Aban can give a 400 point pull back to 1450-1500.
weekend update 2.0
After posting the weekend update on saturday, we reviewed all the charts. Those posted on stockcharts, those not, and historical charts. Certainly it would be anyone's guess where this market bottoms, as it is not being driven by stocks but by bond insurance, the CDS market. The tail is wagging the dog like stock portfolio insurance did in the 1980's, which led to the 1987 crash.
We knew after the 2007 bull market top that it was the end of a cycle wave, and this would be a cycle wave bear market. What we didn't estimate correctly was the severity of the decline. Now that the market has effectively crashed 34% in three weeks it's more important to review the other cycle wave bear markets: 1929-1932, 1937-1942 and 1973-1974. One could argue that 2007 was a supercycle top, or 2000 with an irregular B into 2007, or whatever. What's important is that most EWers recognized that a cycle wave completed at the 2007 highs, and at least a cycle wave bear market has been underway. In reviewing the previous cycle bear bear markets we observed the following:
1929: started with a 50% crash drop, retraced 50%, and then eroded for months on end to much lower levels, took 34 months.
1937: started with a 50% drop over 12 months, with a 40% crash in the middle, retraced 62%, and then eroded for months on end to a double bottom, took 61 months.
1973: started quitely, had a 62% retracement after the first drop, then crashed 33% near the end, and the market lost a total of 47%, took 23 months.
2007: started quietly, is near a 50% drop, with a 34% crash near the end, and this has taken 12 months.
Notice the three previous cycle wave bear markets either dropped 50%, or dropped then rallied 50%-62%, and then bottomed months later. Near DOW 7100 this market would haver dropped 50% from the 2007 highs. There is technical support between DOW 7100 and DOW 7400, these levels equate to SPX 769 and 789. There is also great support for the DOW at the 1998 and 2002 lows, which is also around these levels. Should the market hold there, a 50% - 62% rally over the next 8 months is possible, then a retest of the lows in 2010 at the four year cycle low. We may still get our ABC flat, but from lower levels. Lots of technicals going back to 1932 support this POTENTIAL scenario. Please review the chart...
ACC dropped nicely. See last Sundays post on ACC.
The Indian market opened on weak note on worst global cues. Market continued drift lower after opening sensex fell more than 1000 point try to recover in afternoon session but close in deep red zone. For coming session we can open on weak note we can see some bounces from the lower levels .If nifty trade above 3327 it can test 3396-3421 on the lower side 3190-3150 will act as support zone .
Last week nifty lost more than 14.10% as worst performances week in history .On daily chart nifty had broken 3500 levels and made new low .For coming session we can test 3150-3058 levels on the other side above 3435 it can test 3500-3550 levels .Rsi is in over sold zone nifty is forming lower low and lower top still weak sign. Nifty had fallen from 4300 levels we can see some relief rally in coming days .
NIFTY WEEKLY had kiss the lower trend line3058 will act support zone .
SELL BHEL BELOW1315 TGT 1288 >1259>1150 STOPLOSS 1349
SELL LUPIN BELOW 618 TGT 586 >565 STOPLOSS 633Markets are efficient but 90% driven by emotion.
Markets are technically strongest after a sharp decline and technically at their weakest after a sharp advance.
Most important intellectual quality for successful investment is the ability to keep an open mind. The biggest mistakes are made by those who " do not know what they do not know".
Genius is nothing but a great aptitude for patience.
Speculative markets are unpredictable. We can not predict. He who predicts is lost.
Why Markets go up and down?...There are fluctuations of supply along with public and institutional demand for commodities, stocks & bonds. These are inturn influenced by myriad of other forces.
Markets are made of emotion. They are influenced by the irrational behaviour of lunatics. Markets reflects all kinds of thinking, from the very smart to the ineluctably dense.
Nature's Law (Elliott's) represented the distillation of human activity. When suitable data is compared with the cyclical pattern discovered by Elliott, the waves then become visible to the experienced eye.
All human activities have three distinctive features - Pattern, Time and Ratio all of which observe the fibonacci series.
The Rhythms of the Mind:
Elliott recognised the true forces behind the share-price behaviour. Most attempt to relate the stock market behaviour to current events whereas those events have little to do with future stock market performance. This aspect made Elliott's Wave principle that much more important. Markets movement is a psychological phenomenon. This law behind the market can be discovered only when the market is viewed in its proper light and then is analysed from this approach. Simply put, the stock market is a creation of Man and therefore reflects human idiosyncrasy.
A look at present scenario: This fast falling market will definitely has in it some extended waves and in the coming weeks , we are likely to witness iv of 3 followed by 'abc of 4th implying a likely choppy movements.Any lows made on Monday(or Tuesday)will be followed by rallies followed by selling while holding the lows of Monday(or Tuesday).
For Bulls:- Buy into every dips/ plunges and book profits on rallies and do not hold overnight longs till the daily signals a bottom and a buy.
For Bears:- Book out your shorts on every dips/ plunges and sell into every rally and reduce the quantity of holding overnight shorts as the risk / reward ratio is diminishing.
The range of choppiness will be quite big considering the falls of previous few weeks.
Continue with the strategy of buying good stocks that have fallen to 11% value of their peak value. On friday, some such stocks like Bajaj Hindustan gave 20% return in a single day.
Some such stocks...Asian Electronics, IndiaBulls Securities, IndiaBulls, HDIL, JSW Holdings, UB Holdings, DS Kulkarni, Walchand People, Wire and wireless.(These are taken from the Moneycontrol List)..You may find some stocks of much higher quality available at 70% off their peak value for quick returns..Highly leveraged F&O stocks that have fallen very steeply in the last two weeks( Eg. Suzlon, Bajaj Hindustan, Essar Oil,Chambal Fertiliser, DLF, GMRINFRA, Unitech, HDIL, Indian Hotel, Omaxe...to name a few) will also offer swift bounces. Buy on declines only for a very short duration as they may fall again from higher levels to end Oct series near their lows.
CAUTION:- I am not suggesting here the "END" of the downtrend but only a pause..and that pause will offer very good trading opportunity. Use your trading tools to maximise your gains..
Good Luck to all.
Markets are technically strongest after a sharp decline and technically at their weakest after a sharp advance.
Most important intellectual quality for successful investment is the ability to keep an open mind. The biggest mistakes are made by those who " do not know what they do not know".
Genius is nothing but a great aptitude for patience.
Speculative markets are unpredictable. We can not predict. He who predicts is lost.
Why Markets go up and down?...There are fluctuations of supply along with public and institutional demand for commodities, stocks & bonds. These are inturn influenced by myriad of other forces.
Markets are made of emotion. They are influenced by the irrational behaviour of lunatics. Markets reflects all kinds of thinking, from the very smart to the ineluctably dense.
Nature's Law (Elliott's) represented the distillation of human activity. When suitable data is compared with the cyclical pattern discovered by Elliott, the waves then become visible to the experienced eye.
All human activities have three distinctive features - Pattern, Time and Ratio all of which observe the fibonacci series.
The Rhythms of the Mind:
Elliott recognised the true forces behind the share-price behaviour. Most attempt to relate the stock market behaviour to current events whereas those events have little to do with future stock market performance. This aspect made Elliott's Wave principle that much more important. Markets movement is a psychological phenomenon. This law behind the market can be discovered only when the market is viewed in its proper light and then is analysed from this approach. Simply put, the stock market is a creation of Man and therefore reflects human idiosyncrasy.
A look at present scenario: This fast falling market will definitely has in it some extended waves and in the coming weeks , we are likely to witness iv of 3 followed by 'abc of 4th implying a likely choppy movements.Any lows made on Monday(or Tuesday)will be followed by rallies followed by selling while holding the lows of Monday(or Tuesday).
For Bulls:- Buy into every dips/ plunges and book profits on rallies and do not hold overnight longs till the daily signals a bottom and a buy.
For Bears:- Book out your shorts on every dips/ plunges and sell into every rally and reduce the quantity of holding overnight shorts as the risk / reward ratio is diminishing.
The range of choppiness will be quite big considering the falls of previous few weeks.
Continue with the strategy of buying good stocks that have fallen to 11% value of their peak value. On friday, some such stocks like Bajaj Hindustan gave 20% return in a single day.
Some such stocks...Asian Electronics, IndiaBulls Securities, IndiaBulls, HDIL, JSW Holdings, UB Holdings, DS Kulkarni, Walchand People, Wire and wireless.(These are taken from the Moneycontrol List)..You may find some stocks of much higher quality available at 70% off their peak value for quick returns..Highly leveraged F&O stocks that have fallen very steeply in the last two weeks( Eg. Suzlon, Bajaj Hindustan, Essar Oil,Chambal Fertiliser, DLF, GMRINFRA, Unitech, HDIL, Indian Hotel, Omaxe...to name a few) will also offer swift bounces. Buy on declines only for a very short duration as they may fall again from higher levels to end Oct series near their lows.
CAUTION:- I am not suggesting here the "END" of the downtrend but only a pause..and that pause will offer very good trading opportunity. Use your trading tools to maximise your gains..
Good Luck to all.
The Reliance stock is in big trouble. A pull back to 1760 (yellow circle) will give another opportunity to go short for the targets 1450 and 1250. The 1250 level is a 60 % retracement from the top of 3200. All prices are for Reliance Futures.Some more Crash Investing Thoughts.
Of all the cheap valued companies, Focus on those which have durable brands.
Comapnies with Strong Brands often have strong pricing power and thus can grow profits when others companies find hard even to grow sales.
SECULAR damage took place all over the world in stock markets and the financial world. Huge wealth destruction took place in all asset classes except gold. Volatile trading in the US markets and final closing at marginally lower( THANK HEAVENS) eased the fears a bit.Every one is talking abt. decesions to be taken in G7 summit for sanity to return to world financial order.
Back home we did make higher lows but did not make higher highs..we managed to stop at crucial levels on friday..there will be strenght only above the level of 3400 , supports/ resistance at app 3100-3600.. Selling looks very overdone and all indicators can turn anytime..some good stocks which are available today at bargain prices due to capitulation can surely be added for your portfolio for small-midterm ,or a trading bounce in a relief rally. Watch the opening of Asia on monday, I feel next week trading again will be quite volatile till sanity returns..trade with care ..cheers..
When all other sins are old, greed still stays young.
French Proverb
Back home we did make higher lows but did not make higher highs..we managed to stop at crucial levels on friday..there will be strenght only above the level of 3400 , supports/ resistance at app 3100-3600.. Selling looks very overdone and all indicators can turn anytime..some good stocks which are available today at bargain prices due to capitulation can surely be added for your portfolio for small-midterm ,or a trading bounce in a relief rally. Watch the opening of Asia on monday, I feel next week trading again will be quite volatile till sanity returns..trade with care ..cheers..
How much more can they sell ? They can sell uptil ZERO if things get worse.
Think of Japan. Nikkei was at 40,000 in the 90s. All the FIIs started leaving slowly over the last two decades and now its slumbering at below 9000.
| Largest inflow of $36 b came in 2004-05. |
Our Bureau
Mumbai, Oct. 10 FII investments in Indian equities, from the time they commenced buying in India, has amounted to $56 billion as on Friday, SEBI data showed.
The value of this investment on Friday would not be $56 billion, of course, but how much of this is likely to be sold, marketmen were wondering. On this hinges the fate of Indian stocks in the near future.
More on cards?Going by the FII investment figures (see table) it is possible that another $7 billion to $8 billion in equities could be shed by them, estimate analysts. FIIs have already sold equities worth more than $10 billion in 2008.
Taking October as the base month, the largest increase in FII investment was between 2004 and 2005, when net buys by FIIs rose by $36 billion. But the Sensex was at 8,483 in October 2005 and FIIs are likely to hold on to those investments, said an analyst. Of course, this is a crude way of calculating as one does not know how much of those investments they have sold to re-enter the market, but it is a rough indication on what is to come, said one analyst.
The next large chunk of investments came in 2006-2007 (October) amounting to nearly $18 billion. In October 2007 the Sensex was above 18,800, much higher than now.
It is this $18 billion of investments that FIIs they are likely to offload first to cut losses, said the analyst.
"They would calculate on a last-in, first-out basis. What they had invested in 2004-05 has still gained enormously from what the Sensex levels were then."
By this estimation, at least another $8 billion can be sold by FIIs, he said.
UncertaintyMr Motilal Oswal, Chairman & Managing Director, Motilal Oswal Financial Services, was of the opinion that little can be said when one could not predict what would happen overseas. "But there are some long-term investors among FIIs too, entities like pension funds and so on who are not likely to sell too quickly."
When all other sins are old, greed still stays young.
French Proverb
The markets were flying all around the whole day after the huge gap down and near circuit levels in the morning and despite all help from the government , it kept slipping again and again ..the bottom as of today is 3198-3209-3258 at day end..and we made lower tops at 3996-3364..Europe /US futures is in deep red..Depressing day for all and i think hands off would have helped today to gauge and see how markets are behaving..lets see how next week unfolds..till then rekax and dont think of the markets this weekend..good sign i noticed was that many stocks started moving up after the carnage and are up 20-25% from their bottoms..cheers..
Markets have to make higher lows /highs before some semblence comes..if 3199 the todays base is breached , then we wait for another low or market should make higher low (3239 it is that right now)before we can even think of this carnage taking some breath.. todays high of 3396 will have to be crossed too.( basically a few higher lows/highs will be a clue for stopping of this carnage).so look at this range intra day for your cues , its already been a very chppy market..
take care.
A pleasant memorable week for those who traded the trend and a miscerable week for those who anticipated a reversal...
By falling below 3600, Nifty has entered into a new trading area where the range is likely to be 3600/ 3550 to 3000 / 2950 /2850.
By falling below 3600, Nifty has entered into a new trading area where the range is likely to be 3600/ 3550 to 3000 / 2950 /2850.
Tisco book value 300
I just bought @ 310.
eps around 64-70.
few years ago eps was as low as 40-50
Anyway
http://in.biz.yahoo.com/081009/203/6yfu1.html
arcelor expects ok numbers.
I don't and the market doesn't..
Steel stocks have crashed. More price drops to come but I think that tisco's profitability will go back to pre bull market levels..
Last time tisco was at 300 was when I started trading..
2004 ish.
So I think I'll just hold for 3-5 years and exit at a p.e of 10 around lets say 800-1000 rs.
Keep in mind bear markets are sharp violent affairs. especially near the end of local waves. I'm not saying nifty is done tanking but such a violent spike could lead to a profit taking/pullback rally maybe a consolidation between 3000-3600-3800. If we had held 3800 then 5k would have been my jan target but since we broke that. Jan target is around 4400 now.
Nifty strong support at 3300-3000-2800-2600
2600=ground floor
eps of nifty = 225
If anyone has estimates for fy2009 nifty/sensex earnings estimates, then please do leave a comment.
old estimates for nifty earnings would have been 20% eps growth
so 270 eps. or 2700 ground floor
but fresh estimates might be lower around 250-260?? I really don't know.
But if I had to pick an area then the break all your bank deposits and buy nifty
region would be 2300-2700.
10 times forward earnings (since current yield on a fixed deposit is around 10%)
(I still have some fds... all fds start getting broken if we touch 2800-2600 and 2300)
The message said that based on fractals that we were going to have the next leg hard down. Nifty was at around 4300 at the time...Now at 3200...
Booked all shorts b/w 3500 and 3200...Some early...Some late...Overall a fantastic trade - The best I have ever done...Even I was amazed at how the whole thing played to the dot.
Now see the latest chart posted above. Nifty log.
I have also added some comments on the chart.
To me it looks like the risk-reward has shifted to the long side and we should buy the dips going forward...We might get a retest of the lows in order to complete the wave structure but its not necessary.
I bought heavily yesterday at around 3200...If you did not buy, dont worry, good chance we will retest the lows again...Else just buy the dips...The move up could be fast and furious..but should be profitable nevertheless...
One thing to note here - something I have always said...Dont use insane leverage...You will be wiped out...Trade safe..
Now wave structure I am not sure...If we have completed the BIG wave A down and the corrective multimonth B wave rally is going to start? OR if we have one more downleg in a month or so to complete the big A wave...
Maybe in a later post, if all are interested, I will post a couple of EW possibilities with charts. This fractal call turned out to be pure GOLD for me...And hope some others also benefitted...The whole time this was running, you just had to look at the charts I had posted earlier and note the pure symmetry of the both the waves...Its really a thing of great beauty :)
Trade Safe.
SENSEX and NIFTY seem headed towards the last Fibonassi support levels and the zones for both the indices are given in the charts. The Sensex seems likely to settle around 10,000 with few hundred points +/-. And NIFTY should bottom around 3,000 again 1.5% +/-. The exact support levels are though 9700 for Sensex and 2950 for Nifty.
However if these levels are broken there could be a breakdown
I just bought @ 310.
eps around 64-70.
few years ago eps was as low as 40-50
Anyway
http://in.biz.yahoo.com/081009/203/6yfu1.html
arcelor expects ok numbers.
I don't and the market doesn't..
Steel stocks have crashed. More price drops to come but I think that tisco's profitability will go back to pre bull market levels..
Last time tisco was at 300 was when I started trading..
2004 ish.
So I think I'll just hold for 3-5 years and exit at a p.e of 10 around lets say 800-1000 rs.
Keep in mind bear markets are sharp violent affairs. especially near the end of local waves. I'm not saying nifty is done tanking but such a violent spike could lead to a profit taking/pullback rally maybe a consolidation between 3000-3600-3800. If we had held 3800 then 5k would have been my jan target but since we broke that. Jan target is around 4400 now.
Nifty strong support at 3300-3000-2800-2600
2600=ground floor
eps of nifty = 225
If anyone has estimates for fy2009 nifty/sensex earnings estimates, then please do leave a comment.
old estimates for nifty earnings would have been 20% eps growth
so 270 eps. or 2700 ground floor
but fresh estimates might be lower around 250-260?? I really don't know.
But if I had to pick an area then the break all your bank deposits and buy nifty
region would be 2300-2700.
10 times forward earnings (since current yield on a fixed deposit is around 10%)
(I still have some fds... all fds start getting broken if we touch 2800-2600 and 2300)
Hello Friends and Faithful followers of this Blog,
Almost a month back I posted this message here -The message said that based on fractals that we were going to have the next leg hard down. Nifty was at around 4300 at the time...Now at 3200...
Booked all shorts b/w 3500 and 3200...Some early...Some late...Overall a fantastic trade - The best I have ever done...Even I was amazed at how the whole thing played to the dot.
Now see the latest chart posted above. Nifty log.
I have also added some comments on the chart.
To me it looks like the risk-reward has shifted to the long side and we should buy the dips going forward...We might get a retest of the lows in order to complete the wave structure but its not necessary.
I bought heavily yesterday at around 3200...If you did not buy, dont worry, good chance we will retest the lows again...Else just buy the dips...The move up could be fast and furious..but should be profitable nevertheless...
One thing to note here - something I have always said...Dont use insane leverage...You will be wiped out...Trade safe..
Now wave structure I am not sure...If we have completed the BIG wave A down and the corrective multimonth B wave rally is going to start? OR if we have one more downleg in a month or so to complete the big A wave...
Maybe in a later post, if all are interested, I will post a couple of EW possibilities with charts. This fractal call turned out to be pure GOLD for me...And hope some others also benefitted...The whole time this was running, you just had to look at the charts I had posted earlier and note the pure symmetry of the both the waves...Its really a thing of great beauty :)
Trade Safe.
SENSEX and NIFTY seem headed towards the last Fibonassi support levels and the zones for both the indices are given in the charts. The Sensex seems likely to settle around 10,000 with few hundred points +/-. And NIFTY should bottom around 3,000 again 1.5% +/-. The exact support levels are though 9700 for Sensex and 2950 for Nifty.
However if these levels are broken there could be a breakdown
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