A long consolidation between [4200 if we go there] 4700-5200 time wise.
What should one do with long term investments, should one trade, add or stay put now?
Thanks,

rocky said...

respected sir,

thanks for reply
I was reading your blog and you mentioned that you booked at Range Expansion. this move may be more higher so that one can hold to enjoy the trend.How can one identify the Range Expansion can you ellaborate.. if possible give example also

Pramod Shinde said...

Dear Sir,
I think nifty has retraced till 5172, now it may go till 4550 as it looks like we are not out of woods as yet. Medium target looks like 3700 which has to be taken to fill the gap created in may 2009(you too keep giving the target 4000). Question is when?
RIL is the key!
Pramod Shinde