Please always trade with strict Stop Loss. Intraday calls are like Kili Joshyam. Just trade in small quantity.
NIFTY SPOT RESISTANCE : 5116,5145,5173,5218
SUPPORT : 4999,5026,5052,5072
NIFTY FUTURE RESISTANCE: 5188,5172,5145,5129
SUPPORT : 5102,5086,5075,5059
ALL SPOT LEVELS :
RCOM : BUY ABOVE 249 SL: 242 TARGET: 262,267
SELL BELOW 235 SL: 241 TARGET : 223,218
SESA GOA: BUY ABOVE 336 SL: 328 TAR: 350,360
SELL BELOW 311 SL: 318 TAR: 299,292
ALL FUTURE LEVELS :
ICICI BANK BUY ABOVE 931 SL: 926 T: 940,944
SELL BELOW 920 SL:925 T:910,906
RELCAPITAL BUY ABOVE 964 SL:955 T: 988,995
SELL BELOW 937 SL : 945 T 922,915
M&M BUY ABOVE 968 SL:957 T:988,995
SELL BELOW 931 SL 942, T: 911,900
HAPPY TRADING!!!!!!!!!!!!!!!!!!
Wednesday, October 14, 2009
FIGHT BETWEEN FUNDAMENTALS & TECHNICALS
DEAR ALL,
One question that everyone has is that why is that the markets are rallying even after 2-3 months of covering up for the losses/pace that occurred prior to markets going up. The main reason for this is $$$. $$$ has continued to go down and that has propelled the commodity rally and also the stock rally. But wait a minute. How can $$$ going down force a rally in stock markets? It’s simple. $$$ goes down meaning other currencies get richer and they can now get more for their buck. Let us explain this a little further.
US has printed so much that it doesn’t really have anymore room to print further. It needs to find ways and avenues to beef up their economy. US has purposefully devalued their $$$. Why? let’s take an example.
1 $ was Rs. 52 at one point this year. Which means, if india had to import $100 worth of goods, it would have to shell out Rs. 5200 for that. Now $$$ is devalued and is trading around Rs 47. Which means, the same imports will cost around Rs.4700. In fact india can import more for the same amount of Rs. 5200.
Why would someone devalue their own currency? Because that is how you can get more business. 70% of US economy comprises of consumer spending which isn’t happening owing to the downturn in the economy. Take a look at how much saving is going on Personal Savings rate in the US. Remember, this is entire US with less than 30% REAL working population. If you remove children, women and old people. You are left with less than 51% of the population. Current unemployment rate (REAL) stands at over 21%. So basically the Personal savings rate of 5% is accountable for the entire 100% while only 30% population is really earning. That in essence means if 30% of the population makes 30,000, and savings is 5% for entire 100%, the real savings rate will be over 20%. In essence, US consumers are not spending 20% of what they make, which is net.
Now in such a scenario, where will the US economy grow? They are forced to look outside. Which is why they devalued their currency and thus improved the prospects of exports. In fact this theory is clearly proven by Reduction in trade deficits within the US and increased exports.
But how does this help World stock markets and indian markets? Basically, more money comes into the US from exports and already floating tons of $$$ go into stocks. Whenever investors see a small sign of revival, they jump into the Emerging markets. That’s why if you notice carefully, Emerging markets started rallying much before US markets did.
There is One problem though with this approach. US devalues it’s own currency to increase exports. This impacts the trade balance in other countries. Take for example, India, whose ITES forms a big part of exports will actually get lesser revenues because INR is getting stronger. Countries may not like this for long and they will in turn devalue their own currency to match US $$$. On top of that, $$$ devaluation puts lot of pressure on OIL and OIL producing countries as well and hence they don’t want this to continue the way it is.
Moreover, $$$ and OIL run mostly on Technical Analysis. And TA analysts around the world are starting to realize the strong support that $$$ is currently at. If it can hold onto 75-76 levels, it will rally from here. Which in essence means commodities will go down along with stock markets.
Another major factor that will influence $$$ and it’s move to the upside is that it has now become the “default TRASH currency” because everyone is now using $$$ for carry trade by shorting it almost everyday and making money by investing elsewhere. Now when something becomes so obvious, it doesn’t stay there for long.
Next 6-9 months we expect $$$ to gain a lot of strength owing the above and many other internal issues within the US. This will clearly once again lead to correction in equity markets worldwide.
Curious Fact : If everything has already gone back to normalcy and there are NO issues and earnings for companies are already all set to improve, then why does FED still NOT raise interest rates?
The Fed’s key bank lending rate is now at a record low near zero and will probably stay there for an “extended period,” Bernanke said in prepared remarks to a Fed conference here.
Now if everything is fine and recovery is on it’s way, inflation seems to be kicking in as GOLD is making new highs and $$$ making new lows, then shouldn’t FED at least “consider” thinking of controlling inflation, NOT implementing at the least. The very fact that US FED is letting $$$ go down the drain so that it can get more export oriented $$$ and not worry about inflation even when GOLD is going up every day states clearly that US is in clear state of Deflation. Nobody within US wants to spend money. Barely 15% of the approved TARP/TALF money has actually been lent out when the whole purpose of creating such instruments was to ease credit lines. US Retail sales completely dead and the forecasts are even worse. So, again where are the Green Shoots?
Trade with caution.
PS: Everyone believes in the saying, “Buy when everyone is selling and sell when everyone is buying”, but hardly anyone follows it in practice.
Like in February when 96% of traders/investors were Bearish, currently over 92% are Bullish. These extremes led to reversals. Let us see if we get one soon. Check out Robert Prechter’s Interview from Forbes “The dollar is bottoming and the stock market is topping,” said Prechter, who became well known for forecasting the 1987 stock market crash
In short, the action in the US stocks are just adjusting to the declining dollar as neither valuations nor expectations are in line with the stock prices. Once $$$ starts it’s move back up, equity markets will probably see something worse than the March Bottom.
VIJAYAKUMAR .K.
One question that everyone has is that why is that the markets are rallying even after 2-3 months of covering up for the losses/pace that occurred prior to markets going up. The main reason for this is $$$. $$$ has continued to go down and that has propelled the commodity rally and also the stock rally. But wait a minute. How can $$$ going down force a rally in stock markets? It’s simple. $$$ goes down meaning other currencies get richer and they can now get more for their buck. Let us explain this a little further.
US has printed so much that it doesn’t really have anymore room to print further. It needs to find ways and avenues to beef up their economy. US has purposefully devalued their $$$. Why? let’s take an example.
1 $ was Rs. 52 at one point this year. Which means, if india had to import $100 worth of goods, it would have to shell out Rs. 5200 for that. Now $$$ is devalued and is trading around Rs 47. Which means, the same imports will cost around Rs.4700. In fact india can import more for the same amount of Rs. 5200.
Why would someone devalue their own currency? Because that is how you can get more business. 70% of US economy comprises of consumer spending which isn’t happening owing to the downturn in the economy. Take a look at how much saving is going on Personal Savings rate in the US. Remember, this is entire US with less than 30% REAL working population. If you remove children, women and old people. You are left with less than 51% of the population. Current unemployment rate (REAL) stands at over 21%. So basically the Personal savings rate of 5% is accountable for the entire 100% while only 30% population is really earning. That in essence means if 30% of the population makes 30,000, and savings is 5% for entire 100%, the real savings rate will be over 20%. In essence, US consumers are not spending 20% of what they make, which is net.
Now in such a scenario, where will the US economy grow? They are forced to look outside. Which is why they devalued their currency and thus improved the prospects of exports. In fact this theory is clearly proven by Reduction in trade deficits within the US and increased exports.
But how does this help World stock markets and indian markets? Basically, more money comes into the US from exports and already floating tons of $$$ go into stocks. Whenever investors see a small sign of revival, they jump into the Emerging markets. That’s why if you notice carefully, Emerging markets started rallying much before US markets did.
There is One problem though with this approach. US devalues it’s own currency to increase exports. This impacts the trade balance in other countries. Take for example, India, whose ITES forms a big part of exports will actually get lesser revenues because INR is getting stronger. Countries may not like this for long and they will in turn devalue their own currency to match US $$$. On top of that, $$$ devaluation puts lot of pressure on OIL and OIL producing countries as well and hence they don’t want this to continue the way it is.
Moreover, $$$ and OIL run mostly on Technical Analysis. And TA analysts around the world are starting to realize the strong support that $$$ is currently at. If it can hold onto 75-76 levels, it will rally from here. Which in essence means commodities will go down along with stock markets.
Another major factor that will influence $$$ and it’s move to the upside is that it has now become the “default TRASH currency” because everyone is now using $$$ for carry trade by shorting it almost everyday and making money by investing elsewhere. Now when something becomes so obvious, it doesn’t stay there for long.
Next 6-9 months we expect $$$ to gain a lot of strength owing the above and many other internal issues within the US. This will clearly once again lead to correction in equity markets worldwide.
Curious Fact : If everything has already gone back to normalcy and there are NO issues and earnings for companies are already all set to improve, then why does FED still NOT raise interest rates?
The Fed’s key bank lending rate is now at a record low near zero and will probably stay there for an “extended period,” Bernanke said in prepared remarks to a Fed conference here.
Now if everything is fine and recovery is on it’s way, inflation seems to be kicking in as GOLD is making new highs and $$$ making new lows, then shouldn’t FED at least “consider” thinking of controlling inflation, NOT implementing at the least. The very fact that US FED is letting $$$ go down the drain so that it can get more export oriented $$$ and not worry about inflation even when GOLD is going up every day states clearly that US is in clear state of Deflation. Nobody within US wants to spend money. Barely 15% of the approved TARP/TALF money has actually been lent out when the whole purpose of creating such instruments was to ease credit lines. US Retail sales completely dead and the forecasts are even worse. So, again where are the Green Shoots?
Trade with caution.
PS: Everyone believes in the saying, “Buy when everyone is selling and sell when everyone is buying”, but hardly anyone follows it in practice.
Like in February when 96% of traders/investors were Bearish, currently over 92% are Bullish. These extremes led to reversals. Let us see if we get one soon. Check out Robert Prechter’s Interview from Forbes “The dollar is bottoming and the stock market is topping,” said Prechter, who became well known for forecasting the 1987 stock market crash
In short, the action in the US stocks are just adjusting to the declining dollar as neither valuations nor expectations are in line with the stock prices. Once $$$ starts it’s move back up, equity markets will probably see something worse than the March Bottom.
VIJAYAKUMAR .K.
Friday, October 9, 2009
INTRODUCTION
HELLO !!!
Welcome to all who are visiting to my Blog. I am Vijayakumar .K. & I've got 8 Years experience in Stock markets. In this blog I'll share my views about stockmarkets, individual stocks,Buying stocks for short term & long term. Suggestions always welcome.
Welcome to all who are visiting to my Blog. I am Vijayakumar .K. & I've got 8 Years experience in Stock markets. In this blog I'll share my views about stockmarkets, individual stocks,Buying stocks for short term & long term. Suggestions always welcome.
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