iCharts Discussions

SwingTrader · Posted: Tue Jul 17, 2012 8:58 pm Post subject:

Almost there....but sell signal not triggered yet Very Happy

It looks like one more day like the last two days and my sell signal will get triggered. Let us see...

SwingTrader · Posted: Wed Jul 18, 2012 8:07 pm Post subject:

No sell signal yet as market turned up strongly today. So are we going to continue the uptrend? Maybe if we break strongly above previous 2-3 days highs. Let us see...

SwingTrader · Posted: Sun Jul 22, 2012 8:54 am Post subject:

Options sentiment has now been close to giving a sell signal since the last few days. A strong down day could trigger the signal. I have been skeptical of a sell signal here as we have not seen an extreme in bullish sentiment since the start of the current rally. Extreme in bullish sentiment means greed and that would signal a good conclusion to a rally. Since that has been absent I have been skeptical of any downside move. But a strong move closing below the 16th July low will certainly take me out of my long positions..at least temporarily until I get a clear signal of direction. Until then I continue to trail stops on my long position trades.

INTERMEDIATE TERM SENTIMENT : BULLISH (since 06.06.2012)

LONG TERM SENTIMENT : BULLISH (since 03.07.2012)

This week is going to be crucial...

rameshraja · Expert Joined: 24 Nov 2006 Posts: 1121

Hello ST

On Friday, has Nifty in EOD formed Evening Star formation to concur with your option analysis ?

Regards

C T RAMESH RAJA

vinay28 · Black Belt Joined: 24 Dec 2010 Posts: 11748

Dear Mr Ramesh Raja, to the best of my knowledge, it is not an evening start because

(a) the last three day candles (that are necessary for a morning or evening star) are actually at the bottom of a downtrend and (b) friday's volume is lesser than that on Wednesday.

The second reason is actually redundant since the first one is convincing enough.

Even Thursday's candle can't be considered as a doji star for the same (1st) reason.

I hope I am right!

rameshraja · Expert Joined: 24 Nov 2006 Posts: 1121

Mr Vinay

Thanks for your Clarification. Lets not clutter Swing Trader's thread with our discussion.. you can put any further views in my thread. Nifty has movedup from 4760 to 5361, a whopping rise of around 600 points in 30 days of trading.

Thanks

C T R

SwingTrader · Posted: Sun Jul 22, 2012 6:42 pm Post subject:

SwingTrader · Posted: Sun Jul 22, 2012 6:46 pm Post subject:

vinay28 · Black Belt Joined: 24 Dec 2010 Posts: 11748

ST, let me respond with due respect to all experts like you and RR as I am a newbie when it comes to TA.

Correctly speaking, it is an evening star if and only if (a) it not only meets conditions given by RR and I (in RR's thread also) but also (b) if it is at the top of an uptrend i.e. the high of the star (or doji star) should be the top of the uptrend. It would then indicate reversing downtrend.

AND, if a similar but opposite formation occurs at the bottom of a downtrend, it would be the morning star, which would then indicate an reversing uptrend.

So, while it looks perfectly like an evening star when seen in isolation, it looses that title since the above necessary and sufficient conditions are not met.

Incidenatlly, I too feel market may move up sharply next week, may be 150-200 points from recent low. But this is because (a) I saw what I thought was a DT yesterday, which is at the bottom of a downtrend and (b) if I remember right, rsi is probably showing a "hidden div"in either daily or weekly chart. Also, 5169 has held beautifully.....so far. Let's see how next week pans out.

After seeing RR's post, I called my friend to discuss my logic with him on this issue. He too agreed that it was "not at all" an evening star. He is the one who has taught most of the experts who come on TV.

SwingTrader · Posted: Mon Jul 23, 2012 9:19 am Post subject:

vinay28 · Black Belt Joined: 24 Dec 2010 Posts: 11748

OK ST

SwingTrader · Posted: Mon Jul 23, 2012 5:58 pm Post subject:

Intermediate term SELL signal triggered today.

INTERMEDIATE TERM BIAS : BEARISH (since 23.07.2012)

LONG TERM BIAS : BULLISH (since 03.07.2012)

So what is so special about the options sentiment triggering a sell when technically is very clearly a sell based on today's move? Nothing special. I just like to see options boys confirming the technical signals. Way more calls were being held compared to the puts before today (based on overall stats). Today the balance sort of shifted. I like to see that before I reverse my market position.

I got stopped of my long positions. I have got into a small short position this afternoon. I will get into more short positions tomm. As I mentioned, for position trading I take limited risk / limited reward options positions like spreads / collars.

Long term positions - they are still in place as long term bias is bullish. But intermediate term change of bias triggers hedges (I initiate hedges when intermediate term bias changes to bearish, remove hedges when intermediate term bias changes to bullish).

SwingTrader · Posted: Sun Jul 29, 2012 9:18 am Post subject:

Intermediate trend continues to be down, no confusion in that matter. Any up move here could be a good opportunity to short. I am looking for a downside extreme in the next 7-10 days on the options sentiment. If we get an up move instead, it will just prolong the down move further. Let us see...

But long term trend continues the flip-flop. Long term sentiment is unable to break above the key +20% mark, it failed to do so 2nd time (first time it tried was during the monstrous rally in Feb this year). No new long positions for me until +20% breaks on long term sentiment. Thanks to the hedges, my existing long positions are fine. I will continue to hold those for now hedging/un-hedging based on intermediate term bias. I am planning to concentrate more on intermediate term trades from here.

INTERMEDIATE TERM BIAS : BEARISH (since 23.07.2012)

LONG TERM BIAS : BEARISH (since 26.07.2012)

***Will change my long term view to bullish only when long term sentiment breaks above +20%. Only that will now clearly indicate long term strength coming into the market.

One interesting observation about options sentiment. Options sentiment failed to hit extreme before it reversed....or so I thought. I have failed to notice that options sentiment tends to hit farther extremes on the downside (sentiment rises higher) compared to upside moves (sentiment falls). Fear of declines is stronger than greed on the rallies. So sentiment rises more on declines than it falls on rallies. I need to take this into consideration and tweak the standard deviations on the "extreme bands" chart. I need to account for farther extremes on declines and nearer extremes on rallies. I tried this in my options sentiment spreadsheet and found that options sentiment had indeed hit extreme on 2nd Jul before it reversed.

vimalmehta · White Belt Joined: 07 Apr 2009 Posts: 20

Hello ST...very intrigued by these posts on option sentiment and long/int term sentiment...I read the posts right at the beginning but still curious how these indicators are calculated.
Also wanted more info on the putcall ratio? Is it a ratio of the no of puts traded to the no of calls or is it based on outstanding open interest? Thanks VIMZ

SwingTrader · Posted: Mon Jul 30, 2012 9:10 am Post subject: