Trading in a Volatile Market- Santosh Gundecha

Market has shown that it is 'Supreme ' and has made a mockery of most of the analysts. lobalization took toll on Indian markets. Most of the analysts including myself, were not comfortable with the way market was trading above 4200-4300 and were of a view that market will go down and try to test 3800-3850.

Market did the same but not in the way everybody thought. It was going down like a falling house of cards. As IF this was not enough, the V shaped recovery after making bottom near 3800, caught most players on the wrong foot.

The non-stop news coming from US, made players unable to take any sort of positions, long or shorts. Daily gap-ups and gap-downs in the Indian market (courtesy Dow Jones) made all investors, traders and other market players - HNIs, large traders and small Fund managers - very uncomfortable.

Market has shown its supremacy so players have to go to the basics.

The first rule: 'Bull Market has no Resistances and Bear market has no Supports'. The supports were breaking so fast in 6-7 days of downfall from 4500 to 3800 that the levels were just numbers and not supports.

Second Rule - In bear market relief rallies are too fast and vicious. The same things we are observing now: we are about open a good gap up on Monday. So we are retracing fast in 3 days to the fall. To add to the 'Firangi induced' volatility, is our last week of expiry. So every player will be ready with his position to cover on or before expiry as the future looks very uncertain.

FIIs are major sellers in the Market are causing the Rupee to depreciate as much as 15 percent in the last few days. However IT stocks are not able to gain much because sentiment is much hampered for these stocks, since much of their business comes from the US ,and everybody is suspicious about the health of US companies and thus their ability to spend on IT development . This would have been a boon for IT companies as they were to have Super profits of 15 percent due to depreciation of Rupee.

Trading Strategy: Last few months, the market was moving in a range with small volatility. So major HNI and Small Fund Managers were happy selling Options i. e. calls and puts to get 'COOL' 3-4 percent profit in an expiry. This time many of them have burned their fingers because of the two-way movement. They had to go for hedging/ counter-hedging and this made things more complex.

While doing this one tends to forget simple rule that 'OPTIONS WRITING PAYS ONLY IN NON-TRENDING MARKETS'. One cannot be stuborn with markets and make a single strategy (like Options writing) to earn in every type of market.

It is a better opportunity (and simple too) to play with plain Options i. e. calls and puts strategy like Strangles, Straddles etc. Plain calls and puts are paying much more with limited risk .

Now we are moving in last week of expiry and are about to open with a gap-up on Monday. Technically there are a series of resistances starting from 4330 to 4550. It is advisible not to Fight with market and Play with simpler tools like Options, when we move 100-200 points in Nifty a day. (Those watching charts can watch Candles and gaps in the daily charts).

Hoping this write up will be eye opener and wishing all a Happy and Safe trading.

Nifty Future for September 4 - Santosh Gundecha

Nifty future has good support at 4210 -4150 (which was held in the August expiry too). The trendline support looks good. Nifty can move up on the back of falling crude prices (although Dow is not supporting as of now!).

One can expect a possible pullback (may be on Thursday or Friday). Nifty future has a rest at 4650-4725. It will require much effort to cross these hurdles.

PS: The Political Drama on Nuke deal is set to give the expected pull back.

One can go long on pull back , near the supports.

Nifty Fut Weekly August 25-29 - Santosh Gundecha

Nifty future may open gap up around 4390-4400 on Monday because of strong US markets. We are entering Expiry week, so Some Volatility is expected.

The Nifty has a resistance 4400>>4465>>4515. The supports are at 4330>>4310 and finally 4250.

This being Expiry week and we are opening Gap up that too directly near resistance of 4400 . One should be cautious at higher levels.

Buy on DIPS only could be the strategy.

Unitech - Hot Stock - Santosh Gundecha

An Inverse Head and Shoulders (IHS) is visible in Unitech. This is a bullish signal.

If Unitech is able to trade above 176-77 for a day or two , it could see the targets of 210-220 range.

Trade (Swing): Buy Unitech if it trades above 177 with Stop loss of 170, for a swing target of 210 to 220 .

Nifty Future could See 4900 - Santosh Gundecha

Nifty future is looking good on the charts. If it manages to trade above 4535 for a day or two, we could safely say we can see 4900 in August.

With Crude cooling down and World markets stabilizing, there is a high probability of Nifty future moving up and going toward 4900. On the down side there is a good support at 4110 to 4070.

One can buy at dips with suitable stoploss. I will try to post some Options Strategy at dips, so that the risk is reduced much and one can gain for bigger targets.

Nag Fertilizer - Hot Stock- Santosh Gundecha

Nagarjuna Fertilizer is looking good on chart. Above 40 it can show 42-45 within next couple of days.

Trade: Buy Nag. Fert. in Delivery or Futures Above 40 with sl of 38 for targets of 42 >>45.

UPA Winning? - What Charts Say - Santosh Gundecha

It is said that charts speak. We are on the brink of a massive event which is the UPA government's Vote of Confidence in Parliament. Today, Nifty future just broke the Falling Wedge on upside at 4050 levels. It may still be borderline, however we have broken to the upside. The next targets are 4185-4220 and then 4320.

Now, how do we use this chart to learn if the UPA is winning or not. I am not looking at any other view or news. Just trying to read the chart. It is a difficult task but I am using this attempt as a Case Study. If we trade above breakout level of 4050 on Monday and Tuesday , we can safely assume that UPA is winning the vote of confidence.

I know I am making a big statement. All analysts will start saying this after result is declared, but I am sticking my neck out .

The Other View

This you may say contradicts my earlier view but please read between the lines. We are more interested in the markets, and its movement. If we trade above 4050 on Monday and Tuesday, we are surely going up.

Let the UPA win or lose. The scenario is as such: We see a small blip on July 23, people get trapped in shorts, and the market starts to move up. So please be careful if you are shorting after the results are declared.

Please note that all that I have written are merely guesstimates, and my attempt to predict political events on the basis of price action on the charts. The condition here is that the market stays above 4050 for two days.

The last but not least, my favorite subject: Astro views. Let's hope Saturn and Mars are cooling down and helps market.

Nifty Future for July 16 - Santosh Gundecha

As written continuously market is undergoing through a very bad phase from various aspects. We breached a big support for Nifty futures at 3810 near close, which we can say still holding as it broke 3810 in the last 5 minutes of close.

Now for today again 3810>>3750>>3700 are supports. On the upside Nifty has many hurdles to cross. Resistances for Nifty future being at 3840>3880>3920.

I will advise traders not to look for shorts at lows. Markets look oversold.

Nifty Future for July 15 - Santosh Gundecha

As written in my report yesterday, Volatility is at its best. Bouts of buying and sudden selling are now being witnessed daily. For July 15, Nifty can take support at 3915>>3870. The resistance for the up move is at 3980 >>4010>>4045 and then at 4090--4100 .

We will open big gap down . This is what I have given in my astro-techno update yesterday. Nobody had expected market to open such a big gap down. I know many who have gone long overnight yesterday. Such behavior should be avoided.

Those who wish to trade Nifty futures can try to buy near supports given above, after the initial gap down. They can books profits at the resistances given or exit when momentum halts. Better use stoplosses and trail a position for maximum benefit.

These are the days of high volatility, so when one initiates a position, it should be closely watched and stops used judiciously without fail.

One can try to buy options in most beaten stocks, like Infosys or Satyam, during dips. Markets have a tendency to overreact. I will try to post some options calls during the day, when possible. Do not forget that stoplosses are important in options too.

Volatile Week Ahead July 14-18 - Santosh Gundecha

Astro View: I had written in one of my earlier article on July 7 that Saturn and Mars are in conjunction at exact degrees on July 11, in astrology sign of LEO, which is the enemy sign of Saturn. As a result, we witnessed a lot of uncertainty, volatility and bearishness. This happened not only in Indian markets but also in US stock markets, Crude, Forex , etc.

I was expecting stability to come slowly by July 15-18, but now I feel we will have to wait till at least until July 22-23. On July 21 there is a debate in Parliament. (A 'debate' means allegations and counter-allegations). On July 22, the government would take the Vote of Confidence. This points to the fact that until July 22, rumors would run overtime.

Technical View: On Friday, the Dow kissed 11,000 mark but managed to close above it. The 11,000 incidentally a good support on Dow.

On the Indian bourses, the Nifty future had 7-week consecutive weekly bearish candles, followed by a weekly candle 'Doji'. A doji signifies indecision. We are still moving in a range , but the range now is growing with rising volatility. One can consider 3800 to 4200 as the range for Nifty futures. However, we have good support at 3810 > 3750 >3700.

On the Daily chart, the Nifty Future had a bearish engulfing candle on Friday, thus eating all the gains of earlier 2 days.

Trading strategy: There is a lot of volatility in markets, however there are some traders who cannot sit without trading. For them, one could trade Options, as Options have limited risk. One strategy would be to buy Nifty calls, when the Nifty plunges toward the lower side of band. Do not forget to use stops here too.

Doubled - Call Option on Satyam - Santosh Gundecha

Please refer my trade in Satyam Computer of July 8.

The trade was as follows:
Buy 480 CA July around Rs 10 with stoploss of Rs 5. Target Satyam cash rate 495 > 510.

This option is already doubled in 2 days (actually yesterday itself). It traded today at high of Rs 23.90 and closed around Rs 20. So what to do next? Wait for our targets of 495 and 510?

Now you can raise stoploss to Rs 10 . Tomorrow is Infosys's results. If it beats expectations (which are now higher due to a weak INR against USD), our option could triple in value (i.e. Rs 30). One can book at Rs 30. If holding multiple lots, book half here.

Cheers.

Options trade in Cairns - Santosh Gundecha

Cairns India has given a falling channel/wedge breakout at 240-241.

Buy Cairn 250 CA July at Rs 9.5o, stoploss Rs 5 ...Max risk Rs 5625.

Cairn can show cash tgt of 265-273 ...Options tgt 20-25 .

Nifty Futures for July 10 - Santosh Gundecha

Pl refer my articles dated July 9 and July 7. I have stated in my July 9 article that a break of the range will give big move.

Today Nifty future had broken the range on the upper side. So now NF will move northward. But before going up, NF could retest the breakout level of 4100 again and may retrace up to 4075>4045.

However , if international markets and domestic political problems do not play spoilsport, NF can see the targets given in my Monday's report: 4180> 4230 >4330.

Morning Alert: Due to weak US market we may open gap down.

Trading Call: Praj - Santosh Gundecha

Praj has a resistance zone at 189-191. So one Short Praj in cash or futures as follows:
Short Praj near 187-188 SL 192 tgts 179>173>168. ( all cash levels)

Nifty Future for July 9 - Santosh Gundecha

From last one week we are moving in a range of 3800 to 4100. On daily charts, everyday there is a Black candle followed by White and again Black candle. This daily volatility is because of international markets as well as Big internal Political chaos; and Media is adding fuel to speculation on political front.

Break on either side can give good move (This can happen once certainty/ stability is established on political front). The latest news is PM is in favor of a vote of confidence on July 11. Let's see what happens and how much 'horse trading' takes place.

So again my D-days of July 15-18 (Astro view) appear crucial.

Options Trade in Satyam - Santosh Gundecha

Satyam Computers had given falling Channel breakout yesterday. It is re testing the breakout levels today. Market is down today due to weak International Markets and LEFT Front Meeting to withdraw support.

Satyam Computer Options can be bought:

Buy 480 CA July at Rs 10 with stoploss of Rs 5. Max Risk is Rs 3000 per lot.

If market sustains (and of course political stability), Satyam can show target of 495 > 510.

Astro Update for July 7 - Santosh Gundecha

As written in one of the my earlier article that Saturn and Mars are in conjunction in astro sign Leo. They will be in exact degrees on July 10-11, 2008. We said 'political uncertanity/chaos will be there till at least July 15 '.

Just now there is a News Flash 'LEFT TO WITHDRAW SUPPORT ON 10th' . So the conjuction is doing its best. ( JK CM also tendered resignation today).
Lets hope dust settles by July 15-18.

RPL Trading Range - Santosh Gundecha

RPL is in a triangle and a breakout on either side can be used to trade.
RPL Trade Range - Above 174 it can show 181-185.
Below 165 it can go to 160-61 and then 153.

Nifty Future for July 4 - Santosh Gundecha

The Political drama continues. If it goes in favor of the ruling congress party, Nifty Future can go up and see targets of 3945-3980-4035-4080. However, if it turns unfavorable or if uncertainty prevails, then NF can test 3810 and then 3750. Tomorrow there will be a shock of inflation number too, which may already have been discounted. Let's hope that it does not give us a rude shock like it last week. Despite all the bad news, there is what looks like a silver lining on political front as of now. (Nobody can be sure of politicians and taken them for granted).

Nifty Striking Distance from H&S Target of 3750 - SG

I had earlier posted a chart with the title, Nifty Head and Shoulder, giving a target of 3750. We are within striking distance of this. The link of that chart is given below.
http://bhoomitrader.blogspot.com/2008/06/nf-head-and-shoulder.html
However, it is said that a 'Bear market does not have supports and a bull market has no resistances'. This is holding true this time too.

To add to the woes is the falling international markets, boiling crude prices - which are taking the toll on our economy. On the other side, we have the UPA-Left-SP drama. This political uncertainty will continue till July 15 at least.

Astrologically too, this is the worst time, with Saturn and Mars in conjunction on July 10-11, effect of which will be seen till July 15-16. If I remember correctly, the fall of 2000 bull run also happened during such an astrological position.

Many may be surprised with this post and confused whether this is technical/fundamental or astrological post. Perhaps a bit of everything.