Thursday, 15 December 2011

Sailing Through Rough Weather.

Thank you readers for sending some nice emails on the correct “Bottom” call. I would say “Thank you Lord”.  That my calls have been correct is just grace of God, not any special intelligence on my part. Understanding of the collective market sentiment will surely help.
Right now, the market is between "?! it will tank again anyway" stage and "See? What did I tell you stage".

Pre-opening, I twitted that I expect the market to open higher but staying out of it. Sure enough there was enough choppiness in the market to make a sailor seasick. At the end of the day SPX managed to close about 4 handles up. But in the process few other things happened.

If you look at the stochastics RSI on the daily chart, it is now in oversold territory and will now turn up again.  Also SPX daily made an inverted hammer.  Per Wikipedia, “The Inverted Hammer is a type of bullish reversal pattern.”

McClellan Oscillator has already turned up. Most of the reversals take place from this region.  

Seasonality is favourable and yet everyone is convinced that Europe is burning down and world is going to end. Isn’t the boat is loaded on one side? Do you really think there is more downside from here? I don't.

Just one day left for the December OE which is also Triple Witching day. It will give us a firsthand experience about the power of the option writing group and usefulness of these option pain calculators.

Let us remember that stock market is a zero sum game. If DIJA reaches 20000 tomorrow, it is not going to end all the hunger in the world. Similarly, even if DIJA reaches 5000 tomorrow, it is not going to end the world. Some folks will be richer or poorer depending on their judgement but it does not change anything. Let us be little dispassionate, leave our bias aside, trade what we see and not what we believe. If we say that our happiness depends on DOW 20000 or 5000, we will remain unhappy forever.

Anyway, I believe some surprise is coming early next year for the bears. For now, I am staying out of the market till the middle of next week. I think we will see renewed weakness in the early part of next week and that would be a good opportunity to go long for a quick trade. One thing for sure, tomorrow is going to be exciting.

Once again, thank you for your encouraging emails and for joining me in Twitter.                          (@BBFinanceblog). I will keep you update about my market analysis on a regular basis during the market hours and you will always know about the trades in real time. Visit regularly to profit from the world of finance and forward it to your friends as well who may benefit from it. It is free!

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