Friday, April 20, 2012

EOD Analysis For 20th April 2012 and Outlook For 23rd April 2012

OI in Nifty futures slowly increasing towards the 23 million mark; VIX is still surprisingly low [this has been a pattern consistent towards expiry for the last 2 months now] as we move towards expiry, significant premium erosion seen on Nifty and BankNifty April futures

Critical levels and outlook remain unchanged for both Nifty and BankNifty;

[Ignoring the freak values in Nifty, LnT, INFY etc; IMHO always cross check with both the spot values and futures values and the aberrations most often than not can be ignored as is the case today in above mentioned futures low prices; there could be more but these are the ones I saw; this is not the first time it has happened nor is it the last time :D We have seen this in 2011 also where LnT spot price high reflects 2000+ but the futures price eliminated that possibility; likewise, there were some freak candles on Nifty during the Diwali rally but the futures price eliminated the doubt; this time it is the other way around i.e. futures prices are reflecting aberrations and spot prices are confirming reality :D]

Some illustrations for reference

First and foremost, Nifty maiya parameshwari; have made some changes to the trendlines

Hence from this perspective as well as the EW perspective given by Raghuji, we strongly discouraging Long Nifty Option Straddles / Strangles especially for far away strikes as the odds of such strategies delivering handsome gains are very less.

Some interesting charts for reference; these counters seem to be approaching a break-out or break-down mode and keeping such counters on the radar may provide some quick sling shots [and I admit that at the end, it is about assessing probabilities but I personally prefer to take a cautious and measured approach than just randomly picking calls / puts that eventually burn holes in the trading pockets. I seldom get into specific stocks except for instances like these where there are flags / triangles / diagonals coming up that signal swift moves in either direction.]

JP Associates



The whole point we are trying to convey is that one should patiently wait for high-probability setups to come in rather than randomly buying calls and puts 'desperately hoping' that some bumper lottery will come out! [most often than not the lottery tickets go worthless!] 

Whether it is the EW perspective by Raghuji or the robotic and rigid mathematical approach advocated by SMO [ his blog title says 'random words' but he is absolutely rigid and robust with his entry/exit approach] or some other trading system one is comfortable with; but evaluating potential outcomes and then staking money is very prudent IMHO

To end I will just repeat 3 sootras given to me by my mentors

Sootra 1: Protect your capital; manage your losses and profits will follow - given by wwji

Sootra 2: Trade little, trade healthy - given by harshal bhai

Sootra 3: To Each His Own - given by Raghuji

Interpretation of the sootras are quite subjective always and hence left to the discretion of readers :D

Enjoy the weekend - will catch up on Monday EOD

1 comment:

reachnagraj / theknight16 said...

Please note that there is a typo error in the title of the 4th chart posted; it should read Larsen and not IDFC