Our markets opened in negative ground, taking overseas cues, and quickly recovered on short covering, coupled with some follow up buying in index heavy weights, which have become attractive for long term investors/funds. Both Sensex and Nifty closed in positive territory, around 5DSMA levels, indicates a relief rally. With crude touching 110 $ and retreating on profit booking by traders, and US markets posting one of the highest ever positive closing in the recent times, on Fed moves to injuct ample liquidity, augurs well for asian markets as well as our markets too.
Gap up opening on our indices is foregone expectation one can have, and the behaviour of the indices around 200DSMA levels, where profit booking can be expected by short term players, as the sentiment is weak due to prolonged bearish ness in 2008. Investors holding profitable positions can book partial profits around higher levels, as they would get ample number of opportunities to re enter the same stocks, or move into quality, growth oriented, blue chip stocks, and should be cautious with momentum stocks which have made retail investors to loose more money, as most of them will be illiquid. Recession or Stagflation of US economy is in store during 2008, which certainly is not good news to equity markets, as more skeletons from the cupboard, in the form of loan losses, write offs will be known at the end of this quarter, markets around the world will have the volatility.
Gap down and Gap up openings can not give profit, unless one has overnight position advantageous to book the profits in derivatives trading. If our markets cross 200DSMA and settle above it with volumes in this rally, we can presume that a bottom is formed around lows of 10.03.2008 for the month, as January Lows are held.
Strategy for the Day: Buy a Strangle of 4800 put option and 5100 call option at the opening prices for intra day trading in current series.
9 comments:
Dear Mr.Rao, I am regular reader of your blog since Sep 2007. Your blog has been very helpful in my study of the market. Technical analysis is no doubt fairly accurate. What is your personal opinion about astrological analysis of the market?
I am a computer scientist and would like to disbelieve astrological predictions of the stock market, but I am amazed by the accuracy of some predictions.
I quote from the Jan 2008 issue of a leading astrology magazine: "The period from 1 Jan to 9 jan indicates Bull Trend. From 10 jan to 24 Jan there will be heavy volatility. This period indicates the market will give DOWN CIRCUIT for 3 to 4 days"
For March 2008: Bear Market upto March 12fth, Bull from March 13th. Uptrend dates: 3 to 5,7, 10 to 12, 18 to 21, 25,28,31.
Downtrend dates: 6,13,14,17,24,26,27.
You can verify for yourself the accuracy of the astrological predictions!
Dr.Prabhu
Dear Dr.Prabhu,
Very much fascinated to note that you have been following blog since Sept'2007, at the outset.
Well I am also a student of astrology, and read Astrological Magazine published by Dr.B.V.Raman, Bangalore. Well I did not the get issues since Jan 2008 till date, so missed the prediction.
Anyway, the influence of planets on one's life, if believed, then extrapolation of the same principle relating to major planet movements to certain sectors, and the general trend of markets is studied by number of people.
If one is able to collate the same with astrological prediction too, and able to make money, it would be wonderful.
Investment strategies should never be made, only based on such studies, whereas fundmental and technical analysis can guide for making profits or minimising losses.
Thanks,
vrkrao
Dear Mr. Rao,
The only effect the sun, moon or stars can possibly have on the stock exchange is its gravitational effect in accordance with Newton gravitational law which states that two bodies would attract one another with a force equal to the product of the masses times the gravitational constant divided by the square of the distance between them however if your personal gravitational affect on the stock exchange would be greater than that of any planet/star considering you are much closer to the stock exchange and hence the square of your distance would be much greater. So I think it is a rational to conclude we can safely dismiss the effect of sun/moon/stars on the markets as you personally have a greater effect literally. Please calculate your self it is very easy.
If you know of any other force other than the gravitational effect please let me know and we will investigate.
Dear Mr. Rao,
I am glad to know that you study astrology. I quoted from "Express Star Tellar" which I buy regularly, which I have observed is surprisingly more than 90% accurate in its monthly and daily stock market predictions.
Based on the Jan issue prediction, I bought Jan 2008, 6000 put @Rs.90 x 1500 on Jan 9th. You are well aware that the put went upto Rs.1600 on Jan 21st, a profit of 600%. Unfortunately not trusting the astro prediction fully, I sold the put on Jan 15th itself for a negligible profit.
I am a Reiki master trained by William Lee Rand(USA), Walter Lubek (Germany). I have trained in TM and TM Siddhi, of Maharishi Mahesh Yogi while studying computer science in the USA. I have also studied pendulum dowsing and Tarot which are quite accurate in stock market predictions, when studied in comparision with tech analysis.
I have studied and explored the occult and spiritual arts and sciences with passion since 2000. So much so that I spent more money than I earned on these pursuits. I now try to trade the stock market using the occult skills that I learned, trying to balance my spiritual pursuits with my material needs.
It is my personal experience that I lost money mostly when I trusted the "tech experts" on CNBC TV and NDTV Profit, ICICIDirect and not trusting my own occult skills, astro predictions and my "inner self / sixth sense / spirit".
The human mind's experience is based on ego which is mostly greedy and always wants only as much of "the best" as possible. The mind is most often misled by what appears to be true based on our perception of our five senses. Our inner self / spirit is the real guide which never errs if only we could heed it!
Do keep posting regularly on your blog at least for fans of you like me. It would be a great idea based upon your vast experience as a banker and stock market analyst to post about your daily analysis of a few select top stock futures like Reliance, L&T, State Bank, ONGC or one from each "hot" sector.
Wishing you and all your readers happy and prosperous trading!
Dr.Prabhu
Hello,
I would not disbelieve astrology completely. But, I myself am a spiritual person. So, I respect the power of astrology.
@Mr. Rao - I can understand the role of astrology in predicting market ups and down cycles broadly. Trend changes are identified / predicted fairly accurately by Astrology. I personally feel, daily or weekly trading can't be done using the same.
@Ashok - There is more to life than the 'Science' that we study and are taught. That is where astrology, spirituality come into the picture. Even the great Stephen Hawkings is fascinated by the metaphysical world (God), even though he couldn't measure it. That is where astrology comes in. Its another tool to guage human (crowd) behaviour, which is the exact thing that technical analysis tries to replicate.
@Dr. Prabhu - I am a student of behaviourial finance. But, I would be very excited to hear about your experiences with the occult as well as spiritual arts and the stock markets. I would be grateful if you can point me in the right direction in terms of any books on this subject.
Vinay
Dear Dr.Prabhu,
If you wish you can discuss your thoughts on astrology etc., personally through mail to me, as majority of people in the world treat the subject as premitive, and treat it as an excuse to cover the mistakes with 'karma' theory.
my email id: vrkr4u@gmail.com
Dear Mr.Ashok,
I totally agree with your views, being a Post graduate in Applied Geology from Andhra University, Vizag, cannot accept and influence of 'Saturn" which million miles away, from earth, how it can differently influence each one of us, who are tiny elements when compared with the size of the planet 'Saturn'.
But, Started developing interest in the subject since 1992, when january issue of Dr.B.V.Raman, Astological Magazine predicted the Harshad Mehta scam and fall of stock markets with accuracy.
Well let us not discuss these matters on the blog, and discuss through personal mail, so that 'the main objective of understanding Nifty movement, fundamental and technical analysis to help our portfolios earn profits or minimise losses.
Thanks,
vrkrao
Dear Mr. Ashok,
The Newton's law of gravity applies only to the three dimensional state of matter. Einstein's law of relativity has long ago disproved Newton's Law of Gravity as being only "relative". Our earth is but a speck in the Cosmos. There are many subtle forces which cannot yet be explained by science.
I have been brought up to view every thing in life with a "scientific out look". Since 2000 due to some drastic changes in my life, I tried to seek an explanation to the cause of those changes. This became a never ending quest into the occult and Spiritual realms.
I am a scientist and as such am highly scientific. But I am also aware that there is a realm beyond scientific explanation, which I am exploring since 2000. All occult and spiritual arts and sciences (Astrology, Numerology, Tarot, Reiki, Dowsing etc)come under the term "Parapsychology".
Interestingly Parapsychology is a subject of study and research at many top universities in the USA and Europe! So much for and against science, but let test the astro prediction for today, as the taste of the pudding is in eating it!
Friday March 14Th: (Bear Day) Opens with flat trend normal rise from 10.10 AM to 14.00 PM, decline from 14.00PM.
PSU, Auto, Power, Telecom, Colour, Chemical will decline.
Dr.Prabhu
Dear Dr. Prabhu,
The example is not mine but that of the late celebrated Cosmologist Dr. Carl Sagan. I am certain he was well versed with most theories including that of Newton and Einstein. In case you are not familiar with his writings please have a look at this wikipedia article.
http://en.wikipedia.org/wiki/Carl_Sagan
I don't know how you say the example I gave you is not applicable. Carl Sagan used the very same example in his television series COSMOS.
He is the one who applied that very example to urge people to question and not be swayed by mumbo jumbo.
True there are still a lot of things left to be explained in our time but we can not attribute it to astrology as we have no other explanation at the current time.
Let me give you and example. When Tutankhamun's tomb was found in Egypt by Howard Carter and his team of archaeologists there was a parchment which told of a curse which would befall those who opened the sarcophagus. Sure enough most people who were involved in the excavation began to die prematurely from inexplicable circumstances.
Was the curse true? did the mummy strike them down from beyond the grave?
Most people began to think so at the time but it was later found by Dr. Ezzeddin Taha, the excavators had been exposed to Aspergillus niger, a fungus that causes fever, fatigue and rashes. He suggested that the fungus might have been able to survive in the tombs for thousands of years and then was picked up by archaeologists when they entered.
This finding was made much later which gave the correct rationale explanation.
Please understand this is only an example to make my point that we should not attribute currently unexplainable occurances to astrology/ tarot cards/ tea leafs/ parrots etc.. simply because we can offer no logical explanation them at the current time.
You are correct in regard to parapsychology but I very much doubt Ivy-league universities have such departments. Well I am and engineer from Mumbai and as far as I know Mumbai university does not have such a department, my sister is a Gandhi-Nehru Phd Scholar at Cambridge University and she tells me they do not have such a department either.
However I do support the idea so people can actually study such phenomena find the correct rationale explanation and encourage our people not to fall prey to Gurus / Charlatans / Baba's (whatever) who simply exploit they uninformed uneducated masses.
Hi Ashok,
What all you say is no doubt right. I have read Carl Sagan's books. I am not superstitious, I just believe in the supernatural. The babas and god men are not for me.
As Mr.Rao says let us spare his blog from our discussions.(My sincere apologies to you Mr. Rao for stirring a hornet's nest of the matter vs spirit nest!)
I would be too glad to discuss with you via email if you are interested, as I always tried to disprove the super natural. I would be delighted to know more about you and wish to be your friend.
Look at what is happening to the NIFTY chart after 2 PM and look again at what I wrote at 11.09 AM.
Dr.Prabhu
alpkumaar@gmail.com
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