Failing Of A Long Jump

Has the wheel started moving? Last week I had presented the scenario of How Will The Bear Market Saga Unfold? Inspite of all the pseudo positive atmosphere being created by various components of Indian Stock Market and its valued participants, Nifty failed to reach those heights ( read 5000 and above). After a week if we take stock , things are not as rosy as it is being projected by vested parties. I think there is something fishy in the way markets are being made to behave. The day IIP data was going to be published a valued B-Channel flashed IIP data before it was officially published and that too incomplete/wrong. What can be the motive behind this? Markets however reacted to the data being flashed. It high time the regulators take note of the parties who are trying to manipulate markets.

On the other hand Interactive iPath MSCI India Index ETN (INP) has fallen almost 5.5% till 13.08.08 while Nifty fell by 2.2% only last week. Another omnious sign for the coming week. Not to forget that we have a truncated week and by the time we open on Monday ( 18.08.08) much water would have flown under the bridge. Scenario in US and Europe are not rosy too.

Charts as on today also don't look like there is much cheer for BULLS next week.

In the daily charts Nifty is still in the channel. RSI, MACD and Slow Stoch are all indicating falls next week. In the weekly charts RSI has turned down after facing resistance at 50 levels ( indicated by blue line). Slow stoch ( weekly) is indicative of the BEAR week coming next.

So in true Olympic spirit the much awaited long jump of Nifty from 3790 to supposedly 5000 and above has failed. The path to the failure was indicated in my last post How Will The Bear Market Saga Unfold? 

" 4577.53 4558.30 4539.07 4500.60 4462.13 4442.90 4423.67 4385.20 4346.73 4327.50 4308.27 4269.80 4231.33 4212.10 4192.87 4154.40 4115.93 4096.70 4077.47 4039.00 4000.53 3981.30 3962.07 3923.60 3885.13 3865.90 3846.67 3808.20 3769.73 3750.50 3731.27 3692.80 3654.33 3635.10 3615.87 3577.40 3538.93 3519.70 3500.47 3462.00 3423.53 3404.30 3385.07 3346.60 3308.13 3288.90 3269.67 3231.20 "  Figures in red have all been achieved this week . Just check how the lows of the week match with the levels.

Important Levels for this week are:

Upside - 4457.84, 4476.26, 4494.68, 4531.53, 4568.37, 4586.79, 4605.21, 4642.05

Downside : 4611.25, 4591.88, 4572.5, 4533.75, 4495, 4475.63, 4456.25, 4417.5, 4378.75, 4359.38, 4340, 4301.25, 4262.5, 4243.13, 4223.75, 4185, 4146.25, 4126.88, 4107.5, 4068.75, 4030, 4010.63, 3991.25, 3952.5

Jesse Livermore


"The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements.

I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market all stocks go down and in a bull market they go up. "

Mean while for a read this week
The 5 C's of Trading Consistency

"To summarize, the 5 C's of trading consistency are:


• Clarity
• Commitment
• Courage
• Confidence
• Calmness

Consistency is most difficult and most readily proven during tough times. How someone weathers the storms demonstrates their skills."

How Will The Bear Market Saga Unfold?

There is hope in air. A friend of mine asked me if we are going to touch 5000. The B-Channels are more than happy to give such figures, the reason best known to them. Some five weeks back everyone was asking if we are going to touch 3600 - 3000. Now just five weeks later  everybody is going for 4900-5000 levels. This exactly what bear market feeds on. Its always a contrarian call. When everybody was 3600 the markets went up till 4600 and now when everybody is 5000, market will spring a surprise.

Enough of gyan , lets check it with some chart. You have to show some proof to the world to make them realise their folly.

 

So we can clearly see how the markets have moved since January. Lets see another chart to bring more perspective to what I am saying

  

I think now it must be clear. A point to note is the Slow Stoch which is likely to go downhill bring down Nifty with it. So get ready to short guys. This will be a lifetime opportunity to earn money by shorting , buying puts and build a portfolio when we are close to bottom. Stock will be sold at unbelievable prices.

Levels to take note of

4577.53 4558.30 4539.07 4500.60 4462.13 4442.90 4423.67 4385.20 4346.73 4327.50 4308.27 4269.80 4231.33 4212.10 4192.87 4154.40 4115.93 4096.70 4077.47 4039.00 4000.53 3981.30 3962.07 3923.60 3885.13 3865.90 3846.67 3808.20 3769.73 3750.50 3731.27 3692.80 3654.33 3635.10 3615.87 3577.40 3538.93 3519.70 3500.47 3462.00 3423.53 3404.30 3385.07 3346.60 3308.13 3288.90 3269.67 3231.20

Meanwhile for some reading

Some excerpts
"bears are exceedingly dangerous environments for investors. Fools ignore bears at their own great peril, and even the prudent are filled with plenty of trepidation. For the most part, you can't merely weather a bear by buying the best-of-breed companies. They will get sucked into the selling too. Other than sitting in cash, the only viable strategy for surviving, even thriving, in bears is actively trading these merciless beasts. "

"The key to successfully trading bear markets is understanding their primary driver, sentiment. The mission of a bear is to gradually hammer on investors until their perceptions of stocks radically change. When a bear begins, optimism and greed abound and traders are far too complacent. But by the time the bear ends, all hope has been beaten away. Pessimism and fear remain and traders are totally demoralized. "

"To trade a bear, traders have to carefully monitor popular sentiment. And then when it gets to an extreme, they must do the opposite of what mainstream market thought considers right. When the thundering herd is scared, traders want to go long and buy stocks. When the herd is greedy or complacent, traders want to go short and sell stocks. Contrarian trading within bears is dazzlingly effective. "

FII's - The Open Secrets Of ETF's

I have tried to research more on this topic since my last post FII's - The Open Secrets You Would Like To Know . The results are that there are four India specific Exchange Traded Funds or ETF's.

iPath MSCI India Index ETN (INP)
Morgan Stanley India Investment Fund (IIF)
PowerShares Index (PIN)
WisdomTree India Earnings (EPI)

The important question here is that how can we use this information. Two important questions which are now unanswered are:
Do the performance of the ETF's have any effect on our index - Nifty?
How is the FII activity in Nifty related to the FII activity in these ETF's?
This is not an exhaustive list and many more may arise as we delve deeper into this. Till then this post is like a snapshot page which has all of these ETF's against Nifty.


5 day Comparison Chart of NSE and iPath MSCI India Index ETN. For technically inclined guys, Pls check Interactive iPath MSCI India Index ETN (INP) Live Chart (Yahoo)







5 day Comparison Chart of NSE and Morgan Stanley India Investment Fund (IIF). Check for Technical Charts




5 day Comparison Chart of NSE and PowerShares Index (PIN) Check for Technical Charts




5 day Comparison Chart of NSE and WisdomTree India Earnings (EPI) Check for Technical Charts

Interactive WisdomTree India Earnings (EPI) Live Chart (Yahoo) Live Chart (Yahoo)

Interactive WisdomTree India Earnings (EPI) Live Chart (Yahoo) Live Chart (Yahoo)

Interactive PowerShares Index (PIN) Live Chart (Yahoo) Live Chart (Yahoo)

Interactive Morgan Stanley India Investment Fund (IIF) Live Chart (Yahoo) Live Chart (Yahoo)