iCharts Discussions

[ajayhkaul]

In response to the command received from various friends on icharts I will be posting my blog here also.

Hopefully admin will help get the blog readable for all.... so here goes...

[ajayhkaul]

Scratch my Back !

Created On: 12/11/2011 16:01:31
Guess who sold his soul !

"......Now we know why Warren Buffett exploded onto the political scene late this summer. At first, we thought his calls for higher taxes on the rich were a ploy to help him "earn" a seat on Obama 2.0's cabinet.

It's something much more sinister -- much more greedy.

It was nothing but a ruse to keep regulators out of his hair. You scratch my back, he told the feds, and I'll scratch yours.

WARNING: What you are about to read is a graphic display of what is wrong in America...

As of Oct. 28, Warren's Berkshire Hathaway had $29.7 billion worth of credit-default swaps linked to its debt. It's a figure that is hair-raisingly close to a number pulled out of thin air on Oct. 11 by the Financial Stability Oversight Committee -- the Wall Street sheriff's department created by Frank-Dodd.

The proposed rule says if a firm creates $30 billion worth of CDS exposure, it gets extra scrutiny from Bernanke and his troops at the Fed.

Imagine that... Uncle Warren slips under the radar by a whisker. And all he had to do was make a few pro-tax headlines.

Now that the rules are on paper, where's Warren? We haven't heard anything from him on his tax plans since, oh, say, 30 days ago. Go figure.

It begs a question... why would Uncle Warren sell his soul to throw the feds off his scent?

We'll answer with a question... Would you want Tim Geithner and Ben Bernanke running your business?..." (Andrew Snyder )

Buffett is not the only one playing the system .... There's Metlife also it seems.

These days, the only way to "level the field," it seems, is to send more cash to Washington.

Watch the news for more of such ...eg US plans bomb sales to UAE to counter Iran !!!

Figure out how your country is going to contribute ... 'to level the playing field'.

Meanwhile...... if you had only two months to the year end and it was time for your bonus calculation based on market activity, what would you do ?

Exactly ..... that's what the Bonus Babies are doing but first propping up the markets to get the ducks in line.

Don't pay them this time ..... play your edge and pay yourself first by regularly taking your profits off the table.....

BTW ...You notice how the 'greatest investor' operated in 'self interest' ? Scratch... scratch....

[ajayhkaul]

The Scorpion King

Created On: 02/11/2011 20:50:35
Edited By AJAYHKAUL On: 03/11/2011 02:02:29
I wrote about the frogs and the scorpions earlier and there was Germany/ Greece pair in there.

Always ..... people's actions can be traced to SELF INTEREST. Check your own !

Politicians are great examples ..... so read on .....

''.........Under the pressure of German Chancellor Angela Merkel and French President Nicolas Sarkozy, European banks agreed to take a 50% haircut off the value of their loans to Greece. Merkel and Sarkozy spearheaded an unprecedented European Union bailout of Greece.
And what does the Greek Prime Minister do? He throws a big wrench in the plans: he wants his people to vote on it! He wants his people to vote on getting free money!

While frowned upon by equity analysts and the media, a Greek referendum is sheer genius.
Here’s what a Greek referendum on the proposed European Union’s bailout of Greece does: it signals that democracy is important in Greece, it solidifies the Greek Prime Minister’s popularity (Andreas Papandreou’s popularity among voters plunged after he introduced so many austerity measures), and it confirms that Greece wants to be part of the euro currency. And that is what it’s all about…making sure the euro survives.

Greece has a sweetheart of a deal: Greece will receive about $180 billion and enjoy a 50% write-down in the value of its debt. It literally is free money. The Greek voters are not stupid. They know the severe repercussions if Greece doesn’t accept the European Union-led bailout. What this vote really does is strengthen the euro, something that will make the Chinese “lenders of last resort” very happy......"

So what's next ?

''.........No, the bear market rally in stocks that began on March 9, 2009, is not over. The stock market doesn’t roll over and collapse when stock advisors are bearish and when investors are so worried about the economy and the stock market.

We are still in a Phase II bear market. During this phase, the stock market moves higher during a rally that can last three to four years. The purpose of the rally is to bring stock market investors back into stocks with the false sense that the economy is recovering.

Yes , you got it...... it will rally till all the ducks come quacking in and the pain is maximum( Peking duck recipe)

No pain, No Gain !
.
Currently daily fluctuations of 1 or 2 % is for the day traders to mint money like they did today and also rotate stocks.

You know who is day trading , don't you? ( Coming soon... my blog on senSEX tourism)

Now you know , so play your EDGE and remember to say thanks around 24th November ( Thanks giving ) plus to Santa Claus-'help the banks with year end book keeping with all the ducks' money etc .... indirect taxation anyone?

And....... well.... Jingle bells to all !

[codered]

[vinay28]

Thanks Ajay. I also suggest that you give a couple of days for each blog to be digested and for answering queries, if any. Otherwise, it will confuse you also.

[ajayhkaul]

Vinay I am posting the last few and then take it as it comes ....

Goldilocks .... and market sentiment

Created On: 01/11/2011 17:22:26
Edited By AJAYHKAUL On: 01/11/2011 18:15:55
Here is a story that was narrated to us as children.... did they know we would be trading ?!( this was posted in one of the forums so it is good to share with more readers- the adaptation of this timeless story is mine)


The Story of Goldilocks and the Three Bears

Once upon a time, there was a little girl named Goldilocks. She went for a walk in the forest. Pretty soon, she came upon a house. She knocked and, when no one answered, she walked right in.

At the table in the kitchen, there were three bowls of porridge. Goldilocks was hungry. She tasted the porridge from the first bowl.

"This porridge is too hot!" she exclaimed.

So, she tasted the porridge from the second bowl.

"This porridge is too cold," she said

So, she tasted the last bowl of porridge.

"Ahhh, this porridge is just right," she said happily and she ate it all up.

After she'd eaten the three bears' breakfasts she decided she was feeling a little tired. So, she walked into the living room where she saw three chairs. Goldilocks sat in the first chair to rest her feet.

"This chair is too big!" she exclaimed.

So she sat in the second chair.

"This chair is too big, too!" she whined.

So she tried the last and smallest chair.

"Ahhh, this chair is just right," she sighed. But just as she settled down into the chair to rest, it broke into pieces!

Goldilocks was very tired by this time, so she went upstairs to the bedroom. She lay down in the first bed, but it was too hard. Then she lay in the second bed, but it was too soft. Then she lay down in the third bed and it was just right. Goldilocks fell asleep.

As she was sleeping, the three bears came home.

"Someone's been eating my porridge," growled the Papa bear.

"Someone's been eating my porridge," said the Mama bear.

"Someone's been eating my porridge and they ate it all up!" cried the Baby bear.

"Someone's been sitting in my chair," growled the Papa bear.

"Someone's been sitting in my chair," said the Mama bear.

"Someone's been sitting in my chair and they've broken it all to pieces," cried the Baby bear.

They decided to look around some more and when they got upstairs to the bedroom, Papa bear growled, "Someone's been sleeping in my bed,"

"Someone's been sleeping in my bed, too" said the Mama bear

"Someone's been sleeping in my bed and she's still there!" exclaimed Baby bear.

Just then, Goldilocks woke up and saw the three bears. She screamed, "Help!" And she jumped up and ran out of the room. Goldilocks ran down the stairs, opened the door, and ran away into the forest. And she never returned to the home of the three bears.

How does this relate to trading ? Consider this :

Goldilocks = trader/investor
Jungle = The jungle that is the market / investment world
Enter a house in the jungle= adopt a belief( or only that news which you have access to and make some sense out of it) which is a part of the big picture( Big Picture =the house belongs to bears, but Goldilocks does not know that).

Sampling and using food/sitting in the chairs/bed etc = we adopt whatever suits our beliefs

After getting tired , Goldilocks goes to sleep = following a belief might lull you into complacency and you will not know when the bears/bulls actually arrive. In this story the bears arrive after Goldilocks has settled down with whatever suits her . The bullish investor may realise very late that the sentiment has changed . ditto for bearish investor.

That's why we must constantly ask ourselves --- what is it that I believe that is not true anymore? This means that we may look at some 'signals'( technicals or fundamental/news etc) that may no longer co-relate to the actual market behavior and we should be able to sense that AND CHANGE OUR BELIEF.

A forum member has been bearish towards 4500 or lower. But in the meantime market has jumped 500 points . So when is he going to change his belief and use the bullish run for profits? If he gets in late , he will be holding a more than half burned match stick - or just skip this bull run and wait till things turn around. Maybe he is more skilled at trading the downturn.

The story is as told to kids at nursery school and i just cut paste from a googled page and adapted it to the way we approach the markets esp the beginners. But it reflects some part of our trading - ie changing market sentiment and our beliefs.

In case a trader changes his belief because of this argument , then this is just an additional info that can turn an investor's belief just as it happens to all of us --- we change based on peer pressure, herd behavior , planted news. biased 'experts' , rating agencies etc etc.... information overload that our brain is not designed to handle.

The brain tires easily and resorts to shortcuts to make judgement that affects our trading results.

Just as in the whole lot of noise were you able to co-relate the entire rise in the nifty to QE1,2 and now QE 3 ?

More about our reptilian brain later ....

Cheers for now !

[ajayhkaul]

The 36th Chamber of Shaolin !

Created On: 22/10/2011 21:42:49
Edited By AJAYHKAUL On: 23/10/2011 12:53:28
No No No.... this is not just about some martial art ..... this is about trading and what all traders have to go through - without exception.

This is a reality check.

I suggest see the movie by the name as in the title to this blog. You will get the picture.

NO ONE can trade the market . We can trade only our beliefs and opinions about the market.

In that sense , Market is supreme since it cannot be consistently traded ! A trader only trades what he believes( right or wrong on that particular day) about the market. With TA we learn to track some patterns that Market tends to repeat simply because market is made up of millions of people like you and me and we can be quite predictable in certain circumstances.In that sense , we are trading based on our own collective behavior over the past . Panic and greed make us irrational and unpredictable and that's why --the market can remain irrational longer than we can remain solvent!

Since all traders have been wrong at sometime or the other, Market wins*****.

A trader evolves as follows : there are no exceptions.

Trading is like any other qualification or skill and you need to work for it.

It looks easy , but it is not.... because we are inherently ... well ... Human !

1..After long period of 'testing' many methods , a trading plan emerges. ( All traders go thru this process , sometimes at great cost). If the trader survives this step and ends up with a positive expectancy system , go to step 2 . Most don't go beyond this step or drop out from the Shaolin school. There are no young geniuses in this business! ( not as yet )

2..Then the plan has to be followed with robotic precision( discipline) and without emotions (feelings of panic,greed...) ..There is no option to this ....This takes lots of time and more cost.The market will command its Tuition Fees.

The trading efficiency is the result of this step.

3..Once the trader becomes 'robotic' its like being in the 36th chamber of Shaolin!!! That's where u get the ' expert feel' which is the intuitive following of the system evolved from above steps in a flash. THERE IS A CLEAR SYSTEM BEING FOLLOWED. Its like driving a car .. after years of driving you get the intuitive feeling. Once you are in the drivers' seat, the car system becomes an extension of your body.

Are we getting there ? Just a reality check ....

Watch the movie ' 36th Chamber of Shaolin' ....it was released many winters ago..... and check if you have the chutzpah to get there? Else cut your losses now... for the same kind of time and money you can get a medical degree in market psychology !!

***** The coin toss : Do this --- Take your favorite coin and toss for heads or tails. Note the result at every toss. Repeat to a count of 50 , check the expectancy of this simple system say 30 heads and 20 tails. Now keep tossing to 100 count. What is the result? The law of large numbers says that your result will get closer to 50/50.

Now ..... MARKET = COIN and YOU = TRADER

Notice , the COIN (Market) does not remember which way it landed the last time , the TRADER ( and his indices,charts etc) does !

The Market /COIN does not know you , it is YOUR favorite , not the other way round !

So how do you play this game ?

Food for thought , yes ? ....but you get the idea ?

And may you find your holy grail of trading..........!



Meanwhile , Europe is getting ready for a trillion dollar 'hair-cut' , but they will do it in parts.

What can you do with bad debt ?

Well , you can dance just like Sarkozy and Merkel are planning to tango to 'Kick the can down the road.....'

http://www.telegraph.co.uk/finance/financialcrisis/8837327/Frances-Nicolas-Sarkozy-and-Germanys-Angela-Merkel-hold-crisis-talks.html

Or Lets TOSS !

[ajayhkaul]

Codered I am posting backwards !!! ie the latest one is at the bottom ...pls refer the dates so there is no confusion..

The matter in the blog is dated , so please factor that in..

[codered]

Ajay ji , a standing ovation to u, honestly, the knowledge that u r pouring out, i should thanks everyone of the Ichartians's for all the help, information, they share to us, i am humbled to Anna, Admin's of Ichartians, RK,Vinay, Oppor, Ajayji& all for all their hands in collaboration.

Round of Applauds to everybody.

[ajayhkaul]

Codered we are on a LEARNING PLANET .... everyday we learn something and the market keeps us on our toes.

Plus I made so many friends .... thanks to you for being a catalyst to resolve this!

[codered]

Wanna more, keep it coming

[ajayhkaul]

Here it is , codered
Derivatives, Dominos and Ducks

Created On: 14/10/2011 18:32:35
Edited By AJAYHKAUL On: 14/10/2011 18:45:30
It seems the world economy is sitting on a $600 trillion time bomb that's ticking away - yes its the derivatives. ( "The notional value of the world's derivatives actually is estimated at more than $600 trillion. Notional value, of course, is the total value of a leveraged position's assets."

Who dunnit ? It seems the following gentlemen are involved : Robert Rubin , Lawrence Summers ,Phil Gramm. These guys - with help of then-Federal Reserve Chairman Alan Greenspan - interfered with the Commodities and Futures Trading Commission (CFTC), an important regulatory body, to squash any regulation of derivatives.

Now the dominos are set to fall- a government default will create investor panic and a run on the banks that will bank-rupt them in a daisy chain( remember banks are a ponzi scheme ? See earlier blog). That's why banks are hoarding cash and scared of lending.

The only way banks( aka institutions !) make money is by trading and keep their trading under wraps and away from public scrutiny.

And that's where the ducks come in ! They are all the investors who were puking with panic till a few days ago as stocks were going under. Now the ducks are in a state of disbelief (no appetite for stocks)about the rise of 400 points . Soon they will start to quack( greed) and maybe get euphoric ( listen up for loud and frequent quacking). Baby ducks will join the cacophony.

As Diwali approaches and then the Santa Claus rally will end and it will be time to cook up the Peking Duck - a recipe to be featured in the next blog.

For now 5168 needs to be overcome and the wall that ensues .Then 5439 --- looks like an approx 700 points run up from 4728. Below 5030 , all bullish bets are off

As always , remember that you are being setup- this time for the closing season. So watch and play your EDGE.

I gotta go .... I hear some quacking ......

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Protest Momentum Indicator !

Created On: 11/10/2011 23:12:35
As blogged in Aug 2011 "Rise of Morons ........" the protests are now on in US since September 17.

Read on ........

"Hundreds of people have been camping in a park near Wall Street since September 17, sparking similar rallies around the country against what participants see as corporate greed. More than 700 people have been arrested during marches in New York where some police used pepper spray.

About 100 protesters were arrested earlier on Tuesday in Boston after the group expanded its camp.

The "Billionaire's Tour" on Tuesday also plans to stop at the homes of David Koch, co-founder of energy conglomerate Koch Industries, and hedge fund manager John Paulson.

"Join us on a walking tour of the homes of some of the bank and corporate executives that don't pay taxes, cut jobs, engaged in mortgage fraud, tanked our economy ... all while giving themselves record setting bonuses," said NYC Communities for Change, one of several groups organizing the protest.

It said protesters would march from house to house "demanding accountability for Wall Street crimes and an extension of the Millionaire's Tax," a New York state tax that is due to expire at the end of the year."

Snowball , anyone ?

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Conspiracy ?

Created On: 06/10/2011 01:08:21
The BankNifty is sliding as if on grease as the words meltdown , contagion risk , sovereign bankruptcy , toxic assets /debt etc etc ( some new to our vocabulary) are thrown around liberally . These are necessary to create the panic .

The words generate the (fight or) flight response as the adrenaline kicks in.

So are you puking yet ?

BANKNIFTY number is 8460 from where it must take support and reverse , Just as for Nifty it is 4728.

So what's the catalyst for reversal ? Look out for 'good' news being released to the press in small doses and a quick buildup as FIIs step in again . They need to close their books in a few months time and maximise gains by buying at absolute oversold levels.

Meanwhile :
1..."The U.S. and Europe have always suppressed the rising price of gold," . "They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency."

Between 1999 and 2002, Gordon Brown, then U.K. Chancellor of the Exchequer (and later Prime Minister), decided to sell nearly half of his nation's gold reserves. At the time, just the advance notice of these substantial sales drove gold's price down from $282.40 an ounce to $252.80.

Those gold sales yielded an average price of $275 an ounce, raising a total of $3.5 billion. Today, those 395 tons of gold would be valued more than $19 billion.

You have to admit, it doesn't make a whole lot of sense to sell a solid asset whose price is moving steadily higher each year - especially when the United Kingdom's debt problem then wasn't nearly as bad as it is today.

The answer: Because there's a conspiracy afoot."

2... see previous blog re protests to start in the US - well they have :

"On Wall Street and in cities around the country demonstrators have taken to the streets to protest..."-
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Puking and Quacking - Who wins in Day Trading?

Created On: 22/09/2011 20:24:16
Edited By AJAYHKAUL On: 22/09/2011 20:27:33
'Buy it from them when they are puking and sell it back to them when they are quacking' --- a wealthy trader( or smart money)


And this is what Michael Lombardi has to say :

'You’ll hear news today that the stock market is going down because the Fed indicated yesterday that there is “significant downside risks” to the economy.

Stocks are not going down because of this. The market and investors already know the economy is fragile; after all, the stock market is a leading indicator!

The stock market is going down today because the traders need to make money and they make big money on big market shifts. Banks don’t make much money on lending anymore; hence they need to figure out other ways to make money, and day trading is a great way to do it. Remember, big banks like Goldman Sachs make money—big money—on at least 90% of the trading days.'

Surprised ? Shocked ? Now you know .

That's precisely why ..... 'WHAT IS YOUR EDGE?' to beat the likes of Goldman Sach etc etc at day trading ????!!!!

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Take a hike !

Created On: 16/09/2011 21:18:04
Edited By AJAYHKAUL On: 16/09/2011 21:19:55
So RBI announced another interest rate hike @25bps

And the market says ' Go take a hike' and though it dipped precariously , it closed in the green.

What gives ? Bad news has no net effect ? whats that mean ..... your guess is as good as mine.

As blogged earlier , we are being set up again for the earnings season , so define your EDGE and trade.

Meanwhile this is what Marc Faber has to say : A sad testimony to the western excesses - Boom , Doom and Gloom -----

"The federal government is sending each of us a $600 rebate.

If we spend that money at Wal-Mart, the money goes to China.

If we spend it on gasoline it goes to the Arabs.

If we buy a computer it will go to India.

If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala.

If we purchase a good car it will go to Germany.

If we purchase useless crap it will go to Taiwan and none of it will help the American economy.

The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part". - Marc Faber

Are we going to learn anything from this historic lesson ? For now with two top finance guys running our country , we are not able to get a handle on inflation !

[ajayhkaul]

Pump and Dump - what's YOUR edge ?

Created On: 08/09/2011 01:45:13
Edited By AJAYHKAUL On: 09/09/2011 16:20:41
As mentioned in the last blog we are at 5124 exactly.

This time we took off at 4720 ( the bottom) and before you can say 'FII' we are 400 points up !

That' s the PUMP . On its way to 5196 - 5230 zone and a wall to climb

Like the action ? So whats your EDGE ?

Quote...
Rule #1: Focus on controlling your risk to minimize the chances that you'll ever lose all or a big chunk of your money.

Rule #2: Identify your edge (a period of time when the odds are in your favor) and then only trade when the conditions for that edge are met. Stay out of the market the rest of the time, patiently waiting for the next edge. Be strict about this.

Explanation of Rule #2: Many traders are addicted to action. They get antsy when they are on the sidelines. They like being in the market because they view participation as an opportunity to make money.

Because they have not precisely defined what their edge is, they'll recklessly charge into the market when they hear somebody mention a stock in the news, or they see a market suddenly jump. They get a thrill out of just being in the market. It's like a drug.

That is one of the biggest reasons why traders blow up their accounts.
Now...be honest, does #2 sound all too familiar?
unquote

So, what's your edge?

Happy Trading !
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Seven Meals to Anarchy -- the Food Crisis

Created On: 29/08/2011 18:59:51
Edited By AJAYHKAUL On: 29/08/2011 21:11:53
How quickly a nation can turn on its leaders:

"Civilization and anarchy are only seven meals apart.".... Spanish proverb

Seven meals is about 56 hours. 56 hours without food and entire nations can go from civil to savage.
Sure there are some people born into hunger so they never know the difference.
However, for hundreds of countries around the world food has never been an issue... until now.
Until now, we've pretty much taken food for granted.
But that is changing -- fast.
factors ...
Arable land ,Decreasing crop yields.Growing population.Changing diets in emerging markets
Rising fuel cost,Bio-fuel demand...

We have to add inflation to the mix. And not just inflation, but what could turn into an inflationary war as countries around the globe try to inflate away their own debts.

Inflation is to the food crisis what gasoline is to a fire -- explosive and unpredictable!

The government wont admit that their plan is to inflate away our debt... or at least try... but that's exactly what happens when governments get in debt trouble as in Europe /US
inflation is what happens when too many dollars chase too few goods.......''

Maybe the above gives us some stock trading ideas ie sectors to look at?

Nifty hit 4720 just a hair above 4717 which is a killer level.

Aggressive traders can enter on the long side though 4975/5124 are safer numbers for confirming the trend. VIX is yet to drop below 'jitters' level.

You would need a very strong catalyst ( No RBI rate hike - height of optimism ! or QE3 or similar announcement etc etc that could come mid september) to take us past 5500

Most likely, it is a setup for the earnings season July/Aug/Sept 2011. Last of the RBI rate hikes is already discounted ?

AIG was bailed out with about US$50 b and AIG paid back about $2 b recently as the markets crashed around the world. Proceeds from the crash ?

So FII will again Pump and Dump ? You bet .
So who is paying for the excesses of the Americans ? Rest of the World ( aka Globalization)
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Phantom Gold ?

Created On: 22/08/2011 20:17:06
Edited By AJAYHKAUL On: 04/09/2011 19:32:58
Recent press report extract .....

".........All of this brings about "short squeeze" potential because of the shady goings-on between central bankers and international banks.

For many years the banks have been accused of artificially suppressing the gold market with "phantom" short sales, achieved by lending out bullion they don't actually have. This is easy enough to do if no one pays attention: If a banker has 5 tons of gold in his vault, he might "lend" it to short seller A in a paper transaction, leaving the actual gold in the vault.

Nothing would then prevent the banker from "lending" the same 5 tons to someone else, with nobody the wiser, in a sort of fractional reserve system for short sellers of gold.

The scheme works up until the day too many short sellers are forced to cover at once, with too many actual owners of gold demanding the physical metal. When that happens, it's game over, as many exposed shorts find it virtually impossible to cover.

Venezuela's stated intent to pull 99 tonnes from London's gold vaults could, at least theoretically, set off such a reaction.

It could also lead to similar requests from other central banks, hungry to repatriate their gold reserves held abroad, to avoid the risk of being told "sorry, we don't have your physical just now..."

To actually move all that gold to Venezuela would be quite a feat. It could take as many as 40 separate trips, the Financial Times reports, because it would be impossible to insure a single aircraft.

There is also the question of where Venezuela's central bank will put it all. Says Chavez: "If there isn't enough room to store the gold in the central bank vaults, I can lend you the basement of the Miraflores presidential palace......"

Bottom line: Those waiting to buy gold at significantly lower prices might see their patience rewarded... but they might not. In a true "short squeeze" tied to severe supply/demand imbalance, a parabolic move could last for weeks (or even months)......::

Anyone short gold ???
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Frogs & Scorpions

Created On: 17/08/2011 19:01:50
Edited By AJAYHKAUL On: 04/09/2011 19:32:20
Here's an old story that is fitting the times....

A frog and a scorpion are about to cross the stream and scorpion requests the frog to carry him across promising not to sting . Once aboard and half way into the stream , the scorpion takes aim and stings. While both start to sink, frog in his death croak says... 'why........? ' to which the scorpion says '..... because that's what scorpions do ..... they sting..'!!!

Now you can see some frog/scorpion pairs around you ?
India /Pak
Indian voters / elected MPs
Germany/Greece
Rest of the World/USA
Indian Stock market / FII
Indian Investors/Mutual funds
Anna Hazare / Government (post round 1 of protest)
and so on.....

While FII have continued to sell and pull down the interest rate sensitives , pulling down the nifty , the DII have been trying to shore up their portfolios and letting the rest tank.

Volatility VIX has come down from Tsunami levels to the current tropical storm like .It may be some time before we see lake placid ( 17-19 levels).

We could be looking at a great opportunity to enter the banks and realty etc in case there is no hike in interest rates this time around. Plus the sectors are being rotated - a common reason why retail investors get butchered.

No matter what your strategy , why trade sectors that are not sponsored by FII/DII ? First sector choice and then TA /charts .

You can greatly improve your trading results by this simple factor - SECTOR SELECTION.

Though , its a good time to take a break and head for Jantar Mantar .
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Bottoms UP ?!!

Created On: 10/08/2011 18:12:30
Edited By AJAYHKAUL On: 04/09/2011 19:31:35
After the initial smoke signals , we had some more:

S & P makes calculation error of x trillion dollars ! Imagine that . People still send their kids to the US for education where they don't know how to add .( Blog dated 9/7 & 16/6 )

US Fed is going to hold interest rates till 2013 . Elections anyone?
The ZIRP (zero interest rate policy of the Fed)announcement led Goldman Sach to issue the buy signal to its trading desk. That emboldens the FII for our/other markets.

Our own Pranab Da , rushed to tell us that there was no reason to panic and that RBI is watching the situation.

Now Subbu is going to be at the helm at RBI till 2013 . He got it because he refused to letup on interest hikes ? How is he going to celebrate ? No more hikes, of course ? That will be the event to get a handle on the market. Else the economy will get a hard landing.

A rocky stock market is hardly the way forward to raise money from the Indian investors for all the PSU stocks to be off-loaded.

Indian Government ok-ed $10billion for QFI into mutual funds. Mutual Funds ? That's for suckers. Yes it will help stabilize the market from the impact of FII induced volatility. Also $3billion for infra funds.

The power of technicians(TA) and automated trading can be the reason for slides deeper than normal ? Since all operate at the same levels , they all issue 'sell' signals at the same time? And then the 'buy' is triggered? That could explain the phenomenon of such huge excursions in the trading range in a day. Remember the 'fat finger' crash of 1000 pts in the US ?

Ok . So is it Bottoms UP ? Cheap wedding now ? Cheers ! ( hic )

Caution : Dont drink and drive....Drunks normally taste the low ( gutter )again!

Mantra : Discipline and agility .

[ajayhkaul]

Smoke Signals

Created On: 08/08/2011 18:37:45
Edited By AJAYHKAUL On: 04/09/2011 19:33:26
VIX spikes

DII 'buy' trying to match the FII 'sell' on Fri and today

Almost 75% of the inflows since June first week is now 'outflow'. Where will it flow ?
If they pull out the balance , we are looking at another low - then its 4887.5 or thereabouts.

Goldman Sach upgrades Indian market !!!
Ex-Goldman executives run the US government. Between them they will work out the rescue plan for the markets?

Alan Greenspan says US can print money .. so it wont default !

Most Hilarious - Bernie Madoff says US government is running a Ponzi ( fraud) scheme . It takes a thief to recognize another thief ! Madoff has now noticed the similarity.

The best thing to happen is lower commodity,oil prices - lower inflation? and no more RBI tightening? Would that be a great entry for a cheap wedding?

If it makes one nervous , stand aside . That is also a position.

Discipline and agility .
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The Rise of Morons and Collapse of an Empire

Created On: 05/08/2011 19:53:58
Edited By AJAYHKAUL On: 06/09/2011 16:23:12
'Even in a world ruled by destiny, the morons still stand out. History always seems to find knuckleheads to do her dirty work ...especially when it involves ruining a great empire.' -- Bill Bonner writing about the decision makers (Presidents!) - in the U.S.

'All empires collapse eventually: Akkad, Sumeria, Babylonia, Ninevah, Assyria, Persia, Macedonia, Greece, Carthage, Rome, Mali, Songhai, Mongonl, Tokugawaw, Gupta, Khmer, Hapbsburg, Inca, Aztec, Spanish, Dutch, Ottoman, Austrian, French, British, Soviet, you name them, they all fell, and most within a few hundred years. Reasons? environmental degradation,economic meltdown, military overstretch, domestic dissent and upheaval'
( We can expect the western Good- Bad -Ugly on the US streets soon)
Read more : http://www.counterpunch.org/sale02222005.html

As in the earlier blog ,for late comers , this was a very expensive funeral - 1.3 trillion of value lost in US alone.Discipline and agility to switch sides could only take you smiling to the bank.

But are we getting to some cheap wedding? Nifty, after smashing thru, closed above 5195 . It should support or else its further down the tube . Discipline and agility while you pick your stocks.

We can expect some( false) data about inflation,growth in GDP . employment numbers to cheer the US markets now that the can has been kicked down the road, and DII support for Nifty etc to stem the panic (Ru- Ru or Fear Factor).

Expect alternate steroid doses of Ru-Ru and 'Good' news to keep you there.

History says all Empires must collapse thru the rise of morons.

And a new empire will rise . Which one ? A BRIC nation for sure , but not the one you think (its already ruled by morons !)
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Reality Check

Created On: 01/08/2011 17:48:25
Edited By AJAYHKAUL On: 06/09/2011 16:24:15
John Henry Fabre, the great French naturalist, conducted a most unusual experiment with a certain type of caterpillars called "processionary caterpillars." Fabre carefully arranged the caterpillars in a circle around the rim of a flowerpot, so that the lead caterpillar actually touched the last one, making a complete circle. In the center of the flowerpot he put pine needles, which is the food of the processionary caterpillar. The caterpillars started around this circular flowerpot.
Around and around they went, hour after hour, day after day, night after night. For seven full days and seven full nights, they went around the flowerpot. Finally, they dropped dead of starvation and exhaustion. With an abundance of food less than six inches away, they literally starved to death, because they confused activity with accomplishment.

Are you a processionary caterpillar?

This is a reality check for traders .... so much activity ....has it lead to accomplishment of the goal? A goal like Financial Freedom , for example .

Look in the mirror ...... it is always a good idea to pause and do a reality check once in a while ...Don't you think ?
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Fear Factor or Ru...Ru

Created On: 28/07/2011 20:21:14
Edited By AJAYHKAUL On: 06/09/2011 16:25:11
For those who did not step in front of the train , is the market presenting a buy opportunity ?

Well, after the anticipated bout of Ru..Ru ( or Fear Factor) and field day for the bears we deserve a buy opportunity ? At least the institutions do since they shook all the stops and rotated their holdings in the process.

Nifty has traced 50% from 5740 with the gap down today. Will it attempt 5380 also ?

Isn't QE3 a done deal ? what else can they do ? let the financial system crash and start from zero ?

It is better to kick the can down the road . Japan has done it for 30 years !

All leaders operate with self-interest over the national interest. They are human after all , aren't they?
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Get a Handle on this market !

Created On: 25/07/2011 21:52:13
Edited By AJAYHKAUL On: 06/09/2011 16:27:36
After breaking 5650 with nice volume , we are getting ready for picking off the trapped longs in the 5700s. Maybe we test 5650 once again... a little more Ru..Ru( fear factor)...?Perhaps?

And we have a party going ..... and thats also to attract the hesitant cash on the sidelines. Next few moves must be with good volumes else we don't have a good handle

Remember , if you were not at the wedding, don't go to the funeral.
( Wedding was @ Nifty recent bottom 5195 , see the blog posting ...Bulls are back)

Anyways , take one day at a time.
You must live in the present, launch yourself on every wave, and find your eternity in each moment...Henry David Thoreau

Watch your stops and don't step in front of the freight train...

[ajayhkaul]

Quantum Leap

Created On: 22/07/2011 16:44:36
The bulls live above the 5555 zone and they sprang up and won the days battle - one sided though. Why ? As blogged earlier , QE 3 .....N is coming ???!!!! More liquidity sloshing around the markets , more inflation , .... and higher Gold? These guys have messed up the system and we have more bubbles in the making.

Anyways , the supply line is around the 5650 +/- 25 ZONE and the bulls are unlikely to give up the advantage easily.

So heading towards 5900 and higher ? Well .......One day at a time .......... we live in the NOW .
Enjoy the trading game
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PONZI scheme and Contagion

Created On: 18/07/2011 03:00:26
Edited By AJAYHKAUL On: 06/09/2011 16:29:47
http://en.wikipedia.org/wiki/Financial_contagion
If banks do not know how to look after money , why do people keep money in the banks ?

http://en.wikipedia.org/wiki/Ponzi_scheme
Ponzi schemes are illegal. But the legal Ponzi ? the BANKS themselves!

Take care ! See 'INSIDE JOB' if you haven't already. Its coming to a bank near you !

Meanwhile Nifty held above 5555 on Friday and is getting hammered at 5650 , in line with the key resistance. Only a break above 5650 with volumes should see us on way to 5900. FIIs haven't pulled out as yet .What do they know that we don't? Lots.....
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The Inside Job

Created On: 09/07/2011 19:02:32
Edited By AJAYHKAUL On: 06/09/2011 16:30:29
Here is Ajit Dayal in his column The Honest Truth .....(see my blog entry of June 16)
"......Goldman Sachs, Merrill Lynch, Morgan Stanley, Citibank, J P Morgan - and many other Wall Street firms and banks - have established their 'reputation', capacity, and stature in the USA. Their business plan is simple: they mug an investor, whack his wallet then end up paying fines in a settlement (if they are caught) with their host regulators. On July 7th, J. P. Morgan agree to pay a fine of USD 228 million in settlement of accusations that it was rigging the US municipality bond market. The fine, the article noted, "will have no material impact on the firm's earnings". Nor will this have an impact on most parents' desire to have their children work with J. P. Morgan.

Every time I meet a proud parent of an NRI living in the USA they happily proclaim how proud they are that their son or daughter is working with one of these infamous firms. Maybe they, too, one day will see the movie "The Inside Job" and realise that most of these businesses are basically built on questionable practices. Maybe, after watching "The Inside Job", these proud parents will ask their children to quit their jobs and petition the regulators to protect their own citizens from the fee-generation business plans of these financial geniuses. Or, like many of us who get blinded by some wealth ranking statistic, they will hold the industrial equivalents of the financial firms in high esteem and continue to highlight the "reputation" and "stature" of these firms....."

Meanwhile , its our own DIIs selling hard on Friday 8th . However they kissed 5651 which is a great number on nifty being the retrace( 62% ) from the bottom. It is also just in line with the series of lower tops. Swords edge? It should hold since the FIIs seem to have a different agenda.Anyways, below 5630 is a red light area. Keep those stops tight.
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A ROSE by any other name..

Created On: 29/06/2011 10:57:01
Edited By AJAYHKAUL On: 06/09/2011 16:30:56
So the Fed says' no QE3' ! Instead they will use maturing debt to buy up treasuries? A rose by any other name . The art of financial engineering aka juggling the books !!!....Anyways... now the FII's are pumping in (while DII s are selling i.e. shock absorb function -and this time to prevent a runaway index !).

Remember You are being set up for the earnings season coming up . The Resistances around 5600 should be taken now that 5555 is done with. Then index needs to break 5700 -5750 zone to get back to a total of 700 points (+/ - 100 ) from recent bottom. Enjoy the ride and keep those stops tight.
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Creating and then Controlling Inflation !

Created On: 16/06/2011 17:00:28
Edited By AJAYHKAUL On: 06/09/2011 16:32:29
Guys recall that 99 % of the students who took up commerce after school were the one's who did not make the grade to take up science.

You know the profile.... ( Hey there were exceptions , say 1% )

These guys now handle assignments in the finance sector ( with an MBA added on or even Phd ) .

They have invented fancy financial products to steal your money .

Now they are going to control inflation ! Do they stand a chance ? Don't think so ... usually they will kill the patient( growth) and can do nothing about the disease( inflation). Today's is the nth hike in rates by RBI.

And there is QE 1, 2, 3 ....N !!!!!

"We can't solve problems by using the same kind of thinking we used when we created them." -Einstein

Hope u kept your stops tight ?

Before anyone throws a boot at me ....pls look in the mirror !