Your honest opinion please

[RSI]

Friends,

Time to rakeup this thread. See the yearly chart of Sensex. Data for 31/12/2009 included

 

[RSI]

Here is the same sensex yearly chart containing more data, but on log scale

 

[RSI]

Those who have participated in this thread last year, kindly review your comments. See how far your views have been validated.

More importantly, how do you feel now? How do you analyse the current chart? What will be your strategy for the next year?

 

[sathia.sap]

Those who have participated in this thread last year, kindly review your comments. See how far your views have been validated.

More importantly, how do you feel now? How do you analyse the current chart? What will be your strategy for the next year?

Thank you RSI for this excellent thread...I just came across this thread, read all from the start and I should say this is one among the best....If I've been a mod/admin, I would have made this thread sticky

Now coming to the point, I humbly feel that 2009 bar is an inside bar of 2008. So cannot say a full fledged bull nor a bear run....its something that we need to wait and watch.But i am little inclined to bull since 2009 has taken out 75% of bearish 2008.If we wait and if 2010 takes out the remaining top 25% of 2008, needless to say, we all will be bullish

--Sathia--

 

[RSI]

Thank you RSI for this excellent thread...I just came across this thread, read all from the start and I should say this is one among the best....If I've been a mod/admin, I would have made this thread sticky

Now coming to the point, I humbly feel that 2009 bar is an inside bar of 2008. So cannot say a full fledged bull nor a bear run....its something that we need to wait and watch.But i am little inclined to bull since 2009 has taken out 75% of bearish 2008.If we wait and if 2010 takes out the remaining top 25% of 2008, needless to say, we all will be bullish

--Sathia--

Thanks Sathia for your kind compliments. Thanks once again for participating in this thread and sharing your valuable opinion.

Sathia, comments herebelow are not intended to you, but to serve as a wakeup call to all newbies of this forum.

But what about other members? No one seem to be interested. Now a days I see so many amatures eagerly looking for freebies and day dreaming to become Crorepatis without putting any work. I donot blame them, I too looked around for freebies when I was a beginner. But I have always been interested to learn. What saddens me is to note that no one is interested to learn. I remember those old days (some years back when I joined this forum) when many experts were posting in this forum and this was the ONLY indian forum to look for guidance at that time. Almost all of them have deserted this forum. Quality of the forum has come down drastically but the quantity has increased tremendously.

Friends, please note the old saying "Birds of same feather flock together". So if you are disinterested to learn, you will get company of same people. Quality and effort begets good results.

 

[AW10]

RSI, Thanks for providing the update on the chart.
I was among first one to respond to your chart a year back.. so it gives good chance to re-visit what I told there..

Though I am 60% bearish due to double bar bearish engulfing pattern with heavy volumn. This volumn could be near the topping pattern.

But at this long red bar, I have no confirm signal so I will stand on the side. Not in a hurry to trade.

Next Bar ,
a) if it makes new low, then on following bar I am going short below the low of next bar. My stops will be at the top of long red bar.
b) if it is within the red bar, then no action. watch for following bar .c) If it makes new high, then again stand on the side and watch the battle of buyers and sellers.

In scenario, b)and c), My entry rules for long trade will be
1) atleast 2 continuous bars showing higher highs
2) high of last bar crosses the high of current long red bar.
My stop at the other end of long red bar.

Reverse the above 2 rules for short entry below the low of long red bar..and 2 continous bars with lower lows.

For me, as long as price is withing the boundries of Red candle, it is battleground of bulls and bears..so I prefer to stand on the side as it doesn't put odds in my favour.

Happy Trading.

So, my second scenario has played out.. i.e NO Action on Inside bar.
Going into next bar, now when we don't have new low and price has penetrated almost 75% of big red bar, I am reading it as the selling pressure is over and buyers are in control by pressing the prices to as deep as 75% of prev bar.
I wouldn't jump in and buy as soon as high of 2009 bar is taken out..but will wait for retracement (about 50% of 2009 bar or any other early reversal sign) and enter long there. Of course the stops will be at the low of 2009 bar.

Lets see what market has to tell us in 2010. As a chart reader, I enjoy the puzzle of solving right bar. Happy with both outcome of being right or wrong.

Happy Trading

 

[kchintan]

Hello RSI,
First of all, I must say that your findings are brilliant.

As far as my opinion to the log chart goes (and I am a beginner to TA), but few things I can point from this:
1. Its clear that the current market is not in an uptrend. At the most, the highs of 2009 may be retested.
2. Market may also not see a lower bottom this year and remain range-bound like last year.
3. Each of the previous long candlesticks have occured on a bull-run. This time it has occured by a bearish run. (To be ignored???)

Chintz

 

[Tradewithhunter]

In my view there are 3 possibilites for next year.

Possibility 1 - Deflationary recession in 2010 (20% chances)

This is possible if the Fed decides to screw up the entire 'money printing' or as the economist call it 'quantitative easing' in 2010 by either increasing the interest rates or by reducing the money flow in the system by selling govt gilts. This will mean the US economy would see increased unemployment rate, the markets will see a 'W' shape dip and will probably go below the 2008 lows. All markets (including Indian markets) would follow. Equities, commodities..everything will fall and USD will go up.

The chances of this happening is only 20% since currenlty I dont think the Fed is in the mood of increasing any rates until the employment data comes out of the danger zone. Hence the chances of this happening is only 20% (though can;t be rules out completely).

Possibility 2 - Reflationary bull market to continue in 2010 (60% chances)

Since the focus of the Fed will continue to reduce unemployment, they will continue to print money and circulate it in the system (the interest rates are already zero so they cant lower them anymore anyways). More money in the system will bring the money multiplier factor in play.. credit will expand and companies will start growing.. GDP will start expanding (though along with Debt and a huge imbalance in US current account). This will sky rocket equities and commodities prices (like in 2009) and we can see a retest of 2008 highs in 2010 again. However the Fed will be wise enough to start withdrawing money sensibly in later half of 2010 to keep inflation in check. This has got a 60% chance to happen.


Possibility 3 - Reflationary bull market in first half and inflation thrust in second half of 2010 (20% chances)

Fed may decide to delay the pullout from quantitative easing too late (if they pull out too soon, they can screw equity markets as in possibility 1 above. But if they delay it too long, that can screw the equity markets too)

This would lead to inflation sky rocketing ... commodities prices will sky rocket as well. Equities will move up but will gradually start to recede since higher commodity prices will impact companies profitability plus erosion of money value (remember crude at $145 when equities were falling like nine pins in 2008).

This has got a 20% chance to happen.


This in my view overall 80% chances are to have a continued bull market in 2010 .. I will stay bullish overall and follow the technicals.

Cheers
SH

 

[RSI]

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Now on the basis of the facts/evidence (assimilated by me as stated above) what are the deductions/opinions that I can make? I can reasonably expect that

1. It will never be easy to takeout the high of the last candle. Infact, when such a wide range candle with such a wide range body occurs, that range itself will offer stiff resistance to any attempt to take out that range first and then its high.

2. There is no indication of weakening of strength of bears in that chart. So I can reasonably expect that next candle will make a lower high and most probably a lower low as well. The least I must expect is a test of the low of last candle.

3. If in the subsequent candles there are any lower lows, then I will have to watch out how far low it goes. Because, lower the low of subsequent candles, higher the difficulty will be to takeout the range and high of the last massive red candle appearing in the chart.

4. If there is any rally, I will have to asses the strength and enthusiasm of bulls in that rally. Shorter the rally, more negative will be points awarded to the bulls.

5. I have to be prepared for a 1-2-3 pattern as well. This will confirm the downtrend. Being a yearly candle, I doubt whether I will be able to see this (of course, you did not have the benefit of time axis to form this opinion). But I must not be shocked to see one such pattern.

6. If by chance (this is extremely remote chance), the high of last candle is taken out in the immediate future say next two or three candles, that will be more in the nature of an upthrust. A new uptrend is very unlikely.

7. There is another possibility also. Next few candles may establish a trading range rather than making new lower lows. If that happens, I will have to conclude that bears are loosing the advantage that they have established in the last candle. Does it mean that there will be an uptrend? I am not sure. To move the prices higher, there must be sufficient demand. In the absence of sufficient demand, price will not move up.

The above quoted were some of my observations and opinions formed last year.

2009 turned out to be an inside candle. But look at the volume. It is the highest that you can seen in first chart, i.e. the chart starting from 1997.

What has the price done on this volume? It has survived the lows posed by that massive red candle of the year 2008. Not only that, it has managed to recover more than 70% of that massive red candle of 2008. Have the bears lost the advantage that they had gained in that 2008 red candle? To get an answer, I would like to see the test of the low of 2008 red candle. I would like to see how the price behaves when it reaches the area of 7700 to 8100.

As you know, forming an opinion about direction when the price is trading in a range is very difficult. That has got many dangers as well. I would like to see the test of either the high or the low of this range. If I could witness both, then I would be lucky. But I doubt whether we will have so much of volatility this year. Where is the high? Resistance zone is in between 20500 to 21200. Where is the low? As stated above support zone is in between 7700 to 8100.

True to trading range, will the volume taper off this year? I would like to see that as well.

A word or two about the second chart. You will notice that the long term uptrend is still intact. Will we have a touch of that uptrend line this year and bounce from there this year? Will we have support from the support zone mentioned above?

Surely we have to watchout. Whole year is to span out.

I hope this helps
R. S. Iyer

 

[RSI]

Seeing your response, I am having a feeling that this thread is not of much use to many. Therefore, I have decided to discontinue this thread. But before saying goodbye to this thread, let me thank deep from my heart to all those members who have wholeheartedly participated and expressed their valuable opinions here.

Thank you very much.

I wish all of you good luck in your trading and happy life.

Regards

R. S. Iyer