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

Nifty Bearish if close below 5175

Nifty is finally coming out of the 5175 - 5900 range. A close below 5175 is bearish. The 50 day EMA is already below the 200 day EMA (Death Cross) as shown in the chart above. The last time such a cross happened was in early 2008 and we all know what happened after that. Not saying that we will have a similar sell off and there are death crosses that end with only minor corrections and followed by a reversal. But the point is we are in serious bear territory and risk is on the table again. So now is a point to be extremely cautious. Bear markets are volatile so expect huge volatility ahead.

Nifty breakdown from wedge...potentially bearish

Nifty has broken down from a wedge. If this breakdown sustains ie it is not a false breakdow, this is potentially bearish for the Nifty. Keep an eye on this pattern.

Nifty Update

Nifty is now in a wedge pattern...A breakout or breakdown from this wedge will give the next major direction for the Nifty

Nifty - Elliot Wave Update

Nifty is undergoing Wave 3 in the larger timeframes which started in October 2008. Wave 3 is the largest and most trending generally and should take the Nifty to levels of 15000 by 2014-5.

Fibonacci in action - Crude and Nifty

The above charts show the significance of the 61.8% Fibonacci retracement in Crude and Nifty Futures.

First Crude hit a high of around 148 in July 2008 and a low of 32 in December 2008. The 61.8% Fibonacci retracement of this fall is around 105 which proved to be a resistance for Crude in the last few weeks. In the last few days it has broken past this resistance so expect prices to rally further from here.

Nifty hit a high of 6350 in Nov 2010 and a low of 5175 in Feb 2011. The 61.8% retracement of this move is 5900 which is where the Nifty is facing resistance since the last few days.

Dollar Index in a downtrend

Dollar Index seems to have broken down from important trendlines and support levels. The trend is down in the Dollar Index which could be bullish for Equities and Commodities

Death Cross in Nifty

In the Nifty 50 DMA has crossed below 200 DMS. This is potentially bearish. But like all other things in technicals it is not a 100% confirmed indicator. We need to see Nifty breaking down below 5400-5600 range and also below 5175 before getting bearish on the market.

Right now we have been in 5400-5600 zone for over 2 weeks and so a big move in the Index is expected. Which direction it will happen that the market will guide us. So have a close eye on the 5400-5600 region.

Global Indices and Commodities Update

The risk markets (like equities and commodities) have all corrected and the risk averse markets like Treasuries and Dollar Index have been rallying as a result of the Japanese situations

Global Indices

SP500 has closed below 50 DMA and a key support zone at 1300. So it could very volatile here It has support at 1182.

Dow Jones has support at 11000.

Nikkei – obviously been devastated because of the Tsunami. It has support at 8800 but if that doesn’t hold the next support is at 7000, a level which we tested twice in 2008/09. The Kobe earthquake in 1994 led to 30% decline and stopped at a 1992 support zone of 14000.

FTSE has support at 5500 levels.


Commodities

Gold – key level to watch are 1400 and 1380…break of these numbers gives a target of 1300…and break of 1300 is very bad for gold.

Silver had strong resistance at $19 which it took out in july 2010 . Silver could reach a target of $39-40 but its becoming a crowded trade as everybody is bullish so its time to be a bit careful.

Crude Oil – the next support is at 96$..which is 50% retracement of rise from $85 to $107

Base metals – have all corrected below support zones and are expected to be sideways with a downward bias till the situation improves.

Nifty Update

• Longer term trend will turn up if we close above 5800 and turn down if we close below 5175
• Intermediate trend will turn up if we close above 5600
• FIIs have stopped selling in a big way so that’s a positive

Cardamom bearish, support at current levels

Cardamom is in a downtrend. But we have support at current levels of 1050. We might see a small bounce from these levels. But the larger trend is downwards.

Nifty Update

From a longer term perspective the trend is downwards. As per Dow Theory we got a sell signal at 5700. When do we get a buy, when we start seeing higher tops and higher bottoms which I feel will take some time to happen.

From a short term perspective while we are in this 5175-5589 zone we could be rangebound but if we breakdown below 5175 it is very weak for the market. 4800 is the next support which we hit in May 2010.

We have resistance at 5550-5600 zone. Time to be cautious, I would get bullish on the market if 5589 is taken out comfortably on a closing basis.

FIIs continue to sell.

Budget will provide a trigger, so let us wait and see how the market reacts rather than initiating any trades now.

Nifty Futures Update

• Nifty is in a short term uptrend now
• Nifty seems to have taken support around the 50 week EMA
• 50% retracement of fall from 6350 in Nov 2010 to 5180 in feb 2011 is 5770, 38.2% is 5632.
• Fallen a large amount so retracement s happening
• 5550 is an important number to be taken out
• Whether this uptrend is sustainable we will have to evaluate later

Nikkei 225 in an uptrend

The Nikkei is in an uptrend. a Cross above 11428 will urther confirm this uptrend. Watch out for action on the Japanese Index

There is always a bull market somewhere

There is always a bull market on somewhere. The chart above shows the upward trend in Castor Seed traded on the NCDEX. That is the main adantage in trading a variety of asset classes - some assets are always bullish. Diversification is the only free lunch on the Street!

Nifty update - bears are back!

• As mentioned a couple of weeks ago Nifty has broken down below the 5700-6200 range after testing 5700 a few times in the past. Also in doing so it has created a new lower bottom and thus has given a Sell signal as per Dow Theory.
• FIIs continue to sell.
• 5300-5450 is the zone it broke away from before the huge rally to 6300 so this zone should provide support
• Rather than watching for specific zones one should keep an eye on the FII figures. As long as they continue to sell one cannot expect a sustainable bounce back in the nifty
• We are near the 200 DMA which is a zone where there is massive fight between bulls and the bears to decide the next direction. So it is choppy and expected to be choppy for the next few weeks
• It best for investors to be on the sidelines till we get some direction for the market. Trend would change if we go above 5750 and thus create a higher top
• Traders should wait for the the next rally to short the market rather than shorting now

Crude Oil Update

Crude Oil is near the Fibonacci 50% retracement from the mid 2008 high of 6370 to the December 2008 low of 1940. If we remain comfortable above this 4100-4200 zone then the next stop is the 61.8% level of 4670.

Market Update

•Nifty has broken down below the 5700-6200 range after testing 5700 a few times in the past. Also in doing so it has created a new lower bottom and thus has given a Sell signal as per Dow Theory.
•FIIs continue to sell.
•Irony is Western, European and Asian Indices all continue to be in uptrends so the global scenario is positive. Dow Jones has support at 11000, S&P at 1230, FTSE at 5800, Nasadaq at 2650, Dollar index in downtrend…resistance at 81.5 and 83.5
•We are near the 200 DMA which is a zone where there is massive fight between bulls and the bears to decide the next direction. So it is choppy and expected to be choppy for the next few weeks
•For long term investors it is best to be on the sidelines till we get some direction for the market.
•Bank Nifty is now clearly making lower tops and lower bottoms. Every rally is being sold into and is a great shorting opportunity for traders.
•IT Index continues to show the highest relative strength
•Realty continues to remain very bearish

Strong counters in the current market – HCl Tech, Sun Pharma, TCS, Hindalco

Nifty below 5700, bearish

Nifty has broken down below the 5700-6200 range after testing 5700 a few times in the past. Also in doing so it has created a new lower bottom and thus has given a Sell signal as per Dow Theory. FIIs continue to sell. All this shows a high probability of Nifty heading lower.

Agri Commodities bullish

Most Agri commodities are bullish currently. Wheat, Refined Soyabean Oil, mentha oil, pepper, castor seed. Investors should use Commodities as a means of diversification. Those troubled with the volatility of the Nifty would be happy to see the 50-60% returns that most commodities have given in the last 18 months. In India there are three main categories of commodities - Metals, Agricultural and Energies which are traded on the MCX and NCDEX. HNIs have increasingly started using commodities as part of their asset allocation to get superior risk adjusted returns.

SEBI allows Indian investors to trade in global indices

Market regulator SEBI today paved the way for Indian investors to trade in large indices of 24 global exchanges, including that of US, Europe and Asia .

As per a SEBI circular, Indian exchanges will be able to provide trading in derivatives contracts of these global indices.

The entire story can be read here:
http://economictimes.indiatimes.com/markets/regulation/sebi-allows-indian-investors-to-trade-in-global-indices/articleshow/7260398.cms