Dow Jones Displays Character - Closes Flat

Big relief! Dow Jones in yesterday's trading session closed flat at 9771.91, only 17.53 points down from previous day's close. I mention this as relief because the buzz on the street was that there will be bloodbath on Wall Street. Some voices claimed that it is this anticipation which led to a sharp fall in Indian markets as also in all other Asian markets except China. Moreover the European markets also traded as if there was no tomorrow, red being the favourite colour among all markets there. With all that at the backdrop, you would now appreciate why I expressed relief at Dow closing flat.

On 02 Nov 2009 Dow Jones had showed its hand in moving northwards in short term. I had mentioned that as leadership for rest of the global markets in my last post. For quick reference click the link here- http://archana-archdeb.blogspot.com/2009/11/global-stock-markets-dow-comes-to.html

Leadership that Dow exhibited was to no avail. No global market was ready to follow Dow Jones' example. China was an exception, but then China always plays the market on its own terms - based on its economy's performance. But we were discussing Dow and its tenacity in holding on to sanity against global sell offs. The other way around is still not happening!!

But to be candid I must admit that Dow's strength yesterday had lot to do with some important events that took place. Take a look :-

• Warren Buffet's Berkshire Hathaway bought the railroad company Burlington Northern Santa Fe Corp in a mega-deal of $44 billion. This signals that Warren Buffet is betting big on revival of American economy. In his own words Warren Buffet described the deal as "It's an all-in wager on the economic future of the United States". With strong American revival there will be increased demand for power and Berkshire owns coal based power company MidAmerican Energy. This company will require coal to be hauled over long distances. That is also where acquisition of a railroad company comes into play, if you get the bigger picture. But in all intricate calculations, US economy surging ahead is what Warren Buffet is betting his last penny on. That is certainly good news for global markets, considering how coupled we all are!
  
• Experts expressed their considered opinion that Fed is not likely to hike any interest rates in its November meet. That acted as firm anchor for Dow in trade yesterday.

The salutary effect of Dow showing strength will be felt today across global markets. At the time of writing this post, all Asian markets were trading in positive territory. Indian markets have also opened in green, the colour most elusive for the last eleven trading sessions!!

Global Stock Markets - Dow Comes To Rescue

Look to the West! Dow Jones has finally made up its mind to temporarily halt downward slide of global markets. In trading yesterday Dow could gain a decent 76 points to close at 9789. That will send Asian markets to spiral upwards today, leaving behind all apprehensions of yesterday. Wonder when will these Asian markets have their own strength of conviction in their respective economies! When will they stop looking to the west for day-to-day cue?

Be that as it may, the good news is that Dow has yo-yoed back to green territory in its last trading session. But in initial trade it zoomed 145 points higher than previous close, on the back of some good manufacturing numbers. To be precise the ISM index rose to 55.7% in October, up from 52.6% in September. This is also its highest reading since April 2006 which was cheered so merrily by the street that it seemed as if Dow was determined to break some kind of record in single-day gains. If you ask me, personally I was of the opinion that Dow was properly geared to gain at least 250 points yesterday. That's how it seemed in early trade on 02 Nov 2009. But alas!

By midday one found Dow languishing 35 points down, having given up all of its 145 points gain. That in effect was an intra-day loss of 180 points from its high. What spooked Dow were the Financials, Tech and Energy stocks. Investors got so nervous that all good news and reassuring signs of recovery from manufacturing data were brushed under the carpet and selling again took center-stage.

However Dow did recover some of its lost ground and thankfully so for health of Asian markets today. The recovery was witnessed both in Financials and Tech stocks. Somehow I fail to understand as to how anyone can possibly be selling Tech stocks like Apple at this point in time. With Christmas around the corner, Apple is likely to have a strong sales season of Mac computers and iPhones. But then that's how markets are!

As for Financials, I guess US market participants did not like a key Federal Reserve official saying all that he said about executive pay in large financial institutions. I have a hunch that big boys on the street didn't like that one single bit. How can you even hint that a substantial portion of executives' pay (incentive-compensation) in big banks should be deferred over a multi-year period? So what if they have turned around with massive help from tax-payers' money!!

But somehow Dow in late trade yesterday made a nice effort to claw back into green. That is leadership, because now the Asian markets will follow suit. Indian markets should open with a gap up and sustain their rally today.

Dow Jones Bleeds - Will Nifty Arrest The Global Downtrend?

Dow Jones in its last trading session made no attempt to recover from low and kept its steady southwards journey in trade yesterday. It looked almost like a surrender of the bulls to bear hug. That does not augur well for global markets. What spooked US markets which resulted in Dow closing 120 points in red on 28 Oct 2009? Nothing out of the way. Just the same old stuff, same old conditions, same old story. It seems global investors are pulling out money from equity markets and parking it in Dollars. Hence increased demand for dollar and that's how you can see the Greenback rise against all currencies except yen. But wasn't it just the opposite situation last week? There was unambiguous opinion across the planet that dollar was losing its sheen and was likely to depreciate against all major currencies. Well news flows as per market behaviour and not the other way round.

The long and short of all this is that Asian markets are trading deep in red today ie 29 Oct 2009. That sends shivers down the collective spine of bulls in India. With bulls quivering, bears will naturally seize control. That is how the situation would seem to any of us for today's trade. Moreover its expiry day for derivatives today and hence there will be lot of nervousness on the part of traders. However it seems to me that Indian markets will arrest the downward trend in global equities by showing the way up, starting today. News will follow later to justify the move and that is why I can't put a finger to any reason at the moment. All I can say is that the Elliot Wave calculations suggest an upward move from here in Nifty and Sensex. Remember we still have an upside Nifty target to reach at 5280 before this year ends or maybe just at the beginning of New Year.

Whatever be the case it will be nice if you can pick up any or some of the shares suggested below:-

• Punjlloyd buy at 180/185 for a target of 225 in short term.
• Canara Bank buy at 324/327 for a target of 357 in short term.
• DCHL buy at 45/47 for a target of 62 in short term.
• Dena Bank buy at 61/63 for target of 70 in short term.
• Dr Reddy buy at 950 for target of 1050 in two weeks.
• Voltas buy at 141/144 for target of 168 in two weeks
• Crompton Greaves buy between 340 and 350 for a target of 425 in short term.
• IDBI buy at 113/115 for a target of 128 in short term.
• IOB buy at 113/114 for a target of 126 in short term.

Day Trading - Status of 23rd Oct Positions

On 23 Oct 2009 before the Indian markets opened, I had given buy recommendations for six stocks futures. for quick reference visit this link here : http://archana-archdeb.blogspot.com/2009/10/why-day-trade-today-recommendations-for.html

Now let us run a cross check on the status of these positions. Out of the six recommendations one buy price of DLF Oct Fut was not met in trade. For rest of the five positions here is my outlook for each position:-

1. Centurytex Oct Fut. This position had an intra-day low of 488.35 and closed at 493.2. If you have bought around 495 you should be holding your position for next trading sessions. In worst case scenario it will give you 498.5 where you may exit without any injury. But if you are a little brave hearted then you should keep the position for a target of 550 till expiry. Maximum downside risk is 467. This I am advocating because this scrip is still maintaining its swing, and has also completed two long term bullish patterns, viz 'Cup and Handle' and 'Rounding Bottom'. Its actual worth is 920/950 in one year's time.
2. LITL Oct Fut. This position had an intra-day low of 510.3 and closed at 513.75. If you have bought around 513 then you should be holding this position for next trading sessions. You will get an opportunity to exit between 533 and 541. Its actual potential though is 620 in short term.
3. Nagarconst Oct Fut. The position had an intra-day low of 156.95 and closed at 159.2. If you have bought around 164 then you should be holding the position till minimum target of 170. Its actual worth is 220/240 in medium term of about six months because it has completed the long term strong bullish pattern of 'Rounding Bottom'. However before surging to 240 level it may retest the levels between 120 and 140.
4. HDIL Oct Fut. The position made an intra-day low of 370.7 before closing at 375.85. If you have bought around 375 then you should be holding the position till minimum 390. The scrip is worth 500/515 in medium term of six months.
5. Punjlloyd Oct Fut. The position touched an intra-day low of 255.2 and finally closed at 259.55. If you have bought at around 270 then you should be looking to exit at 277.

Why Day Trade Today - Recommendations For 23 Oct 2009

Why didn't I give any day trading recommendations on 22 Oct 2009? Yesterday I had given no recommendations for trading in stocks futures. In fact I had not posted anything and remained just a silent spectator throughout the day. For compulsive traders in the market it will seem to be almost a Herculean task - not do anything on a particular day. But then it is one of the qualities you will have to consciously develop if you want to survive in futures trading over the long run.

I still haven't answered my question.Why I didn't give recommendations to trade futures yesterday was because I was not certain. I didn't like the general sentiment developing across global markets. Whenever there is doubt creeping up in your mind just stay away from market. Let it do whatever it wants to do. The worst that will happen is that you will miss out a profitable trade or two. But then that is erring on the positive. At least this scenario cannot burn a hole in your pocket, nor take your peace of mind away. No sleepless night!

But today is different. The US markets have again taken the lead to show the direction and mind of the markets. Asian markets are pleasantly trading in green at 8.30AM IST and all seems to be fine up above.For day trading, today my recommendations are as under :-

1. Buy Centurytex Oct Fut at 495/500 for a target of 534. If you plan to keep it for tomorrow then this position should give 561 in couple of day's time.

2. Buy LITL Oct Fut at 513/518 for a target of 568. In case you hold the position till expiry then it should give you a target of 588 to 600.

3. Buy Nagarconst Oct Fut at 164/167 for a target of 171.If you plan to carry your position then you can see a target of 171/180 and finally 188/190 being achieved in couple of days.

4. Buy HDIL Oct Fut at 375/380 for a target of 400.

5. Buy Punjlloyd Oct Fut at 270/274 for a target of 286. If not today then you can keep it for tomorrow.

6. Buy DLF Oct Fut at 445/450 for a target of 465. You may plan to keep your position open also for a couple of days for a target of 500 plus