Please forgive me for sounding so pessimistic in the title, yet, however hard I try, I cant seem to write any optimistic column for bulls! I am quite bearish about the days to come partly because of the status quo of the US economy and partly because of the current state of affairs of our own economy. Freddie Mac and Fannie Mae are on the verge of bankruptcy and looking for the Fed's intervention to pump liquidity. Only time will tell what's going to be Fed's action. We need JP Morgan or another biggie in the picture if events turn the two ill-fated mortgage firms into facsimilies of 'Bear sterns'!
While the US stock markets in recent past or the past one month, to be precise, seems decent and some heavily optimistic souls started singing 'the-worst-is-over' and 'we-had-a-mid-term-bottom' songs, the reality seems to be apathetic to these souls' musings. The truth is that the current credit crunch due to the sub-prime mortgage crisis has resulted in write-offs close to 500 billion $. Some analysts expect that the total write-offs would be between 1 trillion $ and 2 trillion $ in the end. The intensity of the current crisis can be understood if the greatest philosophical speculator of the financial markets of our time, George Soros, believes that this is the worst crisis in US next to "the great depression" of 1929.
One of my close relatives was bitten by the stock market bug and asked my suggestion on whether he should invest now as the market has 'bottomed out'. I asked him what he meant by that - bottoming out. He replied that he just meant that the worst has already happened and he wants to jump in and stay invested for a long time. Apparently, his enthusiasm has been created by the media and the punter prototypes. I wonder if there would be any buy-n-hold investors in the current market without electronic media in the picture! I can still see analysts on CNBC predicting the stocks' movement for the next 6 - 12 months when the near future is not clear enough!
I am being reminded of the classical adage of the financial markets - "Bulls make money. Bears make money. But, pigs get slaughtered" and the lazy 'investors' who are trying to bottom fish now are the pigs!
Saturday, August 23, 2008
Saturday, August 9, 2008
Nifty outlook
Is the worst over? thats a million dollar question! Atleast the 50-stock index has found a short term bottom at around 3800 levels. This level is significant because it is close to 62.8 % of 6287, the highest closing of Nifty. The ratio 61.8% is called the golden mean and the most important of all Fibonaci ratios with respect to retracements in the financial markets. For all the optimistic souls in the market, it is a good news that Nifty did nt breach this level on a closing basis. Shortly after Nifty bottomed out at this level, the much awaited bear market rally has started. The market saw olympic sized gains and bounced back to the current levels of 4500 in just two weeks.
It could be seen that Nifty had broken the down-trend line and headed towards reaching the 200-EMA which is currently around 4737. The rally may continue till Nifty reaches this crucial resistance and may lose steam at around 4750.
Quick peak into the latest developments in tech stocks
I have taken a long break from blogging as well as trading! However, I was watching the market action everyday which is quite interesting. when was the last time it was uninteresting? - u might ask as well. And the answer is - I dont remember :)
In an earlier post, I have written about how well the IT scrips are performing but, expressed apprehensions about the 'sustenance' part of it! Well, my fears turned out to be true, and the IT index tanked along with the broader index shortly thereafter!
The top loser among the index stocks (IT sector) is Satyam. I have seen noticed a huge distribution of the stock and some manipulative action in the price 'run-up' and have mentioned the same during my previous posts (check out my previous post - "Marking up..!"). Well, the inevitable has happened. The stock tanked from highs of 540/- to around 380/- and currently trading at 409/-.
In an earlier post, I have written about how well the IT scrips are performing but, expressed apprehensions about the 'sustenance' part of it! Well, my fears turned out to be true, and the IT index tanked along with the broader index shortly thereafter!
The top loser among the index stocks (IT sector) is Satyam. I have seen noticed a huge distribution of the stock and some manipulative action in the price 'run-up' and have mentioned the same during my previous posts (check out my previous post - "Marking up..!"). Well, the inevitable has happened. The stock tanked from highs of 540/- to around 380/- and currently trading at 409/-.
Thursday, June 5, 2008
Marking up . . !
The IT stocks are showing 'strong' resilience in the downtrend. It does not come as a surprise to me, however, raises some important questions about the 'sustenance' part of this resilience. If you have traded the market during the last three days, particularly the in IT scrips, this question will be in your mind as well!
After watching the price action and dedicating myself to the ticker for three days, the immediate conclusion I can come to is some distribution of the stock by some large players has happened on tuesday and wednesday. Apparently, marking up of prices is being done in a particular scrip - Satyam. It is a cinch for anyone one who has traded in this scrip today that there is some mysterious force absorbing all the stock that is offered and occasionally testing and confirming the likely market behaviour if it withdraws itself! you know what i mean ;)
Well, my bold prediction is that this stock is going to be sold off sooner or later no matter if the overall market is negative for the next two days. Then you will witness the real strength of the IT scrips.
After watching the price action and dedicating myself to the ticker for three days, the immediate conclusion I can come to is some distribution of the stock by some large players has happened on tuesday and wednesday. Apparently, marking up of prices is being done in a particular scrip - Satyam. It is a cinch for anyone one who has traded in this scrip today that there is some mysterious force absorbing all the stock that is offered and occasionally testing and confirming the likely market behaviour if it withdraws itself! you know what i mean ;)
Well, my bold prediction is that this stock is going to be sold off sooner or later no matter if the overall market is negative for the next two days. Then you will witness the real strength of the IT scrips.
Sunday, June 1, 2008
scrips for the day
on a green opening that sustains itself (Long):
- satyam - tcs - infosys
- Sesagoa
- ranbaxy
- SBI
The IT scrips
I was tracking as well as trading mostly in tech stocks, particularly Infosys and TCS, last week. Having observed that the stocks in the IT sector are bullish and showing a deviation from the general trend of the market (which has been sideways for quite sometime), I am attracted to study this rally. Infosys is trading above pre-january08 levels. So is Satyam. Infact, Satyam has broken its 52-week high this week and rallying like there's no tomorrow! TCS, despite its sudden fall after posting poor Q4 '07 numbers, is rallying very well. Being index stocks and sectoral leaders, the rally of the three scrips seemed to have influenced other stocks in this sector. Iflex, and HCL tech are also taking part in this rally. A quick peek into stock specifics:
Infosys
The initiator of this rally, with its 'better-than-expected' Q4 '07 results. The outstanding numbers, infact, pulled the Index - NIFTY from 4600 levels to 4800 on the day of its results!
As per Elliott wave theory, the 5-wave impulse that was initiated then, seems to have completed waves 1 2 3 and 4. I could see the final 5 th wave (the last one in the impulse wave) is under progress. The rally is likely to continue on monday as well (02 June).
The stock has rallied from 1300 levels to the cmp of 1957 (~50%)
TCS
Posted poor Q4 '07 numbers. This was followed by the re-organization of the top level management and over 500 employees are shown the door on grounds of poor performance. Despite these negative cues, the stock managed to rally on par with Infosys (reminds me of the herding theory of Bob prechter!). As per Elliott wave theory, the 5-wave impulse seems to have completed waves 1 2 3 and 4. I could see the final 5 th wave (the last one in the impulse wave) is under progress.
The stock has rallied from 800 levels to the cmp of 1029 (~50%)
Satyam
Having broken the 52 week high last week, this scrip is expected to buzz for the next few days. The P/E ratio as well as EPS also looks better than its peer Wipro and hence, I expect this break out is fundamentally justified. I could not apply Elliott wave theory to this rally of this stock. I could see the formation of wave 1 and 2precisely. The waves 3 and 4 are a little zig-zag. I think that the scrip may be in the 5 wave or entering the 4 wave. One important thing to note about this scrip is the huge volumes with which it was traded last week. Friday's volumes of this scrip exceeded the volumes of Infosys and TCS. Also, there are multiple press releases during the month of May with some news of new projects and plans for expansion. Are the promoters desperate to take the rally to new highs?!
The stock has rallied from 370 levels to the cmp of 523 (~40%)
Wipro
This scrip is trading near its 52-week high. Has completed 1 2 3 and 4 waves and entered apparently the 5 wave as per Elliott wave theory. Another 10% hike in its market price will break the current 52-week high.
The stock has rallied from 55levels to the cmp of 08(~40%)
Now, a look at other players in the sector:
HCL Technologies
Gained 34 % in this rally so far. Apparently, in the 5 wave. As per my knowledge, generally, the sectoral leaders have to initiate the rally and after the rally reaches its zenith, others in the sector will continue to rally for sometime. If this is true, then more upside is to be seen in the next few days. The most notable thing about this scrip is the traded volumes during the last Friday.
Iflex
Gained ~45% in this rally so far. I could not identify an Elliott wave pattern unlike in other scrips. The valuation (P/E ratio) seems to be at a higher end - (more than infosys!). The scrip has completed 1 2 3 and 4 waves and is about to enter 5 wave as per Elliott wave theory. Any breakout in the rally of the sectoral leaders may trigger a fall and cause severe loss in the market price in order to bring the valuation on par with its peers. However, the scrip entering a 5 wave cannot be ruled out provided the continued momentum from the sectoral leaders. Anything is possible when the crowd is HIGH on adrenalin!
Infosys
The initiator of this rally, with its 'better-than-expected' Q4 '07 results. The outstanding numbers, infact, pulled the Index - NIFTY from 4600 levels to 4800 on the day of its results!
As per Elliott wave theory, the 5-wave impulse that was initiated then, seems to have completed waves 1 2 3 and 4. I could see the final 5 th wave (the last one in the impulse wave) is under progress. The rally is likely to continue on monday as well (02 June).
The stock has rallied from 1300 levels to the cmp of 1957 (~50%)
TCS
Posted poor Q4 '07 numbers. This was followed by the re-organization of the top level management and over 500 employees are shown the door on grounds of poor performance. Despite these negative cues, the stock managed to rally on par with Infosys (reminds me of the herding theory of Bob prechter!). As per Elliott wave theory, the 5-wave impulse seems to have completed waves 1 2 3 and 4. I could see the final 5 th wave (the last one in the impulse wave) is under progress.
The stock has rallied from 800 levels to the cmp of 1029 (~50%)
Satyam
Having broken the 52 week high last week, this scrip is expected to buzz for the next few days. The P/E ratio as well as EPS also looks better than its peer Wipro and hence, I expect this break out is fundamentally justified. I could not apply Elliott wave theory to this rally of this stock. I could see the formation of wave 1 and 2precisely. The waves 3 and 4 are a little zig-zag. I think that the scrip may be in the 5 wave or entering the 4 wave. One important thing to note about this scrip is the huge volumes with which it was traded last week. Friday's volumes of this scrip exceeded the volumes of Infosys and TCS. Also, there are multiple press releases during the month of May with some news of new projects and plans for expansion. Are the promoters desperate to take the rally to new highs?!
The stock has rallied from 370 levels to the cmp of 523 (~40%)
Wipro
This scrip is trading near its 52-week high. Has completed 1 2 3 and 4 waves and entered apparently the 5 wave as per Elliott wave theory. Another 10% hike in its market price will break the current 52-week high.
The stock has rallied from 55levels to the cmp of 08(~40%)
Now, a look at other players in the sector:
HCL Technologies
Gained 34 % in this rally so far. Apparently, in the 5 wave. As per my knowledge, generally, the sectoral leaders have to initiate the rally and after the rally reaches its zenith, others in the sector will continue to rally for sometime. If this is true, then more upside is to be seen in the next few days. The most notable thing about this scrip is the traded volumes during the last Friday.
Iflex
Gained ~45% in this rally so far. I could not identify an Elliott wave pattern unlike in other scrips. The valuation (P/E ratio) seems to be at a higher end - (more than infosys!). The scrip has completed 1 2 3 and 4 waves and is about to enter 5 wave as per Elliott wave theory. Any breakout in the rally of the sectoral leaders may trigger a fall and cause severe loss in the market price in order to bring the valuation on par with its peers. However, the scrip entering a 5 wave cannot be ruled out provided the continued momentum from the sectoral leaders. Anything is possible when the crowd is HIGH on adrenalin!
Subscribe to:
Posts (Atom)