The Curious Case of the Elusive Empanelment

The Nifty rallied strongly yesterday. In fact it gapped up above my buying trigger of 4515 and after a lot of soul searching I bought when the 5 min high was taken out at 4550. So I am now long the Nifty. The problem as everybody knows is that there is a strong resistance of 4700 lurking close by. But every trader is faced with this choice once in a while. What should one do? Buy in the belief that the resistance will be taken out or wait for a break out of the resistance to buy. While there is no definitive answer, I prefer to take the first option. And I have my stoploss at 4475 to protect me in case I go wrong.
International markets continue their rally. The S&P closed with gains but more importantly for us, most of the gains came in the last 2 hrs of trading and the S&P has closed at its high. The trends in equities remain up. Commodities too had a big day yesterday with almost all base metals, precious metals and oil rallying.
There are times when I feel that the trend has been going on for some time and therefore the best way to play the market from now on would be to take some delta neutral bets on markets. Two plays that I suggest are
1] Sell HangSeng and Buy Nifty and 2] Buy HangSeng and Sell Kospi.
Today I am in a good mood. So I will give you one more tip. If the Rupee falls below yesterdays low of 48.06 then I see it going all the way down to 47.0
And more to follow from next week. A few stock tips based on my incredible analysis of the market!!!. I know you are waiting with bated breath and want me to start today, but you will just have to be patient!!!.
After writing all this I completely fail to understand one thing. Any fund manager should have empanelled me just to be able to read this note. I mean seriously, who would not want to read this?
Talking about empanelments, I have this question to ask you which is in the form of a story. Please read the next para for your daily dose of entertainment. The story starts with our hero joining a startup broking company....
Our hero, let us say the Head of Equities, soon realises that the key to success is to get one large fund manager to empanel his company. Essentially he needs an anchor client and then the others he knows will soon follow suit. So he targets a very big fund manager who is also reputed to be a maverick. This fund manager could make or break the company our hero works in. As hard as he tries the hero does not get an appointment. Finally using all his contacts the hero manages to get 5 minutes of the fund managers time at 8.30 in the evening at the fund managers house. The fund manager greets him at the appointed time and tells him that he is intelligent enough to realise that our hero wants an empanelment and also realises that our hero is persistent. He justs wants to check our heros intelligence. If the hero can answer one simple question then the empanelment is his. The fund managers says that 1] he has 3 daughters 2] that the product of their ages is 36 3] that the sum of their ages is equal to the number on the door of his apartment 4] that the color of the eyes of his youngest daughter is blue. If our hero is able to determine the ages of his 3 daughters based on these clues then the empanelment is his for the taking. But he has only 5 minutes to answer. If he cannot get the answer the hero has to promise never to pursue the fund manager.
Well what does the hero do? For a moment he is tempted to believe that the fund manager is just fooling and that this is his way of throwing him out. But he remembers that the fund manager has a reputation of being a maverick but is essentially a brilliant person. So he puts his mind to it. He races against time, solves the question within the alloted time and returns with the coveted empanelment.
Question for all of you people out there. Can you put your mind to it and give me the ages of the fund manager's daughters.

The Power of Positive Thinking

The overnight rally in the US has spurred the Asian markets into a higher open. The trends are clear. Equities and Commodities are up and Dollar is down. Dollar in particular broke below a significant low that it had made of 77.65 in Dec 2008. This development coupled with the momemntum of the fall in the last few days, opens the possibility of a retest of the 75 or even 71 levels in the dollar. And man would that be good news for equity and commodity bulls!!!.

After having said everything that really matters in my first para itself, let me try and fill up the space in the other paras!!!. I will start with my few stock and indices trades.

RIL: long since 31st July from 1960. Target 2300. Stop 1870.

ICICI Bank. Long since 30th July at 745. Target 840. Stop 720.

Infosys: Continue long positions.

HSI: long since 31st July at 20670.

HSCEI: Long only above 12460.

KM1: Continue long positions.

NZ1: long since 31st July at 4610. Stop revised upwards to 4580.

That was not too difficult. Even I know how to do Ctrl C Ctrl V :). Ok now the only interesting thing that one can do is to try and predict where the Nifty is headed. As a trader I would follow my trading system and focus on making money and not bother about predictions, but this market of ours rewards those who can give intelligent two minute sound bytes. How many famous traders do you know of in India?. But celebrated strategists? That is another matter isn't it? There are a few even I can name. And you know what? Apparently being right is not necessary. All you have to do is pontificate. So why not add my two bits of analysis to this?.

The Dollar has broken below its Dec 2008 lows as I have already mentioned. S&P 500 is already trading above its neckline of the Reverse Head and Shoulder. The target for the S&P is 1200 in the coming months. The monthly RSI on the Nifty had never gone to oversold levels. Currently it is trading above its crucial 50 levels indicating that we are now in a bullish phase. Typically for the Nifty, once the RSI crosses 50 levels the bullish phase continues for a few months.

From another perspective, the Nifty is trading around its neckline. A break above 4750 will conclusively seal the matter. The target for the Nifty (based on this Reverse Head and Shoulder) comes to 7200 odd in the next one year. Given the weakness in the dollar and its potential to move to 71, the strength in commodities and equities is likely to continue. All this makes me comfortable in stating that the Nifty should cross the Jan 2008 highs of 6300 in the next one year if not earlier.

I feel better now. I am now clearly and unambigously on the side of the bulls. Finally, we all know to err is human and that a mistake is a mistake. But in the case of our markets not all mistakes are alike. It is ok to be positive on the markets and wrong. It is unforgivable to be negative and wrong. That is the power of positive thinking!!!