The trends Part II

I had a method of deciding which old movie DVDs to watch. It involved looking around for a movie which had a sequel. The logic being if the producers found it worthwhile to make a sequel then the original must have been good. But lately I have found that the method does not work. Producers seem to have caught on fast to this trend and have started making sequels to even movies that really are not worth watching.

Similarly yesterdays note was not really good. But I decided to type in a Part II to a particularly ordinary effort. One reason yesterdays note was ordinary was because it talked about markets turning into a downtrend on the basis of our system and immediately the S&P rallied overnight to turn into a BUY. The saving grace if any was that I did mention that this downtrend is not well establised and that it will be considered well established only if RSI breaks below 30.

Asian markets including HSI and HSCEI (which were the only Asian markets in a downtrend) have opened up. The trend has however not yet changed.

Commodities remain in a downtrend and the Dollar Index in an uptrend. But the same caveat applies. The trends are not well established i.e. the RSI has not yet moved above 70 for the Dollar and not moved below 30 for commodities.

I remain short on the Nifty using my system on the hourly data. However the stop to my short positions is now at 5170. If we hit those levels and trade above it then I will cut my short positions and go 100% long.

That is it about markets. You remember the first para about movies?. How even ordinary movies have sequels these days. The real question to ask is how do the sequels turn out? And the answer is that the sequels turn out to be disastrous!!!.