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Stocks

4% Down: Worst Day In Two Years

We’ve had a 4% down day on the NSE, with a graph that started ugly and looks uglier:

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This is the biggest one day fall in two years – since 17 Aug 2009.

The longer term chart of the Nifty sees that we’re in some kind of mid-range:

image

There are two gaps, one around the 5200 level and another created today. if 4900 holds, I expect to see the upper gaps close – the position there is to buy October calls at the 5100 level. If 4900 breaks, it looks ominous and will likely approach the 4780 support (I’d like to work that through futures, not puts).

Sectors – Realty was hurt the most:

Sectors

I don’t like intraday trading but much of my stops and profits are getting booked on an intraday basis. These are trend days – days I identify by the fact that they break away from “mean reversion”. As we opened gap down, I would have expected the gap to close in the first hour – when it didn’t, it was time to go short. (I’m not saying this in hindsight: I did go short in the first hour)

The discipline is finally setting in. I’m respecting stops. I’m working the trends. I’m ignoring the desire to trade when there is no trend. Need it to stay that way.

  • Arghya says:

    Deepak,
    I was wondering why gold price fell when the stock tumbles!!! It is supposed to go up right? Is this the same reason that mighty players got margin call and they had to sell Gold?
    I didn’t find anything special from fed-Bernanke which make people to rush to US-treasury-bonds from of Gold. Am I missing something?
    Response to your tweet regarding intraday trading – Contrary to expert-opinion I do support doing intraday trading. It’s much safer than inter-day, much much lesser risk, close the position on the same day and have a sound sleep. You get leverage around 5 times and brokerage is very low. If you stick to your terminal and to your strategy you would definitely earn on an average of 1,000 daily with a corpus of 50,000 only. It is very effective in our market where volatility is very high.
    The only downside is you need to stick to your terminal through out the entire trading session. It’s impossible to do when you are employed. Moreover it is very-very stressful.
    Anyway, see I suggested to get out from market, recession in confirmed; FED just can’t admit it loudly as it would create panic and cause a hard landing. Fed’s job is to ensure a soft-landing. Good news is – it would ease inflation pressure. I would be happy to see NIFTY at 3500 level by December end so that I could get an opportunity to invest my 80C entirely on ELSS-MFs (I was not able to do that since last two years).
    Request – could you please write something on exit strategy on ULIP. See because of so many article/blogs against ULIP most of the people are thinking to close their ULIP portfolios. But I think it is simply stupid. Most of the charges are in the beginning, so there is no point of closing the account after 3 or 5 years. A person who reads article regarding ULIP jumps to conclusion to sell the ULIP portfolio immediately. The best course of action is to continue the ULIP without making any further payments. You have to make categories such as those who have given premium till 3 years, 5 years and policies which levy allocation charges even after 3/5 years. Continuing the ULIP till maturity would enable the investors to take the only advantage of ULIP (as I told you once) – switching option.
    I switched my ULIP to protector-fund as soon as NIFTY PE crossed 20. I would change it back to maximizer-fund when the NIFTY PE falls back below 15. I don’t have any control over my ELSS investments or I didn’t find any product give me such flexibility. My annualized return on my ULIP since 2006 is 11% even after all those heavy deductions where as my friends who have not exercised the switching options are in heavy loss and after reading articles on internet rushed to close the portfolio. A wrong has already been done and the worse is about to happen.