Living to Trade, the Rocky Balboa Way - Sainik

In his landmark book "Trading for a Living", Alexander Elder, the author, talks of visualizing the market as a gang of bulls and bears, who are equally matched in strength, but who try to push each other to the extreme akin to a game of tug-of-war.

At some point of "no return", actually, the "weak" guys become strong. That is the point when the "weak" guys say: "Enough is Enough". The so-called weak guys have been beaten so badly and the other gang is so confident and ready to give the "sucker punch" as it were , when the weak guys in turn get up and fight with renewed vigor and slowly and surely push the other gang back.

I hate to "hunt for the bottom", and have been a contrarian bull for the last fortnight, whenever the Nifty has fallen below 4000, yet, yesterday's price action in the last 45 minutes brought me back memories of June 15, 2006.

Traders would be familiar with the turmoil in our markets beginning May 11, 2006 and the vertical crash of May 22, 2006, followed by relentless selling by FIIs in June 2006, when all the world was selling India. Bulls were battered day in and day out, and every rise was only a "dead cat bounce". On June 13, 2006, the Nifty futures made a low of 2590, going below a psychological support of 2600, and somehow bounced back to close above 2600.

Then June 14 dawned, and the die-hard bulls thought that they had found the bottom,when there was an upward gap opening, yet, once again, the bears took complete charge and pushed the Nifty future to a new low of 2575, in the last 45 minutes, thereby eliminating all the remaining "die-hard and hopeful bulls" - the futures barely managed to close above 2600 for the second consecutive day.

The price action of that day reminds me of what happened yesterday, when the lowest low of 3790 was broken in the last 45 minutes to make a new low of 3775 and the futures struggled to close above 3800 levels.

When I trade, I not only look at "raw numbers" but a variety of indicators, like how those numbers came about, volumes, price action, the kinds of scrips which moved those numbers, the sentiment among analysts, traders, media, etc and finally what my "gut" says.

All these indicators point out to me that its better to be bullish than bearish in this environment. For all those bulls and bears out there, it's worthwhile remembering the quote of the famous boxer, Rocky Balboa: "It ain't about how hard you hit, it's about how hard you can get hit and keep moving forward, how much you can take and keep moving forward. That’s how winning is done."