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!