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



IDFC


Larsen

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










Thursday, April 19, 2012

EOD Analysis For 19th April 2012 and Outlook For 20th April 2012

OI in Nifty futures still hovering around 21.5 million and VIX well below 22; regardless of where prices go, the next 2 to 3 sessions would witness an increase in volumes [roll-over effects]

Critical support/resistance levels remain unchanged from previous posts.


Wednesday, April 18, 2012

EOD Analysis For 18th April 2012 and Outlook For 19th April 2012

OI in Nifty futures still hovering around the 21.5 million mark and VIX has cooled off a shade further;

Critical levels and outlook for both Nifty and BankNifty remain unchanged from previous update;

Upside seems capped @ 5348 on closing basis and only volumes and/or gap-up can take the index higher;
On the downside, 5177 should provide support [5032-5092 band in case of a severe sell-off; ideally 5109 should provide a very sharp bounce-back]



Tuesday, April 17, 2012

EOD Analysis For 17th April 2012 and Outlook For 18th April 2012

Marginal increase of 2 million in Nifty futures OI i.e. 22 million today and VIX cooled off a shade further
[From today until expiry, will be counting OI in April/May/June contracts]

Critical levels and outlook for both Nifty and BankNifty remain unchanged from yesterday;
Price action on the bourses paying homage to 377 day cycle from 6th April '11 of 5944;

For alert traders, this week will be exciting but some whipsaws may be generated as well so safe traders should  hedge positions well and adhere to strict stop losses; as mentioned by seniors as well, again repeating that one should refrain from going for OTM option straddles and strangles as premium burn rates will be high.

As long as critical supports hold out, risk-reward ratio is still in favor of buying the dips IMHO though upside seems limited as of now

5348 is quite a tough level to conquer on Nifty spot on closing basis on upside [and likewise 10750-10800 on BankNifty; volumes are needed to follow up the buying

Finer trading levels covered by Raghuji and SMO


Monday, April 16, 2012

EOD Analysis For 16th April 2012 and Outlook For 17th April 2012

OI in Nifty futures still hovering around the 20 million mark and VIX hovering around the 22-23 mark

This week is expected to be exciting as far as trading is concerned and critical levels and outlook remain unchanged from previous post;

Critical Support for Nifty is in the 5032-5092 band and 5348 is critical resistance on upside
Critical Support for BNF is 10150 and 10750-10800 is critical resistance on upside

It is interesting to observe EOD charts for CNXIT for the last 1 year; come INFY results and it drops big time, weakness follows up for 2-3 more sessions and then slowly some short covering comes in thereby helping the index stage a pullback

As long as the critical supports hold out for Nifty and BankNifty, risk-reward ratio is in favor of Buying the Dips IMHO

For all our dear readers who keep asking yeh IMHO kya hai yeh IMHO - iska ka matlab hai In My Humble Opinion :D
Other Acronyms used frequently on our blogs

AP = Aatma Pranaam [Courtesy Suraanaji]
HHHHHH = Ha Ha Ha - Ho Ho Ho [Courtesy Harshal bhai and Raghuji]