Workshop in Ranchi

I am conducting a workshop in Ranchi on Sunday , 25th March on Futures & Options. I will be free to meet investors between 5-7pm, please ping me.

Nifty channel breakout

Nifty has broken out of a descending channel from November 2010. This is a bullish sign. For this breakout to be confirmed has to remain above this channel for the next few days. Nifty has also crossed its 200 Day Moving Average. FIIs are buying in huge volumes daily. All this smells bullish to me. Perfect time for a bull run while the world is worried about Europe. So its time to go long if you aren't already. 5000-5100 would be a good place to keep your stops.

650 years of Historical Silver prices

Above is a 650 year graph of silver prices and silver/gold ratio from 1344 to 2004.
Source: http://goldinfo.net/silver-600.aspx

Interesting chart and good news for the bulls

S&P 500 breakdown imminent

S&P500 has held up well in the current markets compared to global indices. However there are chart patterns which show S&P500 is in a similar situation like March- April 2008. A breakdown below 1100 will further confirm this and may lead to a global sell-off in all asset classes like Equity, Commodities etc.

Nifty is now at new lows and a close below 4500 could lead to a free fall. This will of course be helped by the S&P500 breaking down. Stay Short - its a high probability, high risk-reward trade on the downside.

4500-4650 last defense for Bulls

Bulls make money, Bears make money, Pigs get slaughtered. However the few remaining Bulls on the street might get slaughtered if Nifty breaks below 4500-4650 zone. See the chart. Nifty has been falling in a neat channel from the Nov 2010 highs. A breakdown below that channel and also below the 4500-4650 confluence zone which has proved important support and resiatnce points in the past will sound the death knoll for the bulls. Its a good time to be a bear. Stay short!

Pledged Shares

Nice article in moneycontrol on Pledged Shares
http://www.blogger.com/post-create.g?blogID=4747885867082820457

Typically, a promoter looking to raise money by pledging shares, has to deposit 2-2.5 times the value of the loan as collateral with the NBFC. Better the promoter/company’s track record, lower the collateral. Interest rates on loans to non-real estate companies vary between 14-18% and those for real estate companies could be as high as 18-22%.
The moment the share price weakens and the value of the collateral drops to say, 1.8 times the loan value, the lender will ask the promoter to either offer additional shares or repay a part of the loan. In market parlance, this is known as margin call. If the promoter is unable to do either, the lender will dump a part of the shares to recover his money. In a fragile market, this could very well set off a vicious cycle where the lender’s selling could push share prices further down, and trigger more margin calls.

Shares of firms with a significant chunk of pledged promoter holdings are vulnerable to attacks by cartels of bear traders. Where the stock is eligible for futures & options trading, these players hammer the price by short selling the stock futures. This in turn puts pressure on the stock price, and triggers margin calls from lenders. If the promoter is financially weak, he will be unable to meet the margin calls, causing lenders to dump the shares.

Nifty Futures at 4720

Nifty Futures is at 4720. This level was the low on August 29, 2011. This zone was revisited on 4 October. This level was broken on 23 November. Today Nifty has found resistance at this zone. This zone will serve as important resistance if this downmove is to continue.

Also see the importance of this zone in March 2008 after the crash and also in June 2009 after the election gap-up.

A decisive close beneath this is bad news for the Bulls