Missing in Action.

I am away from Delhi for a week, staying in and around Kolkata. At some adventurous locations I do not have access to the internet. This means no newsletter for subscribers and no blog posts either. Today, thanks to the TV-18 CNBC office where I am giving an interview for Awaaz, I am able to use the Net.

Can I imagine life without internet ? The answer is No.

A downdrift has started again in the market. This is not surprising.

First, the Nifty broke down from a trading range. This gives us a downward target of 2450.

Second, The primary trend is down. Therefore, the chances of the target getting realized are stronger since the breakdown is in the direction of the primary.

Third, this is a bear market affecting almost the entire world. We are coupled with the rest of the world.

How do you trade it ?

Thanks to the gaps, narrow ranges, day traders are not making any money. Position traders and Swing traders who have taken a bearish position are probably in the right place. Day traders may consider shifting some volume to a swing trade. Sell on rallies then wait for a decline of few days to cover. Then, buy on signs of strength and wait for a small rally, hopefuly.

Does this mean that day trading will no longer be profitble. The asnwer is: these are short term changes in the market. They will pass by. Maybe, even today, there could be handsome opportunities for day traders. maybe not.

For the Nifty, resistance now comes at 2800, then 2875, then 2975. That’s a lot. Support comes at 2700. below 2700, we could easily see a free fall.

When should we buy ?

After the markets stop falling, there is a consolidation. Once this takes place, going long is also likely to give small profits.

What is a possible scenario ?
The Nifty could slide all the way to 1500 during the year. At this time, it is difficult to imaginve the Index above 3000, but times may change.

How about some optimism ?

Bloomberg says that the current decline in the American stock market between Mr Obama’s election and innaugrationis the worst decline in American history. The second worst decline took place in 1933. The American markets gained 75% that year, after the decline were over.