Tuesday, February 28, 2012

The Nature of Corrections

The Nifty remains in an uptrend – I believe it is in the beginning stages of a bull market. Like all market cycles, there will be corrections, dips in the ongoing up move.

Now, markets are not made to order. We cannot order a correction that suits us. What we know is that all markets correct. The current decline in the Nifty is part of a correction, that is part of the natural cycle of optimism(exuberance) and pessimism.

Yesterday, just before markets closed, Udayan asked me on CNBC, “have you taken any long positions?”. I explained that since we are in a bull market, after a sharp decline I have just taken some long positions, and, if the markets open lower the next day, I will close the positions immediately.

There is a reason why Udayan is the star of all market anchors. He understands the markets – that much is obvious, but he also understands how each of his analysts thinks, trades and behaves. My view has been consistent – we are in a strong uptrend. If this is so, then Udayan correctly surmised that I may well be looking to go long.

My description of yesterday’s conversation and the thinking behind it was to explain the nature of corrections. I  think readers are now smart enough to get the meaning.

Cheers.

11 comments:

Kirti Content Solutions Pvt. Ltd. said...

Hi Sir,

Thanks for sharing.

This illustrates the difference between the thinking of an amateur like me and an expert like you.

Warm Regards
Madhur

Pi said...

I too have to thank you for this - the understanding and meaning of how markets behave - trend, correction to trend, range, consolidation etc.

There was a time when I knew nothing,& I thought I knew everything. Then i understood some fundamentals & i lost money. Then came a time when I knew a lot of fundamentals & i lost more money. Then there came a time when I knew a lot of fundamentals and a little technical analysis and I lost the maximum amount of money.

And then, after many years of reading, following, and separating information from noise, I hopefully understand these things and now I make money, and lots of it. This journey has been tough, but its been a pleasure.

Now I truly feel and can justify to others that what I am doing is not tukka, its not gambling, there's an underlying meaning to it. Its tough to be good at it, and I am happy to have made it till here.

Sivasubbu said...

Hi Sudarshan Ji,

I am die hard fan of this blog and you are the only Technical analysis who speaks truth :) I salute ur analysis.

Hi PI - Its good to note that now you are in good shape. Your earlier stage reminds my present stage :)

Pls guide me the books and TA that you are following.. I am in heavy loss.

rocky said...

respected sir,

can u tell us how u trade on 01 march as s/l of both sides hitted i used consolidation when i buy mkt fall nd when i short mkt goes up i used orb in stocks. please tell us your strategy

Ammature trader said...

How do you suggest one should enter the next week,with 4 trading days and election results overhang? Hourly chart indicators seem to be stuck in the range-bound market. Please suggest.

Dinesh Rishi said...

Sir,

Budget Spl Plz

your Long Straddle during election
result gave excellent results

Rohit Sablok said...

Hello Sir

Can you tell a source from which I can get Historical PE charts of individual NSE/BSE stocks? I have looked evrywhere but to no avail.

Balu said...

Sir

Please comment on medium to long term trend and pattern in Gold. Also plz suggest reversal in those trends.. Do you see any bearish H&S pattern formation?

Thanks & Regards
Balu

Balu said...

Sir

Bearish head and shoulder pattern also on nifty daily charts..
Plz comment sir..

Regards
Balu

Rajesh said...

Dear Sudarshanji,

I have searched Internet for the holy grail of Indicators. I have built up my own, I have moved from those stages to growing humble and bowing to knowledge.
I have graduated from those stages and begun to control my emotions. I am as good as anybody in TA, but only lately I have begun to astonish myself. Most of this I owe to you because being a trader is not just charts and patterns, but it is a mindset!

You may not know how deeply you have impacted mine and others lives by sharing your invaluable knowledge. All I can say is we are grateful to you.

Regarding this post, I took a trade on the opposite side as per my working technique (95% of the time I trade along with you). The very next day, you reminded me who is the master and who is the student ;)

Unknown said...

thank you sir.
i have learnt a lot from your views.
you are most honest analyst among all analysts. or may be its because i am able to understand your views. one thing i like the most about you is that, you talk in terms of probabilities.