Dollar-DXY Index intermediate trend stays down - going lower further

As we all know U.S government has shut down. I hope you are not surprised to see U.S stock market going up very next day of the government showdown!!

Dollar Index (DXY) weekly charts: Trend is down, Sell on Rally

More than the shutdown, here I want to talk about Dollar Index ( DXY). Technically as you see in the charts above, DXY Index up trend was broken below 81.50 and now the trend remains down and is going lower. Given that it is very unlikely we are going to see any Fed's QE Taper anytime soon. Even if they taper, I think that would be sometime next year in 2014 February-March. America cannot live without artificial money!! They are so use to it ...

 No QE tapering = Weak Dollar = Strong Gold.

We will talk about Gold later. Coming back to Dollar Index. As of now what I could see is an intermediate support/target at 79.55-79.60 as marked in the ellipse. It would be interesting to see how DXY would be trading near that level. Bounce or break down?

A break or close below 79.5 would take the index all the way down to 77.8-78. By then I am sure, Dollar would be rescued. So for now use all rally in DXY Index to Sell.

But hey, what about Indian IT stocks?? IF my analysis over Dollar Index is correct, IT stocks will find it very difficult to remain at the current levels and as the safe haven as many analyst/TV pundits are projecting them to be right now, because if our twin deficits improve, India's growth accelerates, USDINR will go down as well, making Rupee to appreciate further.

Good Luck, Be Safe ....

Yes Bank stock price: Traders looks to sell future on rise: Investors Buy shares on Declines

Yes Bank Futures Weekly chart: Stays weak, Sell on rise or on breakdown. Buy at lower levels

Yes Bank stock future trend remains down. Either look to sell on rise around 322-327, with a closing stop loss of 337 for a target of 280, if broken then 260.

Or

In case CAD data is negative on Monday and there's pressure on Banking stocks, then sell below 302, for a target of 280-83. Book profits at this level and maintain position only if 278 is broken for a target of 258-62 on the lower side.

One thing I like about Yes Bank is the higher volumes when the stock bounced off from lower levels of 216-220. So at some time, at lower levels, after the stock price would have declined I shall certainly take an investment call and Buy the stock again on delivery for portfolio. There's a lot of fear/pessimism in the share price.

Never trade without stop losses. Never bet your house on a single trade, if any fails, there will be another which won't fail. Stop loss is always your best friend, hope is the enemy.

Happy and Safe Trading!!

What happened to U.S Stock Market when they shut down last time in 1995-96 and fear of 2011: Dow Charts

Last time United States government shut down was between 1995-1996. From November 14 through November 19, 1995 and then again from December 16, 1995 to January 6, 1996 the U.S. government shut down as a result of a budgetary impasse between Congress and the White House. They faced another threat of shut down in 2011, but U.S government did save themselves just before few hours of the deadline.

Lets first look into what happened to U.S stock market when U.S government shut down 17 years ago in 1995-1996:

U.S stock market during last Government shut down period in 1995-1996

Interestingly as many would fear, at that time of the shut down stock markets didn't fall, let alone market crash. Dow Industrial average, popularly known as Dow Jones and Wall street showed no sign of panic or sell off.

In fact during the shut down period the U.S stock markets actually went up during the shut down of 16th December 1995 to 6th January 1996. Over the following twenty-two days White House and Congressional negotiators struggled to hammer out an agreement over the budget, with the end result that, by January 1996 the President, Bill Clinton then and Congress agreed to a seven year balanced budget plan that included modest spending cuts and tax increases. Politically speaking, President Clinton got the better of the 1995-96 government shutdown.

However, the 1995-96 government shutdown demonstrated the costs of divided government and, more importantly, shifted the political discourse to the right. Although the budget deal restored many of the Republican's proposed cuts in domestic spending, Clinton adopted a more centrist position for the remainder of his presidency. Clinton's move to the right was exemplified in his State of the Union Address of January 27, 1996, in which he declared that "the era of big government is over." 

 Buy fear, sell greed for the U.S stock market??

Its 2013 now and yet again U.S government is facing a shut down threat, like it faced in 2011 as well. At literally the 11th hour Friday night, April 8, 2011, House, Senate, and Obama administration avoided a government shutdown and came to agreement on a budget for the rest of the fiscal year that nobody really loved but that all were willing to live with it then.

Dow Jones charts during the U.S government shut down threat period of 2011 in April

Even then Dow Jones didn't tank during U.S government shut down fear/threat in 2011. Though the markets topped out only in May 2011 around 12920 DJI , few days after the house came to an agreement in April, before finally making a bottom/base between the period of September to October 2011 near 10400.

Wall street always plays things differently. They buy fear and they sell greed. I have seen this phenomenon working the best on the Wall street more than any where else amongst the markets I observe.

Anyway, that's what you are supposed to do in any global stock market! If you really want to be successful Trading or Investing Always buy fear and sell greed.

Good Luck and Happy Safe Trading!!

Bank Nifty Weekly Charts Future Price Prediction - Trend Remains Down - Sell on All Rallies - No Questions Asked!!

Bank Nifty Future has been long in a down trend. It did bounced off from lows made around 8350, till 11280, currently at 9993. So do you Buy or Sell now??

Here is the latest weekly charts of Bank Nifty Future:

Bank Nifty Future Weekly Line Charts, did hit a perfect high at the trend line as you can see above

As you see above Bank Nifty did hit its perfect resistance on the line charts @ 10700 which is closing to closing and then retraced lower. So how does the future looks like? Do you need astrological predictions to trade for profits? Nope, charts say it just enough if not all.

Traders need to sell Bank Nifty Futures on all rise. Consider yourself lucky to get a price to sell anywhere between 10400-10500 and do that with a stop loss of 10800 by closing for a target of 8900-9000 in this October Future and Option series. If there is a positive CAD number on monday, then 10500-600 can be tested. Perfect price (risk:reward) to sell.

Or

In case there is no rise in the markets (Nifty) and Bank NF and a poor CAD, then sell on a break below 9900 with 10200 as stop loss. Selling pressure will increase when Bank Nifty breaks below 9600 and the above mentioned level and gear up to re-test lower levels along with the market and Nifty Future.

Due to higher implied volatility and a 5 week long F&O series this October, options premium are too high, hence it makes sense to Sell Calls (CEs) Options rather than buying Puts (PEs). Yes, it will require higher margin, but then that should be okay.

So if there is a bounce/bear rally in markets, look to sell at the money Index call options and wait for the downside to began. But do buy back/cover your options which you will sell at lower levels when the premium melts, even though they will most likely expire at Zero, don't let them stay open or hedge at lower levels. By then my updates will follow anyway!

Good Luck
Happy and Safe Trading!

Is HCL Tech stock price the next big thing to fall amongst the Indian IT stocks??

On twitter I've been posting stock calls/charts since sometime now and I'd post a sell call on HCL Tech when it was around 1080 on 24th September after noticing clear negative divergence. Here's the chart I posted on Twitter @urf_prince

HCL Tech daily Charts had clear negative divergence between price and RSI

Since that stock price went down till 1045 September futures and I booked my shorts at 1048 on Thursday 26th September, with a view/plan of shorting October at higher price again preferably around 1080.

I got a chance to sell/short it higher again very next day on Friday and I'd went short @ 1079.60 in futures and I'm still holding my shorts with a stop loss of 1095 by closing. So why is my conviction on the sell side? Let my charts answer it:

HCL Tech Weekly Charts negative divergence between price and RSI

As you see above HCL Tech weekly Charts also has negative divergence between price and RSI. The RSI is not just in the overbought territory, but it has flattened. Many would argue that this weekly divergence is not valid and too some extent I would agree as well. But hey, you cannot argue the overbought situation in weekly as well as on monthly charts where RSI is currently at 81.90 and that would make any price rise unsustainable going forward in the near term.

Lets forget the RSI and divergence, lets look at simple line charts and understand what it is doing:

HCL Tech Futures Daily Line Charts which is basically closing to closing: Good for positional trades

As of now HCL Tech has been maintaining it rising trend line. To break it next week, all it needs to do is close below 1060 with above average volumes. If it does so, it will trigger lower end targets at 1025-30. Followed by support at 1002-1015. If breaks below 1000, then 960-970 will be tested on the lower side.

On the higher side if HCL Tech triggers stop loss @ 1095, then I would look to re-short it IF not above 1120, Stop Loss 1125. The negative divergence on the daily charts will get negated on IF HCL Tech Fut closes above 1125, till then sell on all rallies!

Apart from the charts one reason why I am bearish on HCL Tech for the short term is also that EVERYONE in the print and electronic media is bullish on the IT stock posting higher targets. Here are some of the latest posts/links I could find:

http://www.financialexpress.com/news/outperform-on-hcl-tech-shares-target-price-rs-1300-macquarie/1175250

http://economictimes.indiatimes.com/markets/stocks/views/recommendations/buy-hcl-technologies-ltd-with-a-target-of-rs-1125-ashwani-gujral/articleshow/23026928.cms

I can be proven wrong on this, but that's how the market behaves. But if the trades goes well, I know I am going to make very good money over this.

Happy and Safe Trading!!

USDINR - Our Indian Rupee - Where is it headed now against the almighty Dollar?

This is my first post of this blog, related to trading the Indian stock market. However my first post is about the current trend of Rupee/INR. Those who actively/passively trades in currency, this USDINR October Futures daily chart has something to say.

As you can see in the charts above, USDINR took exact support at its rising trend line near 62 and bounced back up, closing at 63.15 on Friday, 27th September.

Its has corrected after making a high at 69.12 to 61.56, of course with the help of some positive announcements made by new RBI's governor Mr Raghuram Rajan followed by no QE taper by FED's Ben Bernanke.

So what does the future looks like? Well, technically as long as USDINR Oct Future does not starts trading below 62, there is a possibility of testing higher levels next week. With a minor hurdle/resistance level at 63.90, USDINR can go up to 64.70-80 coming week between 30th September-4th October.

Monday, we shall be getting India's Current account deficits (CAD) numbers as well. A lot of the Rupee movement next week depends on the CAD. So as of now, look to go long on USDINR on declines with a Stop Loss of 62, for possible targets of 63.90 followed by 64.70-80.

Active traders can think of shorting when it reaches 64.70-80 with a stop loss of 65 for a retest of 63.9 at least. But please note, a move/closing above 65 will trigger an upside target for USDINR at 66-66.50, which is the upper trend line and a pending gap to fill as you also see in the charts.

For live market updates and calls, you may follow me on https://twitter.com/urf_prince

Good Luck and Happy Trading!!