The Analyst as a Trading System

In comments, shabsaif said

Quote:

Make your own trading system, when every analyst saying now up now up than go SHORT and if they saying down down than go LONG in the market

When Sudarshan jee was saying many times that nifty will touch 2450 from that time NIfty was up and up.

After up move once again target 3050 fails and Now down down down

UnQuote

My Notes:
Quite possible. But, sometimes we get it right. When the bull market started, I had felt that we are in unchartered areas and the market can go much further than we imagine. It did. When the bear market started, I suggested that if the Nifty breaks below 5500, then we have a straight decline to 4500. At 4000, my suggestion was that 2000 was possible.

It is about momentum. Traders should follow the momentum. The tracking of momentum can be done in a hundred different ways. Just as the worship of God can be done through many religions but the road will eventually lead to Him. So also, traders will follow momentum in their own styles, but the end result is to be close to the Market.

If momentum is on the downside, I say sell. If the Market goes up, my trades will suffer losses. BUT, sometimes the market continues to go down and the trades will make money. The net result should be: gains should be more than losses.

Have Fun!

Confused !

What is this move : a dip or a new down move ?

The Nifty finally saw trading without losses. While world markets fell overnight, the Indian Markets showed resilence. At 2950, the Index faced resistance. This resistance has resulted in almost 200 points of losses.

What is the trend ?

A difficult question to answer. The short term trend is Down, the intermediate trend is sideways while the long term trend is almost certainly a bear market.

The intermediate trend is what should concern traders. The Nifty made a pattern of higher highs and higher lows, suggesting that this trend was up. Now, this pattern has changed to lower lows. We have not seen a lower high yet. Therefore, we classify the current move as sideways.

What is required for a new trend ?

To confirm an intermediate downtrend, the Nifty should make a lower high. This means we should see a rally for a minimum of one day and then a decline. The rally should not go above 2950.

To confirm an intermediate uptrend, we should see a a reversal of the lower lows pattern. This requires a rally, then a low which is higher than 2738 – today’s low. This process is not easy but in the Market, anything can happen.

How do you trade ?

Use Oscillators to buy and sell. This means that in a sideways market, the trader should be open to taking trades on both sides – buy and sell.

What are the Oscillators saying ?

We are reaching extreme levels on the lower end of the Oscillator range. Perhaps buying opportunites are likely to emerge soon enough. These will be swing trades, looking at small gains, but these should come.

Swing Trading Ideas

Sesa Goa has seen a correction from 100 to 89. The stock could give a bounce. Buy using intraday charts, or above the previous day’s high.

Suzlon has seen a pattern of lower highs and lower lows. It is NOT a buying opportunity, t least not yet. Avoid it.

IT stocks, specially the big ones (Infosys, TCS) has DOJI patterns today. These patterns have come in at support levels, suggesting a buying opportunity.

What happens if the Market falls ?

Well, any move below the previous day’s low is a red flag, suggesting weakness. Go short with proper money management (stop loss, control on volumes)

So, what is the summary ?

The Nifty remains in a trading range, although the break down below previous lows suggests weakness. The Trend is sideways.