Sunday, February 27, 2011

Budget & You




Update 4: Book Profits near 5600+ levels (03-03-11)

Follow this trade in context with the Update 3 posted yesterday below.

It has been a good 'long' journey since the Budget day Lows. One may book profits and enjoy the Weekend if the levels of 5600+ ( especially near 5620-30 and above) are traded tomorrow . 

Next Week trading may be of consolidation/distribution between 5400+ and 5600+ levels. We will discuss the probabilities in detail on the Weekend.





Update 3 : Let 5475 be the New SAR (02-03-11)

As the Initial Balance range mentioned in the Weekly Strategy, has been resolved on up side ,The next couple of trading sessions can be traded as follows-




1. Change the SAR from 5415 to 5475 for the Week ,which is the High Volume zone in 5d  Vol. Profile and approx VWAP of last session's upmove. 

2. Tomorrow trading above 5475 will target 5560 (Fibo. No.) initially and below it will get support at 5440 level (Vol Profile and 20dema). Hourly charts are Overbought and some profit booking may come.The reaction at the supports will be the key to watch.

3. Above 5560, the target will be the touch of 200dma at 5630 level . Below 5440 will turn bearish to touch 5415 (apprx.5dema and previous SAR) and below.( the fall can be quite fast to reach 5300 level )

4. FII's are  big buyers in the Derivatives section of the Index since the start of March series.

5. Puts are getting adding up at 5300 and 5400 (ya again!!) strike with low Call writing at 5600 ,5700 strike , indicating room for upmove.

6. Please check the detailed analysis of the Week, Strategy and Targets in the  Post        below .

Also check the Short Term Probabilities



Update 2 : '5415' Rules again (01-03-11)

The Weekly SAR of 5415 after giving two fine trades yesterday ,was back in action today. The positive opening ,break of 5415 along with bullish intraday moving averages alignment ,gave a good trending day.


Check the Strategy of the Week in the Post carefully -

- Expected resolve of the initial balance range of 5260-5360 in couple of days.
- 5415 as SAR if moves above it.
- Closing above 5480 will be Bullish and potential to touch 5600+

So now check the EW post for the Probabilities and Targets ahead -


Since the Initial Balance range has been resolved , the trading strategy for next sessions in the Week will have to be fine tuned. Will Post update tomorrow.


Update 1: Perfect Day trading Session (28-02-11)

"Trading above 5360 will target 5415 and 5460-80.


Keep in mind during any upmove that the Larger TF is in Down trend, It should be respected by profit booking at important levels of Resistance.(One may keep SAR of 5415 if moves above it and manage it intraday )"

These were the two trading mantras to be followed as posted in the strategy after detailed analysis yesterday.The Hourly chart gave a good entry and when traded above 5415 shooted to the Resistance level of 5460-80 , again came back below the SAR 5415 triggering short trade.So a nice both sides trade making it a perfect daytrading session. Check the Hourly chart below.
 



Now for Tomorrow,One may manage the trade as follows-


1. Below 5290 ,One may go short for target 5260-5230.Positional short below 5260 on closing basis.

2. Trading above 5290 ,can go to near 5360-5400/15 level. Book profit at these levels.
Positional long only above closing of 5480 level.

3. If goes up near Resistance levels mentioned above and then closes below 5300 ,will be very Bearish and target apprx. 5125 in next few sessions only.





4. Read the post below again for Targets and Insight for the week.
02-03-11 will be a Holiday.

----------------------------------------------------------------------------------------------------------------------------------

We will discuss the Trading Strategy for the crucial Budget Week based on the Technical data . A followup of the Down trend or a Short term reversal is round the corner in this Week which will be triggered by the Budget.

1. Indicators:

Indicators as Stochs, Macd,Rsi, present a contrarian & inconclusive picture as some of them are in the Oversold region in the Weekly Chart and some coming down from the Overbought region in the Daily chart.

2. Volume Profile :

 
 


The 5day and 10day Volume Profiles are near identical in structure having the Highest Volume Node at approx. 5480 levels . This was the approx. average VWAP levels for the Expiry/ Rollover Week. It shows some positional selling  during rollovers at higher levels.Taking out this level of 5480 will lead to good short covering and may be a quick upmove to 5600+ levels.

3. Trendlines:


The important Trendlines are shown in the Charts below .One should follow the Hourly charts in realtime to check the break of the trendlines for a signal of the direction to come.
 


The circled area in the above chart is expanded below-
 


There is also a Support area coming from a Long term Trendline.
 



4. Moving Averages:
 



The Moving averages are Bearishly aligned . Trading above 5dema at 5365 level will be Bullish with Resistance coming at 20dma at 5410 level (apprx. 5Mlema) and 20dema at 5450 levels apprx. Above 5450 levels will try to target the 200dma at 5640 level.
The 5Wlema is at apprx. 5345 level and 5Wema at 5430 level.

5. Important Pivots:


Some important levels to take note of are apprx.- 5175 (Previous low), 5230 (Friday's low), 5260 (Feb. Expiry ), 5600 (Last pivot high) & apprx 4900 (fibo level of 38.2% of the total upmove since March 09 -6338)

6. Option Analysis:  


The near equal build up of Calls and Puts from 5000-5500 in range of 40-50 lacs O.I. along with major volumes in far off strikes indicates no clear direction and hedging activities by smart money. It also signifies that even the short term one way downside is not expected as of  now.The addition or unwinding in particular strikes after the Budget  will only indicate direction to come. One should keep open probabilities of trade on any side as of now.One sided bias will be harmful for the trading a/c. 

7. EW Analysis:

Check out the Post -
Short-term-EW-Probabilities
Two Important targets come as 5650 on the upside and 5120 on the down side.

8. FII Action :


The FII's have been on the sell side whole of the last week emphasizing the Down trend. But they have been big buyers of all the segments of the Derivatives in the last trading session. It may be part short covering , part hedging and importantly are they expecting some short term reversal to be traded via derivatives?? 


So, correlating all the data ,we can conclude a  Trading Strategy for this Week -


1. Initial balance of Price may be between 5260 and 5360.Hopefully it will resolve in first couple of days of the Week.

2. Trading above 5360 will target 5415 and 5460-80. Positional longs above 5480 may target 5600+ levels. 
3. Trading below 5260 will target 5175 -5120 .The slide can further extend in alignment with the Larger TF Downtrend.

4. Extreme ends of the Trend may be marked by 5650 on the upside and 4900 levels on the downside ,where positional review will be required.

Keep in mind during any upmove that the Larger TF is in Down trend, It should be respected by profit booking at important levels of Resistance.(One may keep SAR of 5415 if moves above it and manage it intraday )

37 comments:

AAR VEE said...

My sincere Thanks to Dear friends
Bramesh,San ,Rajib,Jazz & Wolfe wave for adding the Link of my Blog at their respective Blogs.I wish them All the Best for their efforts to analyze the markets and educate all.Thanks

U can reach their informative blogs from the 'My Favourite Blog'List given below at footer.
check out-

http://www.brameshtechanalysis.com/

http://niftychartsandpatterns.blogspot.com/

http://niftypointandfigure.blogspot.com/

http://theprofiletrader.wordpress.com/

http://wolfewaveindia.blogspot.com/

February 26, 2011 7:55 PM

piyush sharda said...

nice analysis and real hard work
rv. why are u considering it as triangle? (though triangles are common in 4th waves)

hope u have been able to retrieve the book. let me know if u havent been able to do it...

AAR VEE said...

@PS,
I could'nt get the triangle part?In which chart u r referring to?
There was a triangle in hourly before(may be wave 2 in this down move).

i am unable to download from the link.

Sujeet said...

Hi AV!
Good Analysis and very easy to understand.I am learning EW from your analysis.

Thanks,
Sujeet

AAR VEE said...

Thanks Sujeet,

Hope the analysis helps in trading next week.I am also learning EW still :))

Sujeet said...

So which ever be the count b or c, all are of the larger wave 4. but it is sure that 5th the bull wave is pending, which no body would like to miss. I am asking just because already my portfolio is down by 30% if their is no chance of 5th wave, I should book my loss. Please confirm.
Lot of thanx

AAR VEE said...

Sujeet ,Pl. see the EW reference post -The on going waves since 2008looks like the part of the 4th,so 5th must be pending :). till when the 4th will end is any body's guess.

Ritesh Bendre`s blog said...

Goodwork ... AAr Vee :)))

Prabakar said...

Dear RV,

Thanks for the exhaustive study of all possible aspects.

It surely helps us for our trading.

AAR VEE said...

@Ritesh-
Thanks ,will take ur advice on gadegts for sure.

@Prabakar-
Thanks for the comment.U should share ur perspective too.

Renu said...

Thats really a good analysis........i have added your blog to my blog roll...............keep up the good work rajiv.

AAR VEE said...

Great start for the day!!.Thanks Renu

Nice gesture on ur part to add my blog link.I have been following the simple and effective methods of yours since long.

Thanks and Regards

Sujeet said...

@AV:
Your Magic No 5415 is working perfectly:-)

Lakshmi Ramachandran said...

Aar Vee,
Good detailed analysis. Btw i have not ventured into EW so will not be able to comment on that part.

AAR VEE said...

Thanks Laxmi Mam,

For visiting and going through the Post.
Regards

AAR VEE said...

Hi Sujeet-

It was a nice setup both ways.Hope u got profits out of it.

Rajandran said...

Your Blog has been added to marketcalls fav sites list

AAR VEE said...

Thanks Rajandran Sir,

Obliged and grateful.U have been among the guiding and helpful seniors since long.Sincere thanks on the gesture

Regards

herman from callezee said...

good job.....

KRG said...

AarVee: Pls take a look and let me know your thoughts
http://krgonline.blogspot.com/2011/03/follow-through-on-nifty.html

AAR VEE said...

@ KRG,

Will check in detail and leave comment at ur post later.

meanwhile u can check the EW post before this.It is panning out till now as C-4th and above 5700 will change to my favourite 'B' wave-The Dark Horse.

AAR VEE said...

Hi KRG,

Nice Post.

I am always amazed at the probabilities ,all valid, the market throws up. just emphasizes my limitations.

I am also not an 'out an out EW' player.I just look at the broader counts,(as the subminuette and near counts dont go with my positionals),so just try to go by the broader structure of waves and corelate with other indicators/common sense also, and check points of invalidations of probabilities to enter a practical trade.

I have a preference of the larger B (since 5177 was made and market moved to 5600) that should retrace the whole of the A (6338-5177),which also is given in my last ew post as a dark horse count.I am betting for it,because-

1. The markets have retraced almost 25% of the whole runup since march 09.so enough to call it near a big'A' .(may be with more say till 38% if doesnt breaches the 5700 mark on the up now)

2. The weekly chart is oversold ,ripe for a bounce.This chart never went in O/S zone so much since oct'08.Hence a bounce for the 'B'

3. The distribution can be done only with buying coming in,hence the slide cannot be in straight line.Breaching of 5700 on the up will again make people optimistic and 'buy on dips' types ,so good for a 'C's initial leg.

4. What EW helps in my trade is give me probabilities,ability to me flexible,objective,some targets and above all a broder sense of positional trade that i take.

Any ways practically, what ever proves right,one has to trade his belief , preserve capital, get profits by the counts he follows.

Regards

KRG said...

True. In fact, I w'd go one step ahead and say that EW offers trade plans only once in a while. For the most part, you spend time in awaiting confirmation (perhaps just like any other technical indicator).. So thatswhy EW is perhaps not so popular with hard core traders. It is tough to count waves on very short time frame and to relate them to the larger time frame is even tougher

piyush sharda said...

http://rapidshare.com/files/448622067/main.pdf

rv the link of the book is still working. today my net is slow uploading might take 2+ hours .
u can download i have checked its
working.

i was talking at the triangle frm 2008 . we are in wave 4 they are triangles but why before any synmtom of it u r making it as preferred??

AAR VEE said...

@KRG

I suppose no method will work in isolation,We have to take our preferred ones,having different parameters,and check the corelation,so as to part predict,part protect and part profits :)

Do share ur views at important turns.

@PS,

Since u commented in this post ,i was franitically searching for a triangle here in all charts.:))

U are correct as to ask why the larger 4th is taken in triangle.As i mentioned i connected the tops (2008 and recent)and bottoms(larger wave 2 and 'a' of 4th) to get it.
Since 5th is pending i thought an ascending triangle will be a nice pattern to fit here for coming bullishness and time wise correction reqd. for the 4th.

This pattern may change to an expanding triangle one, if B of the c/4 is irregular that goes above 6338.

lets see how it unfolds.First we have to have a perception based on existing data and then fine tune it as the pattern develops.Flexibility and adaptation is the key here.

KRG said...

AarVee: I must admit that I am not a "trader" as such..and wonder wheteher EW can throw up intra-day trading ideas.. may be sometimes..

Traders must use their own trusted methods as you say and look at EW with a load of salt :)

HAGO

Sujeet said...

Happy Maha Shivaratri to all...May Lord Shiva Bless all.

AAR VEE said...

Hi Sujeet-

Same to u and Lord Bless All and help each one find the'Shiv' tattva in them .

Like in Life so in Trading.

AAR VEE said...

One of the Friend ,KRG, can be reached at his blog -

'The Comfortably Numb'

added in the Favourite Blogs list at the footer below.
He is an avid follower of the Elliot waves and has an original ,indepth view of the Markets. Check it out.

rajan said...

sir , can u able to use motivewave after free trail expiry. is standard free edition working properly, iam using same i licence expiry at 28.02.2011, but i cannot able to get EOD data from 01.03.2011.pls share u r expirence.

KRG said...

AarVee: Thanks for the kind words. I hope you liked my last post on EW. It was prompted by your comment that traders need their own plan in addition to EW.

HAGO

AAR VEE said...

@rajan-
ya same experience here.no 01/03 data and std. version only ,no tools and many indicators.:(

@KRG,
The post was fine with a experience that every EW trader faces.

Sujeet said...

Hi AV:
Did not trade today but again your SAR has done good job.

Good Going Man!

Cheers!

FIRE said...

AAR VEE,

My admiration for your analysis is increasing day by day. Here are great lessons for market students like me.

Could you please tell me how to get the MP picture? It would be a great help.

AAR VEE said...

Hi Fire-

Nothing great about it,everbody gets it right 50% of the time.:)

I try to keep the analysis simple,mainly on price and volume(and some common sense),rest all indicators are their derivatives tweaked in some form.We can take their help in specific conditions for which they are suited.

The chart i use is a simple Volume profile,i.e. volume at particular price levels (horizontal bars are volumes at prices in front of them).MP is further to it and then comes TPO,Price matrix etc.

I use free charts available at volumedigger site.(Symbol of Nifty is .NSEI),u get data for upto 10days(enough for shortterm swing) in different time variables.u can follow it live or eod.also Stock charts are there.(symbol as per NSE)

For MP, i suppose best is Quote tracker software.Amibroker has also afl for it.U may visit Shai's site 'Vtrender' who are doing exclusive MP trades professionally.If u want some e-material on MP do let me know.

piyush sharda said...

rv,

how do u post charts on blog which can be enlarged. like u do or sir does or most others do it. when i post charts they are not enlargeable.

one thought i was having abt volume digger as it gives 10 days data. suppose prices remain high /low for 4/5 days and then turn. now we might assume smart money buying big/selling big . the fact may be that
those might be normal/low volume days just that our window is 10 days and price was at that level for 4/5 days so volume got done there. have u ever faced it?

AAR VEE said...

Hi PS,

Regarding posting of enlarged charts or images on the blog,when u post any image ,either keep the cursor on it or select and click the image ,u get a toolbar on image itself having options as small/medium/large /extra large/remove etc.click the option u want.Try on any image of ur previous post by editing the post option and let me know.
I suppose u will get something at ojn1 about it in the blogging tips post.

U are right that in any trend the developed volume is also accounted for in the reversal.The trick is to check the lower TF say 2d during any reversal and get the idea of the volumes during reversal and then align them with higher TF.
U can also keep note of the Vwap(which is also volume weighted) of Nifty futures EOD daily and get an insight.

Any one indicator will not work always.U have to combine the relevant ones and then corelate for the likely direction.

Share
Subscribe