In case Nifty has a blowout top this month ...

In Jan Nifty did only 100 points in first 21 days and surprisingly nobody complained because their favorite mid-cap/small cap was zooming 10-20-30% in just a matter of days!

Note the big correction months:

1. July 2009

+ 2 months

2. OCT 2009

+ 2 months

3. Jan 2010

+ 2 months

4. April-May 2010

+ 2 months

5. August-Sep 2010?

Assuming we will have a blow off rise like Jan - I have my stock picks in FnO:

1. The infra pack -- GMRINFRA, GVKPIL, IVRCLINFRA? JPASSOCIAT, PUNJLLOYD

2. Underperforming bank - IDBI

3. Cement pick - INDIACEM

4. Random picks - FINANTECH, GTOFFSHORE, ICSA, ONMOBILE, INDIAINFO, MLL --> either they will rise big or fall big!

If Nifty fails to cross 5450-5500 -- these will look like "wishful thinking". Its better to trade long on such "expecting a reversal" kind of stocks only when Nifty crosses 5470-5480

I am making a list of shorts too - the shorts are mostly very risky/very strong uptrending stocks like ASIANPAINT, TITAN, BAJAJ-AUTO types - those which have announced spectacular results - but they already ran up so much that I am expecting sell off when Nifty corrects. The confirmation would be when Nifty breaks down below 5350 - the shorts must be played.

Options/futures data for new series

New series - new hopes ...

Next series interesting observations:

Nifty futures OI:

August series starts off with OI of 2.6Cr whereas July series began with an OI of 2.96Cr

OI deficiency this series was due to profit booking/long unwinding (21L futures contracts) seen a few days back - on 26th July - in the price range 5463-5422.

Banknifty futures OI:

August series starts off with a MONSTROUS OI 27L compared to just about 19L on first day of July series.

This to me is a bearish sign especially because most of the rollovers have come above 10000. There were at least 4 gap ups on the way up to 10000. So watch out for air pockets top POP. If a serious selling starts in Banknifty it could tank 300+ points in 1 day.

Options/futures data for 28th Jul (EOD)

Nifty Futures:

July: 1.38Cr OI down 31% (62L shares cut from OI)

Aug: 2.1Cr OI up 40% (60L shares added to OI)

Total OI on D-1 in June expiry (June+July): 4.1Cr vs now 3.5Cr (July+Aug)

Banknifty Futures:

July: 9.2L OI down 34% (4.8L shares cut from OI)

Aug: 20.7L OI up 43% (6.3L shares added to OI)

Total BN OI on D-1 June expiry: 24.5L vs now 29.2L (July+Aug)

Options/futures data for 27th Jul (EOD)

From options action:

1. 5500 now looking like Himalayas with 1.2Cr Calls vs 16L puts

2. 5400 had confusing action 7.8L 5400CEs covered looked fine but almost 9L puts covered too! Fake move? Profit booking since decay mostly over?

Nifty Futures:

July: 2Cr OI down 22% (58L shares cut from OI)

Aug: 1.5Cr OI up 63% (58L shares cut from OI)

Nifty futures Total OI (Jun+Jul) on D-2 in June was 3.7Cr and now its 3.5Cr

The difference is due to 19L shares that got squared off day before yesterday. As of now I assume it was profit booking.

Banknifty Futures:

Jul: 14L OI down 28% (5.5L shares cut from OI)

Aug: 14.3L OI up 81% (6.5L shares added to OI)

Banknifty Total OI (Jun+Jul) on D-2 of June expiry was 23L now its 28.3L (July+Aug)

Options/futures data for 26th Jul (EOD)

Not much changed from Options point of view:

1. 5500 still a mountain to climb with 1.2Cr Calls/16L puts. What's very interesting is the price of 5500CE went down below 10 bucks. Somebody who bought around 10 will make decent profits if Nifty makes run towards 5450-5470
2. 5400 looks ok support with 68L calls/74L puts. If expiry above 5400 is a certainty - more calls need to be covered/puts written there.

Nifty futures:

July: 2.58Cr OI down 15% (45L shares cut from OI) ==> Opportunistic short covering?

Aug: 92L OI up 40% (26L shares added to OI)

Banknifty futures:

July: 19.6L OI down 15% (3.8L shares cut from OI)

Aug: 7.9L OI up 68% (3.2L shares added to OI)

If LT delivers good results today look for possible run ups in Capital goods stocks that were beaten down yesterday :

JPASSOCIAT

GMRINFRA

GVKPIL

PUNJLLOYD

EKC

RIIL

http://finance.indiamart.com/markets/bse/bseCG.html

Options data for 23rd Jul (EOD)

Notable points from Friday's Options action:

1. 5500 is still tough to achieve this expiry - 1.23Cr OI is decently big

2. 5400 puts adding 10L+ and 5400 Call covering - strengthens the case for 5400+ expiry

Nifty Futures-

1. OI:

July: 3.03Cr OI down 4.2%

August: 65L OI up 33%

2. Rollovers:

13.4L shares cut from July

16.5L shares added to August -- Rollovers on the higher side

Comparison with June - the Friday before expiry we had Total OI of 3.3Cr whereas now the OI is almost 3.7Cr - almost 13% bigger now!

BankNifty Futures-

1. OI

July: 23L OI down 0.17%

August: 4.7L OI up 36%

2. Rollovers:

0.17L shares cut from July

1.25L shares added to August - Definitely heavy rollovers!

Comparison with June - the Friday before expiry we had total OI (June+July) of 21L whereas now the total OI of 28L (July+August)

From http://oitracker.blogspot.com/

1. HIGH OPEN INTEREST AT MARKET TOPS IS A BEARISH SIGNAL IF THE PRICE DROP IS SUDDEN, SINCE THIS WILL FORCE MANY 'WEAK' LONGS TO LIQUIDATE. OCCASIONALLY, SUCH CONDITIONS SET OFF A SELF-FEEDING, DOWNWARD SPIRAL.
2. AN UNUSUALLY HIGH OR RECORD OPEN INTEREST IN A BULL MARKET IS A DANGER SIGNAL. WHEN A RISING TREND OF OPEN INTEREST BEGINS TO REVERSE, EXPECT A BEAR TREND TO GET UNDERWAY.

Options data for 22nd Jul

Options data shows all sorts of fireworks yesterday - specifically action at 5400 was worth looking at:

17L calls covered and almost 11L puts written - indicates short covering. But still @5400 there are 73L calls vs 66L puts - only a follow up call covering/put addition would make Nifty stronger.

With 1.28Cr of calls @5500 - only a miracle would take Nifty above that level. (before this expiry)

Options data for 21st Jul

Options OI analysis for 21st Jul:

It looks like possibility of tanking is more now.

Yesterday action on 5400PEs and 5400CEs both adding says indecision at 5400 but overall OI of 5400CE (91L) vs 5400PEs (55L) says time is running out for bulls.

Today if market starts falling I would expect yesterday's 9L 5400PEs to unwind pretty fast. Otherwise if more more puts start getting written @5400 the possibility of Nifty stagnating & expiring at or close to 5400 increase.

Another weird thing is 5300PEs cut OI of 6L - Remember now the premium is significantly reduced and the risk is for new 5300PE writers if market gaps down.

On world market/US treasuries ..

1. S&P failing to decisively conquer 1083 is also bad.

2. Yields on US Treasury Bonds are firmly under 3 now - which indicates flight to safety - selling risky assets - metals, commodities & stocks (developed and emerging markets)

3 Value Longs - Intermediate term holding period

Well I assume that Nifty will make a new high above 5450 in the intermediate term 1-2 months. So going long on the following with stop losses mentioned - followed strictly EOD basis.

1. NTPC

Entry: 200-205

Stop Loss: 198 on closing basis

Hedge With: 200PA July @0.8-0.9

2. IDBI

Entry range: 121-123

Stop loss: 118

3. INDIACEM

Entry range: 105-107

SL: Strict SL @104.00 - if broken this could head to Nov lows of 96-98 where it becomes an even better buy

Nifty & Banknifty Jul20

CNXIT, CNX500 & CNXMIDCAP

CNXIT - Infosys drags TCS pulls ... closed at resistance point.

I think IT stocks will correct over the course of next few weeks as most of the juice in them is extracted and they are all facing margin pressures.

Midcaps seem to be making merry - have outperformed Nifty - will it continue?

Broader market is mirroring Nifty - with similar H&S pattern - right shoulder yet to be completed with a gap down.

Nifty & Banknifty Jul16

Here are the charts ..

Was there a desperate attempt to create a H&S pattern?

If this pull back lasts a bit more then could we see 5308 soon? 5308 is the POC - Point of Control on the weekly Market Profile chart posted here by Shai/Virenhttp://vtrender.blogspot.com/2010/07/know-flow.html

Banknifty could see correction if HDFCBANK earnings don't meet expectation on Monday.

Will Nifty - DAX love story continue or their break-up is for good?

Bol Radha Bol Sangam hoga ki nahi ...

Psychological damage?

This whole rise from 5240 with so many gap ups - has created a psychological damage :(

2 weeks back I was a totally bearish - shorted Nifty @5280 and lost money - shorted a few stocks and lost money there too!

Now when the time came to short above 5400 - I just froze! Because suckers can do gap ups of 80 points and kill shorts - i didn't want to short Nifty.

May be i will repent...

PS: Another problem is we are a sucker market. We don't fall when global market falls - but we rise when global markets rise. May be this time it will change?

We are commanding PE ratio of 20+ while China has a PE of 10 -- lets see how long the FII suckers keep holding the market up.

The Kool Aid effect over - prices moving towards the magnetic force of Bond Yields

Kool Aid is also a funny thing - you have to keep drinking it everyday. Even if you miss one day this is what happens ..

10Y Bond yields not drinking the Equity Kool Aid?

Oh man - I was watching S&P500 fall and out of nowhere a rally came on last 30 minutes.

And this time I can blame Goldman Sachs for both the ramp up and the news. The news was SEC settlement of GS case!

I just checked the Bond Yields - they don't seem to think S&P500 is right. 10Y US Treasuries bond yields are down 23% yesterday

Last year we have seen Bond Yields are an early indicator of trouble to come in S&P500. We'll see how things go today

Short Watchlist

Here I am putting a watchlist for short trades:

1. ANDHRABANK -- worth trying short @137-139 with 140 as SL

Can be hedged with 140CA too

2. EDUCOMP - status WATCH - Extremely good short entry point would be @640-648 - so wait till that point.

3. FEDERALBNK - status WATCH - Missed the boat?

4. ORIENTBNK - status WATCH

5. LITL - status WATCH - May be missed the boat ? - I am praying for 75 to come on this so that I can short!

6. ORCHIDCHEM -- I am shorting tomorrow @185

24% OI increase in 4 trading sessions!

But again a hedged short with 190CA @3.xx

7. UCOBANK -- I am already short @84.05 - hedged with 85CA @1.95

Nifty and Banknifty update for Jul 14th

Nifty 15-min chart for last 10 days:

3 back-to-back gap ups and looking at INFOSYS gap down today - I wouldn't be surprised if we fall 100 points in a day or two

There's definite -ve divergence. I know -ve divergences can be killed by a sharper upmove. But are so many gap ups sustainable?

Here is the OI pattern for Nifty:

===== =======

Nifty %OI Change

===== =======

5237.1 -1.78%

5235.9 2.30%

5289.05 -1.59%

5241.1 0.59%

5296.85 -6.61% ==> Short Covering

5352.45 2.59% |

5383 1.92% | ==> Longs after 2 gap ups. Can easily be screwed if market gaps down

5400.65 0.78% |

Here's Banknifty 15min-chart for last 10 days:

BN Futures OI:

9381.4 -0.75% |

9464.6 -4.21% | ==> Short covering

9349.4 -10.51% |

9357.15 4.00%

9385.35 -5.87% |

9550.9 -0.35% | ==> more short covering

9449.25 -4.52% |

9566.6 1.30%

9713.7 11.99% |

9850.6 16.35% | ==> I am sure dumb longs are in during the 2 back to back gap ups

9931.6 7.24% |

And lastly, FIIs turned net sellers in stock/index futures but by small amount. Will update more tomorrow.

And what happened to INFOSYS today?

Couple of days back, I had talked about INFOSYS - the ultimate sucker play - back to back 3 gap ups and here is what happened this morning ...

Here's one brother of this stock ...

Earnings for HDFC tomorrow.

http://indiaearnings.moneycontrol.com/sub_india/results_calender.php?sel_date=2010-07-14

The two key differences between HDFC & INFOSYS:
1. INFY OI went up 23% and stock was up 6% from lows 4 days back
whereas HDFC is also up 6% in 4 days but OI is only 5% up

2. For INFOSYS there was decent amount of call writing at 2800/2900 strikes but for HDFC there is not much call writing at 2900/3000 strikes.

Lets watch the stock tomorrow.

July 23th - Reverse Deja vu?

On July 13th 2009 we were at 3920 the 52-week low on Nifty

and today we are at 52-wk high 5382

Reverse deja vu?

It was height of pessimism last year.

Its height of optimism this year.

Lets see how the day pans out.

US Treasuries breakout with volumes

I found this from:

http://goatmug.blogspot.com/2010/06/move-in-treasuries-tlt-says-big-things.html

Just adding the GIF here.

In April I saw HUGE volumes on Ultrashort ETFs and ignored it. This time one can't ignore the treasuries breakout with VOLUMES.

The key is "PRICE FOLLOWS VOLUME".. we'll see how the rest of summer pans out

Gap ups the ultimate sucker plays?

Lets imagine something here - if you are in a long trade (say long in Nifty @5240) your best dream would be a gap up of 80 points to 5320. That would get you excited and start dreaming about another gap up. There you go - you get a next day gap up too.

Awesome! Thank your stars and enjoy the profits.

But lets come back to reality - gap ups are what I call "sucker plays". Gap up to me signifies the market makers don't want co cover their shorts but they want the weak folks to cover their shorts.

It doesn't mean that market will tank immediately. It will keep going up but some day the reversal will come. And reversal will come when all shorts are screwed badly and enough dumb longs are in!

There were two back to back gap ups in Nifty:

And here I present you the "ULTIMATE SUCKER PLAY" -- gap up and make 52-week high. How much more insane can it get?

Disclosure - No positions in Nifty. Waiting to aggressively short when reversal starts! Even if it means the wait is for few weeks to months. Till then let the longs enjoy their profits.

Because no matter what the FIIs want to talk about INDIA being the "domestic story" or some shit like that - lets face it when the whole world is burning we can't be just making merry.

What was that they said in OCT2007-Jan2008 -- DECOUPLING - lol

And this is what happened ..

This time its "domestic story" - rofl

Any guesses what will follow? ...

Update to my INFY & ITC short

I closed the ITC short at almost NPNL (no-profit-no-loss) because its OI is expanding but stock in the same range of 300-305. Also some reports suggest ITC might post good results this quarter.

If it moves in the 320-330 range - then it could be a decent short candidate or below 295 it will be weak and can be shorted too.

Alright - this thing is going up too fast - I closed my INFOSYS short at 2777 with a 26 points loss. But I am going to let my 2800CA run.

- So I take my analysis as judgement error. I am pretty sure in future I will get a good short entry point for both of these stocks.

Two positional short ideas

1. INFOSYSTCH

Short entry point: 2740-2750

Hedge with 2800CA: @44-46

Profits only below 2700

Hedge is expensive :( but one can evaluate risk reward ratio and if convinced about downfall - go for it. After all in trading you can't just hope to be lucky all the time.

Here's my analysis:

Triple top with lower RSI each subsequent visit to 52-wk high; Too much media hype about IT

being the "defensive play"; The truth might lie in statements made by Ratan Tata yesterday

about TCS margins under pressure. Again looks like lots of longs were "let to expire" in June

and OI has increased 40% for a fall of abount 90 points. Looks conviction short to me.

Eventually it might get to 2400/2200 or below if Nifty tanks badly

2. ITC

Short Entry point: 304-305

Hedge with 320CA @1.95-2.25 range

Decent protection till 320

Profits below 300

Here is my analysis:

RSI losing strength; Hit top of channel; OI has lightened by 33% from its peak in June to first

day of July series. Pattern of OI reduction looked like long unwinding? Couple of days back

there was a 10 point jump with 9% OI increase. Is that the last ditch effort by bulls?

Chart:

PS: One has to be cautious in these shorts because we are attacking the "defensive plays". But

what the heck - I have hedges for both. Let me see what happens.

How someone can get fucked by the FIIs despite being right

Here's how the operators work to screw folks despite being right.

It looks like most traders in India are day traders and very few are positional traders. So most of the falls in Indian markets are gap downs and intraday the operators - a.k.a FII - Fucked up Institutional Investors do is to force short covering and in the process get some dumb longs.

Here is what happened to my traders yesterday:

1. Shorts @5272 - with 5300CEs as hedges in the ratio of 3:2

2. More shorts @5284 - with 5300CEs as hedges in the ratio of 3:2

3. Some more Shorts @5297 - with 5300CEs as hedges in the ratio of 3:2

Average short price 5282 or something .. and what happens 2:50 yesterday FIIs decide to screw all the shorts. And in 2 minutes some 12L Nifty futures are traded and price rises to 5291.

And I am thinking ... I have hedges so i am ok till 5300+. And boom next thing u know is suckers run it above 5300 - losses mount :(

And then they start premium of 11-14 points and market goes to 5311 - now I start doubting - OK I am short but this thing is looking ominous. Let me see if it stops at 5313-5314. Eventually they run it all the way up to 5320 and there's just few minutes left.

With heavy losses and the kind of volumes coming in NF - I feel Nifty will gap up - especially because S&P500 is oversold and if S&P closes 1-2% up - we might gap up to 5350 levels! So I decide to cover most of my shorts @5321 and leave the 5300CEs.

And the FIIs - the Fucked up Institutional Investors quietly gap down Nifty by almost 60 points -- like robbers entering through the back door. I was thinking what the fuck is that? At least US markets have some amount of shame - almost 80-90% of fall happens intraday. And gap down is just a small % of the fall.

And next day u don't feel like shorting because of the previous day ramp-to-screw-shorts :(

PS: And most Indian bloggers are horribly optimistic - totally unaware of whatever the fuck is happening in whole world. They take some oscialltors or some averages and live in their own world. I am sure even they get screwed by FIIs - because during months when Nifty rises - they might make money but during months when market falls they might just promptly give back all the the money to the FIIs!