Saturday, September 20, 2008

Fed's Rally!!!Weekend Views On Nifty!!!









So I run to the Lord, “Please hide me Lord”

“Don’t you see me praying?”

“Don’t you see me down here praying?”



But the Lord said “Go to the FED”

The Lord said “Go to the FED”

He said “Go to the FED” all on that day



So I ran to the FED, He was waiting

I ran to the FED, He was waiting

I ran to the FED He was waiting, all on that day



I cried power FED!!!!

Hmmm…. What a week! A week full of chills spills and thrills...a rollercoaster ride of a lifetime and a valuable lesson testing the grit of the best of the best traders. The week started with a lot bad news, the markets reaction to such news was what normally it should have been but the higher powers (THE GOVERNMENT) intervened and tried to change the course of things. Did they succeed?...Yes the rally that followed the mayhem is the proof of it. So is it the good news?...Nope this in fact is even more detrimental to the functioning of free market mechanism in the future. Markets as they say discount all news, Markets have a mind of their own. Their own free will and that’s what’s makes them exciting and challenging. All this interference with curbs on short selling and trying to alter the conditions of the free market is going to be short lived, as the adage goes “You can’t push on a string”.

Well let us leave those deliberations to the people who are smarter than us, as traders we should just concentrate on our charts and our STOPS! As usual we start our analysis with;

The Weekly Picture

We have had a 14 point gain on weekly basis and also got ourselves a Dragon fly Doji, a bullish pattern if found at market bottom. The double bottom on weekly chart is accompanied with bullish divergence on the indicators. Now whatever the trigger is for this rally or however shallow it is, this divergence is telling for now we are going up. We have a good support at 4000/4050 and the over head resistance for now at 4350/70. Above that a retest of 4650 is not ruled out.

The Daily Drama

The latest bar on the daily chart above is nicely nestled between the two most discussed levels of ours 4050 and 4250. There is a convergence of the 20 and 50 periods MA’s at 4300 which in normal circumstances should pose some resistance or at least stall the price for sometime during the course of intra day action. But considering the crazy gaps we are doing now day I won’t be surprised if we surpass this level also by a virtue of a gap open. But then again so may gap ups is really not a good idea, it really doesn’t talk much about the strength of the bulls but rather gives an opportunity to the bears to strike with vengeance.

The Hourly Break

We have almost had a vertical rise and logically we should rest and resume the journey up. Immediate resistance staring at the price on the hourly chart is the 200 periods MA at 4280 approx and something major at 4370 where we can see a sort of trend lines meeting. Whereas the support cushion provided by the 50 and 20 periods MA’s is at 4150 and 4100 respectively, but personally I feel 4200 will do a good job just as well.

Overall like I said a very volatile week it had some sore losers, some fantastic winners among traders. This reminds of a quote I read long time back on perspective “Two men saw through the bars; one saw the dust the other stars!”

Btw I had twisted a word here and there in the original song Sinnerman by Nina Simone. A remix version of the song is worth a watch.

4 comments:

  1. Hi Manoj
    The most simple way to make money is to play "ONLY THE DIVERGENCES" because they are the real indicators of excesses in the market.And that is the only time market deviates from the mean level to the maximum and lets you in on some great bargains.We don't need to study fundamentals to pick bargains then.
    Whatever may be the reasons for their development, market does digest them quickly and tells us through the prices and by the internals.
    Your strength lies in plainly reading what the charts tell you and reproduce them here without any prejudices.And your format is the most simple and most effective and consistent one.(Except you...)
    I like to remind here that there are divergence trap at times which trap Bulls/ Bears(But this not that one).
    Have a great trading week ahead.

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  2. Hello Manoj,
    Thanks for all your post.
    you have recommended some book in your section, can you ps recommend a good book to me as i am new to TA. I dont know anything about Eilliot Wave but i know something about candelstick patters. thanks in advance, plus i would also like to know chart you use in ur blog, i currently use metastock.

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  3. Hi Ilango,
    Yeah Divergences are a good source for some good swings and so are convergences.
    As regards to ur comment on consistency your right on dot..I am lacking in that department. Infact I am not even consistent in making money in trading.
    I always wait for your comments to my posts, dunno why?
    Is there a way to contact you on mail or phone... a few cobwebs I need to clear and somehow I feel you r the man!
    Thanks for always encouraging me with ur comments!
    Regards,
    Manoj

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  4. Yasharth Hi,
    I am exactly like you, a novice. The only difference is that I write in a blog to hone my skills. You can say I am a newbie too tryin2find my bearings in the market.
    As regards to suggestion on the books..start with Elder and Murphy.Pring is another essential. Elliots I am afraid my friend the abc is bit tough for me I somehow never know when to start with the capital ABC or small abc...
    Ilango of justnifty is the right man for elliots...visit his blog regularly to get a fair idea on Elliot analysis. Another chappy who is into Elliots is Lee.
    Software...well i draw my lines too on metastock..though I have heard most of my friends swearing on amibroker!!!
    Hope the info is useful to you.
    Regards,
    Manoj

    ReplyDelete