Friday, April 29, 2016

Bored of Being Unemployed - For Traders Only, Investors Keep Out

As of this moment Dow is trading  at 17716, down114 points. Traders be ready to jump into trade as discussed below.

What we are going to discuss today is for traders' eyes only. Investors please do not try this risky strategy that I am going to discuss today. One has to be nimble footed and there is no room for fat fingers.

I will be giving Dow levels to trade. Scrips which are co-related with Dow movement can also be traded, keeping given Dow levels in view. I hope I am clear. If yes, let's trade ;-

Condition # 1

  • If Dow falls down to 17400/17450, then buy.
  • Sell your position when Dow bounces back to 17850/17900
  • To square off this trade should not take more than a week.
  • If this trade materializes then you stand to gain 400/500 Dow points in quick time.
Condition # 2
  • If Dow does not breach today's low of 17700, then wait for right conditions for sell to develop.
  • Dow is going to trade sideways, so sell will come if Dow takes bounce from 17700.
  • I will let you know in advance when sell conditions develop.
By now you must be aware that I had predicted these volatile trade conditions on 15 Apr 2016, when I had recommended exiting long positions in Dow. For those who are visiting this page for the first time, you may like to read that post titled Bears Sharpening Daggers -US Markets in Danger of Bear Grip

Further I had mentioned in this post that 18000/18200 is selling zone in Dow and bears would like to ferociously defend this last known territory. In that post, I have also discussed about my apprehension of "Bull Trap", which seems to be turning out correct.

Today I am giving out this trade, mentioned in Condition # 1 above, only for traders. From 15 April 2016 onward we have been unemployed as mentioned in my earlier post Out of Work But Thankfully Out of Danger - US Markets Dive

I am reminded of the cliche "Better safe than sorry". 

Thursday, April 28, 2016

Japan Unsettles Global Markets - Havoc Spreads

Bank of Japan announced it's monetary policy today -  that announcement brought tsunami in local and global markets. What did Bank of Japan(BoJ) do to unsettle global markets so much that bulls had no place to hide? Long trades were decimated in all markets from Asia to Europe to America.

In Japanese markets there was bloodbath with Nikkie225  losing 624 points, down 3.6%. So what did Bank of Japan do in it's policy announcement that horrified the investor community and made them dump everything in sight? Bank of Japan took following monetary policy decisions:-
  1. BoJ kept its Deposit Rate unchanged at -0.1%.
  2. BoJ maintained it's Asset Purchase target at 80 trillion Yen (USD 738 billion as of current conversion rate). 
  3. It gave some relief to quake hit areas by offering zero interest rate loans to those areas.
Result of BoJ Inaction: 
After the announcement by BoJ, Yen roared into super-drive and strengthened from 111.88 to 108 against US Dollar. Presently it is trading at 108.5 as of going to press. 

Japanese economy is export oriented and hence Yen gaining so much strength against US dollar means that export of  Japanese companies will no longer be competitive. That will directly hit the top line of companies, finally effecting their bottom line.

What was wrong with BoJ decision?
Will someone please tell me what was so terribly wrong with BoJ decision. It basically did not alter anything from what existed since February 2016. Maybe it was scared to shake the equilibrium in the market as it existed. And look what it achieved - just the opposite!.

Why did BoJ keep rates unaltered?
BoJ thought not to change anything because it got scared of consequences. When it decreased Deposit Rate from +1% to - 1% last February, a sharp drop occurred in stock prices. This time around it did not want to take the blame of upsetting the market. And yet it did!

What did market want from BoJ?
We live in bizarre times. Negative deposit rates mean that if you deposit money with Central Bank, you will have to pay for it and not get paid.. 

Did market participants want further cut in deposit rates? I don't think so. That would have been disastrous for Yen- Dollar trade. Japanese exports would have got further hit.

Did market participants want BoJ to increase deposit rate to pre-February rate of +1% ? That would have effected liquidity. Entire exercise of negative rates was meant to spur growth for Japanese economy so that it can come out of decade long stagnation.

Maybe market participants wanted BoJ to decrease the borrowing rates to negative territory. That would mean that you get paid for taking loan from Central bank. Point to ponder!

Illogical Market Reaction
Japanese companies are effected and so is Japanese economy. Economy will shrink and deflation will take roots. But that has been the state of this third largest economy of the world for nearly two decades. How does that effect global economy?

Global economy has been chugging along despite Japanese stagflation for years. What has materially changed in global economy with today's inaction of BoJ ? Then why such a violent reaction in global markets to BoJ decision? I have no answer. If anyone reading this can provide an answer, we all will get educated. Hit the comment button at the bottom of this post freely.

As of now Dow is trading 58 points down. US market participants have reacted more maturely to news from Japan. May be it will make rest of the world think and act logically tomorrow.

Sun is finally setting in the land of rising sun. That is a reality and we have to come to terms with it - earlier the better.

Tuesday, April 26, 2016

Beginning of End of Oil Age - Saudi Vision 2030

Saudi Arabia got its importance and wealth from US oil crisis in 1970s.

U.S. response to the energy crisis was to establish deeper relations with Saudi Arabia. Deeper relations boiled down to two main points of agreement:-
  • Saudi Arabia will have to sell its oil in US dollars only. It's implication is that any country wanting to buy Saudi oil will first have to buy US dollars to pay for oil purchased from Saudi Arabia. Thus began dominance of Petro-Dollars in world economy.
  • In return Saudi Arabia got military protection from US.
Importance of Saudi oil started to change from 2009, when US oil production increased year on year. Increase in US oil production carried on unabated and Saudi influence declined proportionately.

To add insult to injury, more factors surfaced on the horizon for Saudis' discomfort :-
  • New technology  allowed further increase in US oil production through fracking (Shale gas).
  • US no longer is energy dependent on Saudi Arabia.
  • Saudi Arabia allowed oil price to plunge, hoping to make offshore drilling and Shale Gas production economically not viable. By doing so, Saudi's calculated that they will decimate competition and again rule the oil market.
  • Instead something very strange happened. Unimaginably low oil price did not increase demand in oil. 
  • Demand destruction in oil was due to global financial crisis in initial stage. Then governments across the world started to curb use of oil and started investing in cleaner and greener alternative energy sources
  • G-7 countries have agreed to cut carbon emissions and totally end fossil fuel use by end of this century.
  • Paris Agreement on Climate Change last December commits all countries to holding global temperature rise to "well below 2 degrees Celsius". This can be achieved by sincerely shunning fossil fuel in an accelerated manner world over.Some more thoughts on fossil fuel in this post:
                          Break Free from Fossil Fuel - Resolve on Earth Day

Saudi Arabia has now realized that it has lost control over oil price. Iran's entry into the fray as another major oil producer has not helped the Saudi cause. As last ditch effort Saudis played Doha Summit card for production freeze so as to contain Iran. But Saudi bluff was exposed by Iran and rest is history. Read more :

                      World Waits with bated Breath - Doha Summit Outcome
                              How Will This Sunday Be - Black or Grey?

Last Monday Saudi Crown Prince announced pompously that Saudi Arabia will become oil-independent for its survival in next four years. He unveiled "Saudi Vision 2030" - an ambitious plan to diversify into income streams not dependent on oil.

This is admission by Saudi Arabia that it has finally given up hope of controlling oil price. We can now expect to be freed from the vice like grip of oil cartel headed by Saudi Arabia.

Before Doha Summit, Saudi Prince had threatened to increase oil production in case Iran did not sign Production Freeze agreement. I had commented that it is empty threat to scare US, so that Iran can be pressured. You may again like to read my argument in: Dare Saudis to Execte Threat to Ramp Up Oil Production.

"Saudi Vision 2030" has finally brought curtains down on fight to control market share. This will help oil price to stabilize and get dictated by market forces of genuine demand and supply.

However we wish Saudis success in their new venture.

As for us, we are presently unemployed. We are sitting on the sidelines, watching fight between bulls and bears in US markets. For insight into our present idleness read " Out of Work But Thankfully Out of Danger - US Markets Dive "

Monday, April 25, 2016

Dow In Negative Territory - Are You Scared US Markets Will Crash?

US markets have risen too much too fast. From mid Feb 2016 to date (in about two and half months) Dow has gained 2700 points (approx).This was achieved without any significant correction.

That has given credence to market speculation that US markets may collapse any time. Are you stressed by such announcements?

Let me categorically state that US markets are not going to collapse any time soon. Dow may drop down to 17200 in a worst case scenario. In such market condition, Dow will find support at 17200 and rise.

Reason why I am saying so is simple. There is long term support at 17200 level in Dow. However, Bank of Japan and US Fed will have to spring some nasty surprises this week for Dow to touch 17200.

In the absence of any shock from Fed/BoJ, Dow will go into sideways movement in coming days. 

Is this a Bull-Trap?

Let me draw your attention to the fact that I had forewarned you about a Bull-Trap  when Dow was near 18000. It was mentioned last week in this post . Relevant excerpts are again reproduced here for your eyes only.

"The best case scenario is that the sell off in equity markets takes place in slow motion. Big players may choose to exit their positions in a classical "Distribution Process" so that they can obtain reasonable price for their huge long positions.

So you may witness very high volatility with spurts of buying interest emerging and trying to draw eternal bulls into a bull trap. That is the shade of grey for you!. Keep out of markets and watch it from sidelines till dust settles down. I will keep you posted and immediately inform you as and when that happens. Be safe, be happy - adopt a no-trade strategy for the moment!!!"

Buying interest was generated when after Doha Summit debacle, Dow jumped from 17900 to 18150. From then onward there has been a steady slide. Are we witnessing the "Bull Trap" theory being unfolded?

Now the question is: How sapping will the Bear Hug be? I think not very sapping. If this is a Bull -Trap then bears will ensure that markets rise from their lows.  This will be done to entrap more bulls, before settling down into a bear phase. In short, be ready to witness sideways movement in US markets as I had mentioned at the beginning of the post.

As of going to press, Dow was down more than 100 points at 17890. Are you not happy that you are away from this volatility? Stranded with long positions, spoiling your mood and mental make-up, is quite disturbing!
So enjoy money saved by employing "No-Trade Strategy" as recommended by me in my earlier post. Check it here. Snippets from that post is shared again.

"But right now we should have market strategy to sit on the sidelines. Let various forces of pull and push play out. Let clear trend emerge and then I'll tell you confidently to enter trade for definite gains, like I always been doing"

Saturday, April 23, 2016

Break Free from Fossil Fuel - Resolve on Earth Day

Earth Day was celebrated world wide on 22 April- a day to reflect on environmental issues of our planet. On Earth Day let us spare a thought for our environment - not for any lofty abstract charitable symbolism but for our own survival on this planet.

We must debunk the myth that any step to protect environment, will save our planet. It will save us.

When we tackle environmental issues with positive action, we are saving ourselves, and not the planet. This planet will survive any environmental catastrophe, but humans will not.

So let us do ourselves a favor - protect our environment. In this process we will save our species from extinction. Earth has and will survive many such catastrophe.

Fossil Fuel

This Earth Day let us resolve to phase out fossil fuel from our environment.

We the people of planet earth, have to set urgent realistic deadlines and act firmly to throw out fossil fuel from our ecosystem. Once and for all!

Break free from fossil fuel within next 10 years. It is possible if we have many more Elon Musk (CEO Tesla Motors) on earth.

We must have many variations of Tesla by many other automobile companies. Automobiles consume 60% of world's total oil consumption. Replace fossil-fuel-guzzling automobiles with clean efficient Tesla-kind-of-electric automobiles and enjoy pollution free cities.

Recent precipitous fall in crude oil prices will help the cause of fossil-fuel-free world.

Find ways and means to keep oil prices low for a long time so that oil business is no longer lucrative, and finally gets abandoned by big influential coteries and countries.

Peabody, world's largest coal company, recently filed for bankruptcy protection in US owing to falling demand of coal. This space should quickly get filled by renewable energy.

Technology enhancement in renewable energy should be a global effort, backed by governments under UN umbrella, and not left to corporations. Then only renewable energy will be accessible, cheap and user friendly for mass consumption.

Peek at US Markets from Sidelines

Dow opened the day at 17985, rose to a high of 18027 , then plunged to a low of 17910 and recovered smartly to be slightly in green.

Important points to keep in mind for Dow :-

If Dow closes flat today, then it will be very encouraging for bulls. It will mean that Dow has taken support from 10 EMA and declared it's intention to move higher on Monday. I am expecting that low and high made so far in Dow, remain intact in trade today.

On Monday, if Dow does not violate today's low(17910) and closes above today's high(18027) - then we can expect Dow to touch 18300,

Friday, April 22, 2016

Out of Work But Thankfully Out of Danger - US Markets Dive

We went out of business when Dow reached 17900 last Friday. I had asked my audience to exit US markets with Dow between 17990/17950. Dig out details here.

I not only asked my audience to exit markets, I also told them to stay on the sidelines. That makes us unemployed - watching the battle from gallery. Probe yourself. If you are short of time to probe, examine the operative paragraphs :-

"The best case scenario is that the sell off in equity markets takes place in slow motion. Big players may choose to exit their positions in a classical "Distribution Process" so that they can obtain reasonable price for their huge long positions.

So you may witness very high volatility with spurts of buying interest emerging and trying to draw eternal bulls into a bull trap. That is the shade of grey for you!. Keep out of markets and watch it from sidelines till dust settles down. I will keep you posted and immediately inform you as and when that happens. Be safe, be happy - adopt a no-trade strategy for the moment!!!"

Watching from sidelines, you can witness battle raging between bulls and bears. Today bears seem to be winning. I have been maintaining in all my previous posts that bears will defend their last known territory between 18000/18200 in Dow. You can find mention of this here or read the excerpts below ;-

"I still maintain this view that there is no point in sticking one's neck out when Dow is in its long term selling zone of 18000/18200. Bears by all means will defend this last territory. Once out of this territory,Dow will be breaking new grounds - where no man has ever been before! All- time- high of Dow is 18351."

US markets are down more than 100 points at the moment. Don't you agree that we are safe sitting out this volatility? It is very difficult to be holding positions in such times when there is no clear trend.

At such moments you cannot even build short positions. For all you know, tomorrow you may find Dow 100 points higher. 

One thing is certain though - definite move either way  will be signaled by an intra-day movement of 300 points in Dow in that direction. Therein lies your indication to trend development. 

Watch this space regularly for updates and call to action. Also, your comments will be most appreciated. So take out few minutes to do me a favor and comment without any inhibitions. 

Wednesday, April 20, 2016

Chinese Invade IMF - Yuan Set to Become Reserve Currency

At peak of last global financial crisis of Sub Prime fame, Chinese leadership publicly criticized  international monetary system. China chided that a  international monetary system solely dependent on US Dollar for stability, will be prone to disaster. From there started Chinese quest to invade international monetary system.

China went about being the good guy and convinced IMF executive board that Yuan meets standard of "freely usable" currency. It also observed all IMF compliance rules to get approval for entry into SDR (Special Drawing Rights) basket.

Countries can use SDR to supplement their reserve currency. IMF member countries holding SDR can draw any currency from the basket to meet balance-of-payment needs.

Presently this basket of Reserve Currencies has US Dollar, Euro.Yen and British Pound. On 01 Oct 2016 Yuan will join these privileged currencies to stake claim to Global Reserve Currency basket with weighting of 10.82%, ahead of Yen and British Pound

Are you convinced that IMF has rightly approved Yuan as Reserve Currency? 

Chinese leadership has long history of being secretive and manipulative in their demeanor. All economic activity and data are either hidden from international scrutiny or fudged.

China has always been cheating on its currency and has pegged it artificially and arbitrarily to the dollar.

Despite its dubious track record on monetary front, China could win IMF approval by opening its onshore Bond and Currency markets to foreign Central Banks. Plus it reported its reserves to IMF - Bah Big Deal!!

No one is sure these reserve reports are true or not.China recently reported its Gold reserves as 1658 metric tons after a gap of six years. This is close to last reported figure six years back. However experts believe that it should be nearly double that figure at 3000 metric tons.

Who should we believe? I am with the experts who keep a close tab at various bullion activities of the dragon nation and have nothing to gain by falsifying figures.
Why IMF ignored Time Bomb called Chinese Economy?

Chinese economy is in shambles with balloons all over. Which of these balloons will burst and when, is anyone's guess.

In my earlier post I had mentioned China as one of the three factors that can crash global markets. Other two factors mentioned in that blog were Oil and Brexit. You can again visit the post : Bears Sharpening Daggers - US Markets in Danger of Bear Grip

Very briefly we will go through present state of Chinese economy to get the full import of IMF decision :-

  • Chinese stock markets, barometer of health of any economy, have simply collapsed. Shanghai Composite Index has sunk from 52 week high of 5178 to 3042 - loss of 41% in a year. Moreover it is hurtling towards 2000 level. Remember stock markets are leading indicators to overall economy by six months.
  • China is in midst of oscillating between bubbles - it moved from real estate bubble to stock market bubble to bond bubble and presently has come back to real estate bubble. Property markets in Shanghai rose by 25% year-on-year.
  • China released its GDP figures which simply do not add up. Figures are too smooth to be believed. When they had largest annual decline in rail freight traffic ever reported, how has GDP grown?
  • China is a debt fueled economy. Moth-eaten corrupt sectors like real estate are being merrily funded.
  • Chinese banks have trillion dollars as bad loans (NPAs) and are collapsing under the burden. Recapitalizing such a huge capital is not an option with the govt. 
  • China has not even come clean on the total extent of bad loans that their banks are reeling under.
  • Since the present dispensation took over in 2012, no economic reform has been carried, except anti-corruption drive within party with the sole aim of hogging and concentrating power.
The laundry list of Chinese Machiavellian machinations goes on and on. Yet IMF would like to hand over international monetary strings to China? Beats me! 

If anyone in the audience has different take, please do comment to make us wise on this issue. Whether in agreement or not, your views on the subject will go a long way in shedding more light. So do us a favor and comment uninhibitedly. 

Glimpse of US Markets

Going to press, Dow was trading at 18041, down 11 points. It opened at 18059, made a low of 18031 and high of 18078.

I am still maintaining my stance of recommending no action in US markets till clear trend emerges. Remember we are right inside the Resistance Zone of 18000/18200 in Dow. If you missed my recommendation detailing this strategy, here is the link again.

I will be waiting for your comment!

Tuesday, April 19, 2016

Hear Bulls Roar - Dow Positioned to Break New Ground?

Bears running for cover! And there is none.

From  Asia, Europe right up to America, there is no place for bears to hide. Everywhere bulls are in full control. Markets are in all shades of green, but green all the same.

Oil is up by 0.5% - and surprisingly enough Gold is also up. Bulls are running amok and have inadvertently stepped into gold bastion. But once there by default, they are piling up bullion. Someone please explain more rationally!!

Yesterday Dow recovered form day low of 17848 and closed at 18004, after making a high of 18010. This means that Dow swung a neat 62 points from day low to reach its high. All this was done in gloomy and uncertain situation of oil plunge. Very creditable!

Feeling Left Out of the Celebrations?

Today  Dow has opened in green at 18014 and is at present up by 37 points. But we are out of work, isn't it? That is because I told you to book profit when Dow at 17900/17950 as per my earlier post.

Snippets from that post   Bears Sharpening Daggers - US Markets in Danger of Bear Grip
"Bears are gleefully whetting their hatchets and tomahawks, waiting for markets to open. So the wise thing to do would be to square off all long positions between 17900/17950 in Dow.

I agree that you would feel cheated if Dow was to surge northwards, but it is better to take profits off the table. Remember we had built long positions as per my advice at 17400 in Dow. If you take profit at 17900 you still would have accrued 500 points in Dow.
Massive resistance in Dow Jones exits at it's long term selling zone of 18000/18200. No need to take extra risk in hope of collecting 100 Dow points more, with dark clouds gathering on global stage"

I still maintain this view that there is no point in sticking one's neck out when Dow is in its long term selling zone of 18000/18200. Bears by all means will defend this last territory. Once out of this territory, Dow will be breaking new grounds - "where no man has ever been before!". All time high of Dow is 18351.

What we are witnessing now may be some sort of trap being laid for bulls. I had mentioned it in a post last Saturday. Sample the snippets from the post How will this Sunday be - Black or Grey?

"The best case scenario is that the sell off in equity markets takes place in slow motion. Big players may choose to exit their positions in a classical "Distribution Process" so that they can obtain reasonable price for their huge long positions.

So you may witness very high volatility with spurts of buying interest emerging and trying to draw eternal bulls into a bull trap. That is the shade of grey for you!. Keep out of markets and watch it from sidelines till dust settles down. I will keep you posted and immediately inform you as and when that happens. Be safe, be happy - adopt a no-trade strategy for the moment!!!"

Please don't get trapped!!

Monday, April 18, 2016

Dare Saudis to Execute Threat to Ramp Up Oil Production !

Saudi Prince threatened last Thursday that if Production Freeze at Doha Summit was not agreed to, then they could ramp up oil production by extra 1 million barrels per day. Now that there was no deal at Doha on Sunday, we dare them to ramp up production as announced. We dare them to shoot themselves in the foot. We dare them to carry out their puerile threat. We, the people of planet earth, dare them !!

We are tired of Saudi shenanigans. They are at this mischief for so long that it is not funny any more. As many aver, even with trillions of  petro-dollars Saudis have not done one single act of goodness for mankind. In fact its the other way around!

For investors in oil, there is no reason to panic. This fall was expected which I had announced on Saturday itself. If your are visiting this space for the first time then I recommend you to read following posts before proceeding further :-
                              How will this Sunday be- Black or Grey?
                    World Waits with Bated Breath - Doha Summit Outcome

Lets analyse the situation as it exists today. Crude is down 2.9% at 39.3 USD as of publishing this post. It has recovered lot of lost ground when earlier in the day it had crashed more than 5%, day low being 37.61 USD.

Why am I saying there is no reason to panic for oil investors. Oil can go down to 35 USD this week but that is all. In fact many believe that NO Deal at Doha has been a boon in disguise for long term stability of  crude oil market.

Forces of demand and supply will realign in a structurally sound manner. Supply side constraints will develop as production in many oil producing countries will be curtailed owing
to prolonged low prices not being viable, including shale gas production in US. Offshore drilling will be simply untenable.

On the demand side one is expected to see small incremental steps of growth as global economies claw out of  mire. Local politics, if not anything else, will compel nations to increase productivity in many ingenious ways. After all recession also has shelf life!

Glimpse of US Markets

Dow is up 59 points at 17956 as of going to press. Moving in tandem with oil. Dow has also recovered from its day low of  17848. But we are not trading - remember? I had asked my audience to exit market at Dow in range 17900 - 17950. That was on Friday and you may check it here.

This exit has given us a profit of 500/550 points in Dow since we entered market when Dow was at 17400 as per my recommendations. Check it out here.

But right now we should have market strategy to sit on the sidelines. Let various forces of pull and push play out. Let clear trend emerge and then I'll tell you confidently to enter trade for definite gains, like I always been doing. Remember trading gains of 700 points jump in Dow from 16500 to 17200!

Enjoy no work!!

Sunday, April 17, 2016

World Waits with Bated Breath - Doha Summit Outcome

Will they, will they not? That is the moot question that investors, especially oil traders are asking around the globe. And 'They' are the major oil producing countries. These countries will go into a huddle to decide whether they should announce a production freeze on crude output so as to restrain the supply of global oil or not. With supply side contained, these oil producing nations expect oil prices to  increase.

In Doha Summit there will be 12 OPEC nations participating, with Libya abstaining. Iran will attend but will  send a delegate instead of its Oil Minister.. Others attending are Saudi Arabia, Iraq, UAE, Kuwait, Angola, Algeria, Equador, Indonesia, Qatar, KSA, Venezuela

Seven non-OPEC countries have been invited. Out of these seven, Russia, Bahrain and Oman are sure to attend. Mexico will send its observer. It is not clear whether invitees Azerbaijan, Norway and Kazhakstan will attend or not.

That this Summit is bound to fail has already been discussed in my previous post How will this Sunday be - Black or Grey?. But some important aspects which need to be kept in mind are mentioned below :-

  1. This exercise of Doha Summit for Production Freeze of Oil output was a ploy by Saudi Arabia to stop Iran from hiking production. 
  2. Iran has called the bluff of Saudis by insisting that it wants to ramp up production till pre-sanction level of 4 million barrels per day is achieved
  3. Saudis have cleared their stance of not signing any treaty without others, specially Iran agreeing..
  4. Iraq cannot stop production hike as its economy is in shambles and needs extra money for its army to carry on its campaign against Islamic State.
  5. Saudi Prince has threatened to increase production by 1 million barrels per day, if there is no production freeze.
  6. Most countries are already pumping out oil at their maximum capacity, except Iran and Iraq. So production freeze summit is just an eye wash.
Be that as it may, the very news of no production freeze coming out of the summit will make oil to crash to 35 USD per barrel over the coming week. At that level oil should find support again, since some sense will prevail over oil traders that Oil Production Freeze Summit at Doha was just a charade, and nothing more.

Saturday, April 16, 2016

How will this Sunday be - Black or Grey?

Yesterday my call-to-action in US markets was for booking profit at 17900/17950 in Dow. Check it out here. That call was given before the markets opened. Dow opened at 17925, reached a high of 17938 and finally closed at 17987, down by 29 points from last closing.

Trade in US markets was testimony to the confusion that prevails in trading community. Tug-of -war of sorts between bulls and bears, if you may! This situation of uncertainty is mainly due to a divided house on how Doha Meet on Oil Production Freeze will pan out coming Sunday.

Frankly speaking I have no hopes from Doha Meet of major oil producing countries. This aspect I had covered in my last post Bears Sharpening Daggers - US Markets in Danger of Bear Grip

How can you expect consensus from a motley crowd with divergent geo-political interests and views? Some of these countries have been serious adversaries for a long time with ethnic and sectarian undercurrents. And we are supposed to pin our hopes on a consensus from them? Not me.

What we can expect tomorrow is Black Sunday, as Doha Meet winds up with no production freeze. I say Black Sunday because that will galvanize a furious sell off in oil prices. Presently equity markets are moving in tandem with oil market, and hence I leave it to you to draw conclusions. Since equity markets are not decoupled from oil prices, I expect a mayhem in US stocks.

The best case scenario is that the sell off in equity markets takes place in slow motion. Big players may choose to exit their positions in a classical "Distribution Process" so that they can obtain reasonable price for their huge long positions.

So you may witness very high volatility with spurts of buying interest emerging and trying to draw eternal bulls into a bull trap. That is the shade of grey for you!. Keep out of markets and watch it from sidelines till dust settles down. I will keep you posted and immediately inform you as and when that happens. Be safe, be happy - adopt a no-trade strategy for the moment!!!

Friday, April 15, 2016

Bears Sharpening Daggers - US Markets in Danger of Bear Grip

There are grave dangers for bulls in US markets. I had cursorily mentioned about a clutch of them in my earlier post What will topple markets - Crude, China or Cameron?

This post is a call to action before opening bell for all those who are long in US markets as per my recommendation. It is serious and urgent situation and I shall give detailed reasons in succeeding paragraphs.

Bears are gleefully whetting their hatchets and tomahawks, waiting for markets to open. So the wise thing to do would be to square off all long positions between 17900/17950 in Dow.

I agree that you would feel cheated if Dow was to surge northwards, but it is better to take profits off the table. Remember we had built long positions as per my advice at 17400 in Dow. If you take profit at 17900 you still would have accrued 500 points in Dow.

Massive resistance in Dow Jones exits at it's long term selling zone of 18000/18200. No need to take extra risk in hope of collecting 100 Dow points more, with dark clouds gathering on global stage. These dark clouds are in shape of  following events lurking round the corner:-

Doha Meet on Crude Output Freeze. 
  1. On Sunday Oil producing countries are coming together at Doha for a Meet on Crude Output Freeze. Iran oil minister says he will miss Doha meet. Saudi Arabia indicated that it won't support any output freeze accord unless Iran signs. 
  2. Iran - Saudi rivalry will not allow any ouput freeze.
  3. Iran has rejected call for output freeze because it wants to attain pre-sanction output of 4 mln brls per day.
Long and short of the above inputs is that there is likely to be no cut or output freeze on crude and hence oil prices will start falling from next week. This will negative for stock markets which will see bears taking firm control of markets.

  1. US is stationing warplanes in Phillippines this week as vanguard of a major deployment there. This is in response to Beijing's assertiveness in South China Sea. US deployment is seen as a means of alleviating tension in the region. 
  2. Tensions are escalating as United Nations backed arbitration panel in The Hague prepares to rule in a case brought by Phillippines against China's maritime claims in South China Sea. This is due to concerns over China's construction of artificial islands in South China Sea and its recent deployment of weaponry on a disputed island. China's grand strategy is to use the world as one big supply chain.
  3. China's love for madcap dictator of North Korea and his antics.
  4. China's slowing growth, likely property bubble burst and debt burden on its banks can be reasons for global economic tremor.
Any or all of these reasons can surface over the weekend to sour investor sentiments in the market.

Cameron & Brexit
  1. Referendum on Britain's exit from European Union (Brexit) will take place on 23 June 2016.
  2. Last week Saturday thousands of Brits swarmed the streets of London demanding Cameron's resignation in light of Panama Papers leak. The papers linked him to having invested at one point in offshore funds his late father had created. 
Over the weekend any adverse news on these fronts can make the markets tumble with banks leading the down-slide.You would agree that in such a scenario there is no point in showing bravado, if you are a bull. Exit from your long positions as US markets open today.

Thursday, April 14, 2016

Thrilling Race To 18000 in Dow - Will We Witness It Today?

US markets gave a captivating performance in last trading session. Dow rose from a day low of 17742 to a day high of 17918, finally settling down to close at 17908. That is as bullish as you can lay your fingers at!

There were a couple of compelling reasons for such a fascinating journey northwards in US equities. Most compelling reason for this bullish lift off was JP Morgan coming out with good results. While the street was expecting poor show from financial institutions, out came results of JP Morgan sweetly surprising market participants.  Bears were caught unawares and got painfully caught in a bear trap.

Well that seems almost history now. Dow Jones has marched majestically towards its psychological level of 18000. Now the most important question is - will Dow achieve 18000 in trade today? I think it will, although Dow should open flat. As of publishing this post, European markets are marginally up and Dow Futures is also slightly up. Oil after being in red has shown strength and entered into green territory, which is good news for bulls.

If Dow misses 18000 today, I am sure traders will take the index to this important level before going on weekend holiday.

But what after that? After Dow reaches this psychological level, we should be on a look-out for correction. So we must exit all our long positions in Dow. I must admit that Dow may go even higher than 18000 before correcting, but that will be taking high risk. I say so because 18000/18200 in Dow is a strong resistance zone. Keep watching !

Wednesday, April 13, 2016

What will Topple Markets - Crude, China or Cameron?

Global markets across Asia and Europe are in supreme bullish fever. Everywhere there is welcome green, and that too of deep hue. Dow Futures is 89 points up. But crude is down. which may prove to be a spoiler in trade today.

Judging from situation US markets should open with a gap up. After all it has to reach 18000 destination. Check it out in this blog post.

In this wonderful bull run starting mid Feb 2016, there has to come a time for meaningful correction. Traders will take some excuse or the other to book substantial profit.

Will that excuse be provided by Crude or China or even Cameron? We will intensively investigate and analyse that in my next blog post. So keep lookout for in-depth analysis of impending correction in US markets in this space.

Enjoy the Journey - Dow Is Squarely on Way to 18000

US markets ended last trading session with a strong close, with Dow closing 165 points higher.

Those who have been acting on my buying advice given in this blog, must be enjoying the ride in US markets.

Right from 17400 level in Dow, I have been pleading with my readers  to buy US markets since I could see that Dow Jones was headed to 18000. That is 600 Dow points on offer, which means that even if you had chosen the wrong scrip to buy, you would still be in  profit, albeit small.

I have continuously maintained through this blog that it is time for buying action. You can check out in this post on 30 March 2016.   And I continued exhorting my readers to buy US markets at every opportunity even after publishing this post on 30 March 2016.

Before this recommendation of buying, I had earlier advised my readers to buy in US markets when Dow was at 16500 and sell when Dow was at 17200. That is cool 700 points in Dow achieved in just 15 trading sessions. Check it out here.

I hope I am making my point. If you are here reading this blog and you are in US, then do profit from my recommendations. I am not asking you to blindly follow me. You can perform your own research to my recommendations, or take advice of experts you trust. After that arrive at a decision to whether follow my recommendations or not.

Whether you agree with my views or not, I would only request you to air your opinion in comments section of this blog. It will compel me to reconsider my views when you disagree. I am sure your views will be valuable to other readers also. Plus it will delight me to no end!

Tuesday, April 12, 2016

Worried About Earnings Season In US? - Banks Expected to be Culprits

If US markets fall in this earnings season, Banks will be leading the fall.
Banks are potential under-performers and this earnings season they could be the biggest drag to US stocks..

For economy to do well, its banking sector has to be at least on even keel, if not racing on full throttle. But with ultra low interest rate causing ripple effects on banks' balance sheets, results of banks can be anything but ugly. Dovish stance of Fed on future rate hikes as also sharp decline in oil prices have not helped..

So be ready to get jolted this earnings season by dismal results of US banks. Other positive corporate earnings may act as countervailing effect to banks' earnings for US stock market to absorb the shock.

However, today Dow should remain positive since oil is up along with gold. It seems investors are slowly tucking away proceeds to gold as a safe haven, just in case the stock market tumbles. That can only explain gold price rising with the stock market. And yes, Dow futures is also up.

Oil being up is definitely a positive for the stock market. So be ready to welcome Dow in green territory today.

Dow Experiences High Volatilty - Can It Attain 18000?

Very surprisingly Dow closed 20 points down in last trading session. It was more intriguing since all factors were pointing to a positive close.

For bulls, the closing tick of Dow was dampening since at the beginning of trade Dow was trading 150 points up. That means Dow dropped 170 points without any rhyme or reason.

Was it because of concerns over Alcoa reporting dismal earnings? And can Alcoa earnings outweigh rally in oil prices? Frankly I do not think so. Alcoa earnings cannot alter market sentiments so much that Dow sheds 170 points intra-day. It has to be simple profit booking at higher levels, with traders making themselves light at the very first excuse..

Volatility was such that Dow from day high of 17732 closed at day low of 17556, a drop of 176 points. That drop without any genuine reason only suggests that today Dow will give a positive close.

But if today Dow again closes in red, then we will have to re-calibrate our sell target downwards from 18000. In such a scenario we will have to square off our buy positions at 17600/17700 in Dow.

Monday, April 11, 2016

Bull Roar Resounding Across Global Markets - Will Dow Dash towards 18000?

Global markets are performing well for bulls. All asset classes are doing well, including gold and oil. That is a rare phenomenon.

US markets are also in pink of health. Belying all expert opinion, US markets have continuously and consistently performed for the last two months.

Since mid Feb2016, Dow Jones has made a V-shaped recovery and it is still going great guns. It has gathered almost 2300 points since mid Feb 2016 without any serious correction. That speaks volumes of the serious bull charge in US markets.

As of publishing this post. Dow has gathered steam and added 140 points to the index. That is splendid news for those who are keen to see 18000 in Dow.

And that is what I have been maintaining as target for Dow in this bull run. Check this out in my 30th March post here. 

If you are following this blog and trading, do post your views in the comments section of this post. I will love to hear from you. I am sure all my readers will benefit from your views

Sunday, April 10, 2016

Fasten Your Seat Belts -India and China will be Main Drivers of Global Growth

IMF is about to revise its global projections of growth from 3.4% in 2016. Its going to be a downward revision. It is no rocket science to understand that this downward global growth projection will be due to  global slowdown in productivity, debt overhang, sluggish demand growth and you can go on and on.

At this point in time, everything that can be wrong is wrong with global economy. In this scenario the only beacon of hope for global growth is shining in India and China.

Conditions are more India leaning as the present Indian Govt is continuously making the right moves to drive growth. Mark Tully, ex-BBC correspondent in his book "No full stops in India" holds this very view.

This is what mark Tully in his book maintains : "The way changes are coming in Railways, Power sector, Defense Production and in governance and at the same time accompanied by the resentment of the old forces indicate that the process of change has begun albeit slowly but firmly and is going to be painful."

The only caveat is that Indian Govt should take immediate steps to quickly recover huge capital to the tune of Rs 4.4 trillion from willful defaulters of banks.

Saturday, April 9, 2016

US Markets End Iffy - Should We Remain Undecided?

Dow Jones Industrial Average (DJIA) could not climb the wall of worry. This wall is erected around 17700 in Dow. In my last post I had mentioned how Dow needs to climb over 17700 wall to be able to reach 18000. In last trading session Dow made a high of 17695 and then dropped down to close at 17577.

Scenario No 3 as given in my last post has happened in trade. So we have to wait for another trading day to get a sense of which direction Dow is headed. More importantly, we have to find out when we need to exit our long positions.

All that has been discussed in my last post so just keep all conditions in mind. As of now there being no clear signal, we need to hold on to our long positions.

Friday, April 8, 2016

US Markets at Critical Juncture - What Happens Next?

US markets underwent further pain with Dow slipping 174 points in last trading session. This is serious damage to the index and has to be evaluated with full sincerity.

What does last closing in US markets indicate? Is it still safe to hold on to long positions? Let us try and get some sense of what is in store for the bulls.

Next trading session is very crucial to answering all these questions. For doing an honest analysis, let us consider the following scenarios :-
  1. In next trading session if Dow closes near 17700, then long positions are absolutely safe and 18000 in Dow will be a reality.
  2. If Dow closes near 17400, then we may see Dow slide down to 17000/17100 level. If this happens then we need to be patient and wait for a bounce. This dead cat bounce should take Dow to 17600 level where we should exit all our long positions.
  3. If Dow closes near 17600 in next trading session, then we will have to wait for another trading day for either of the above mentioned points to happen.
The nub of the situation is that we will have to exit our long positions either at 17600 or 18000 in Dow, based on movement of Dow in trading sessions ahead as enumerated in preceding paragraph. So be calm and hold your horses!

Thursday, April 7, 2016

Dow Makes a Comeback - Hold Your Long Positions

Yesterday US Markets witnessed strong buying. That helped Dow Jones gather 113 points to close at 17716. This is good news for all those eyeing for 18000 in Dow.

Buying was mostly spurred by oil making a strong showing. And strength in oil got rubbed on to the stock market.

Push in oil prices were witnessed right after Fed announced that the rate hike will not be scheduled for April. Further there was surprise fall in oil inventories. Grapevine was also in the market that soon there will be agreement on production freeze between major oil producing countries.

Whatever be the reason or clutch of reasons, stellar performance of oil ensured that bulls thundered on in US stock markets.

Today if we have positive close in US markets it will be further confirmation that 18000 in Dow is going to be achieved. 

So keep holding on to your long positions and good luck!

Wednesday, April 6, 2016

Dow Futures In Green - Will US Markets Open Strongly?

Yesterday Dow closed with a heavy fall. It closed 134 points down to register 17603 in the Index. A very ominous closing to put it bluntly.

However Dow Jones closed above 17600 and not below this psychological support level. That is significant as of now. This was elaborated by me in my previous post which you can access here. Till this support level is not violated by Dow on closing basis, we should retain our long positions.

As of publishing this post, European markets are in green and Dow Futures is indicating a positive opening in Dow today. We hope that Dow takes support from present closing and moves higher. The manner in which Dow rebounds will dictate our exit level.

Today oil is also on a rebound amid hopes of a production freeze. Let us watch how long this sunshine in global markets lasts.

Tuesday, April 5, 2016

Global Markets Sell Off - Dow Jones Not Yet In Sell Territory

Dow Jones is down to 17600. Is it time to worry for long positions held?. I do not think so

In fact it is at 17600 that Dow Jones should take support. If it does take support here then we can see 18000 in Dow.

But in case Dow slips below 18600 on closing basis then we will have to review our position. To be precise,  in case Dow closes below 17600 then wait for Dow to reach 17700 again and exit your long positions.

However as long as Dow closes above 17600 we need to keep our long positions till 18000 in Dow.

Indian markets dived deep into negative territory today. Nifty closed at 7603, down 156 points. That has made Nifty vulnerable to further downside.

But if tomorrow Nifty closes in green then we will have a chance of good bounce back in coming days. Nifty has to give a strong closing tomorrow if it has to reach 8000 in this run up. Hope Nifty closes above 7700 tomorrow!

Monday, April 4, 2016

It is a Steep Climb to 18000 - But Dow is Doing Fine

US markets seem to be taking some time to reach 18000 in Dow. After all it is a steep climb that has to be negotiated. But have no qualms, Dow Jones is right on track to reach 18000.

Moment we find any signal of reversal, you will be intimated. Be sure of that. So for now keep holding your long positions till Dow Jones reaches 18000. 

Manner in which Dow reaches 18000 will decide the fate of Dow after 18000.

As for Indian markets, Nifty closed in the green today after trading in tight range. However Nifty is racing ahead to make a breakout from the present trading range.

Today Nifty closed at 7759. Tomorrow RBI review meet will give the decision on rate cut and also give out their guidance going forward.

In case RBI gives 50 bps rate cut, then Nifty will surge ahead to make a break out from its present trading range. 

However if RBI announces only 25 bps rate cut then we will witness a drop in the markets. With 25 bps rate cut we will witness Nifty move sideways in the range of 7700 - 7400 for some time to come.

Saturday, April 2, 2016

Racing Towards Target - Dow Jones Steams Ahead

Dow Jones picked up steam to race towards its goal of 18000. That is exactly what we had predicted in this post

In yesterday's trading session Dow Jones gained 107 points and closed at 17792. This momentum is sure to take Dow Jones to 18000.

Those who took cue from my earlier posts to buy in US Markets would be sitting pretty with hefty gains. I had given this buy call when Dow Jones was trading at 17400, six trading sessions back. Hope you see reason  to trade my recommendations.

 As for Indian markets, Nifty is taking a breather before resuming its upward journey.

Nifty seems to be in consolidation phase. The following scenarios can happen in Nifty, which closed at 7713 last Friday :-
  1. Nifty can come down to 7600 level and then take support.
  2. Nifty can go further down and take support at 7300 level.
  3. Nifty can go up from here and close near 7800.
Whatever be the case, Nifty is consolidating to make a dash to 8600 in couple of months.

Wednesday, March 30, 2016

Dow Jones Breaks Out - Is It On Road To 18000?

Up up and away!

US markets are in a wonderful northward journey. What a majestic jump it is taking in today's ongoing session!!

If you have been following my advice over a number of days, you have got an entry in market and now you are in profit. Check my last four posts pleading with you to buy US markets:-
  1. Dow Jones Tumbles- Ready to Buy in US Markets?
  2. Remember to Buy US Markets Today - Pick the Dip
  3. US Markets Lose Traction - Have You Started Buying?
  4. Compelling Market Conditions - Do Not Stay Away From Trading US Markets
I guess Dow Jones is good to reach 18000 in this run up. For now let us watch the bulls in full force.

Tuesday, March 29, 2016

Compelling Market Conditions - Do Not Stay Away From Trading US Markets

It is not time to stay away from US markets. It is time to enter trade. Conditions are perfect for traders since you are getting good entry point to go long. US markets need to be traded.

However long term investors may take a break and go on extended holiday.

In my last post  all the opportunities to enter trade have been outlined. First lot of buying has already taken place when Dow Jones dropped 100 points on 23 Mar 2016.

Keep your buying spree going. Do not get worried since in this run up you are bound to see 18000 in Dow. Hence this correction is simply an excellent opportunity to enter trade on the long side.

Remember to keep buying till Dow Jones reaches 17100.

Thursday, March 24, 2016

US Markets Lose Traction - Have You Started Buying?

For last three days I have been asking you to buy US stocks as Dow corrects by 100 points. Yesterday Dow had lost 100 points and had given the first buying opportunity. Check it in my last post here.

If you had bought your first tranche of stocks yesterday, then you need to keep buying in tranches till Dow reaches 17100. This had been advised in my earlier post which you can access again.

As of publishing this post, US markets are indicating further weakness. Dow Jones Futures is presently down by 80 points. So today also you need to buy the second tranche of US stocks when US markets open for trading.

Make sure you enter trade when Dow Jones touches 17350 level.. In this correction in US markets you are getting a good chance to enter markets, so do not miss this opportunity.

Wednesday, March 23, 2016

Remember to Buy US Markets Today- Pick the Dip

Be ready to buy in US markets today. I have already maintained in my last post  that you need to start buying as and when Dow Jones corrects by 100 points. Today seems to be the day when you will get the chance to enter US markets.

Keep buying all dips till Dow reaches 17100. From whatever point Dow reverses this slide, you will get to profit from the move. Most likely point of reversal is 17350 in Dow Jones.

So far the Belgium terror attack has had no serious effect on global markets, US being no different. But that can change with a few statements here and there from people who matter.

Moreover, oil is again sliding down. There are also home sales data which is worrisome. And most of all it is the sentiment of traders which has been dented by global events. There will be traders who would like to book partial profits with dip in sentiment as an excuse.

Whatever be the reason, make sure to start buying the dips in US markets as outlined above. Best of luck!

Tuesday, March 22, 2016

Dow Jones Tumbles - Ready to Buy In US Markets?

I have been harping all along that we need to be patient before starting our buy in US markets.In this current bull run in US markets, we traded well for a gain of 700 points in Dow Jones at a trot. Check it out here.

That was when Dow had reached 17200 as predicted. At that time I had maintained that we need to be patient before initiating trade again. But what I didn't know then was that, after FOMC Meet Fed President Janet Yellen will be so dovish. As a result Dow Jones gathered another 400+ points under its belt. And we did not trade in this spectacular run up!

Yet I have been maintaining all along that you need to enter trade only after Dow cools down by 100 points. Not only that, your buying should continue till Dow Jones reaches 17100 level. Check it out in this blog post.

However I am not saying that Dow will certainly reach 17100 level in this downturn. I am only saying that this zone between 17500 and 17100 is the buying zone in Dow. From any point in this zone, Dow can swing back to 17600 and beyond.

Now what happens if Dow falls beyond 17100. That may well happen. But even in that eventuality, if you buy in zone of  Dow 17500 to 17100 you will ensure you get to see 17600 in Dow again

Hence if you buy in the buying zone mentioned above, you will certainly make profit whether Dow faces headwind at 17600 or breaches 17600 for higher levels. So start buying just as Dow loses 100 points.

Monday, March 21, 2016

Is Tipping Point in US Markets Near - Bears Lurking Round the Corner

Spectacular rise in US markets seems unstoppable. Bears appear to be totally swamped. Experts maintain that today also it will be no different. So convinced are the market experts that they have already declared that this rally looks more than a Bear market retracement.

That makes me little worried. If we analyse the set up in charts, we find that 100 EMA is still sloping downwards. That is not good news for Bulls. Dow Jones may go up by another 400/500 points before 100 EMA will give the positive signal for a continued Bull run.

As things stand now, I would still recommend to be patient in pulling out your buy orders. In my earlier post I had indicated that you need to enter US markets when Dow Jones retraces back to 17100. You may start buying from the point Dow loses 100 points , right down to level of 17100 in Dow. Check it here.

I still maintain my view, which is rooted in the fact that US markets are not out of the woods yet. It is only when markets close above 18200 in Dow that we can reasonably claim that Bear market has been negotiated and then Bulls can claim victory. Till then I see it as retracement/ pullback in the continued Bear run.

Be patient in initiating trade, for it is better not to trade than to be embroiled in Bull/ Bear bloodbath. Ensure that you enter the market when the dust settles down and it becomes certain that that your entry point will give you definite returns.