Saudi Index leaves Investors Shell Shocked

Posted on November 13, 2008 by Ramki

The Saudi markets have lost more than half its value since the beginning of the year. How much more pain can they bear? Looks like there is scope to fall by at least another 12%. Check out this chart.

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Stay short in Sterling for now

Posted on November 12, 2008 by Ramki

The Governor of the Bank of England, Mervyn King, has said today that the UK is probably in recession now and 2009 is going to be difficult. He also asserted that he stands ready to cut interest rates again if that is required. Clearly, we need to remain short in Sterling. (Early resistances come at 1.5345 levels). I am posting two charts for your use today, suggesting a short-term target of 1.5090 and 1.4865. But in the bigger picture, we will likely see a test of 1.4570. Remember one thing, folks. We are not using technical analysis to predict the future. We are trying to organize the way we trade into safe compartments. So, when I have 1.5090 as one objective, I will take back a good part of my shorts near there, but be ready (like Mr King) to sell the Pound again if that level breaks. If the analysis helps us to re-enter at better levels, then that is great! Good luck.

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S&P 500 and Citi

Posted on November 11, 2008 by Ramki

If my analysis of S&P500 (and Nasdaq) suggest that we will get a 5th wave move down, then how can I recommend buying Citi from $11.54? This is a valid question, and any good analyst should have thought that through. What I did, instead, was to look at the index and the stock separately.

Having conceded that, I looked at the S&P500 again in greater detail, and decided to post the accompanying chart. The whole decline from 1576 could be labelled as ABC/x/ABC and we are in the second “C” wave, which itself has 5 internal waves. I know this is wishful thinking at this time, but even if it is an incorrect approach to the patterns, we should expect a nice bounce in the index from 830 levels. Now let us turn to Citi. If this stock were to decline about the same extent as the main index, we will be close to $10. But even if it declines that far, it will still fit in the diagonal triangle picture. You might ask what is the value of a recommendation where one could see a 10% (or more) decline in price. You are quite right in posing that question. My strategy with Citi is to only buy small lots as we go down so that I will be in the trade when the reversal takes place. I am definitely not going to bet my daughter’s college fees on this one. But I will surely invest a sum that I am willing to see a 10% decline, but hope to double my money in a year. Enjoy!

Related S&P500 links:

Was that the stock market bottom?
SNP500 revisited
Fifth wave extensions can make you rich!
What is a significant rally in the stock markets?
Harmony in markets: S&P500
S&P 500: Potential Ending Diagonal Triangle
Ending Diagonal Triangle in S&P500?
S&P500 Elliott Wave update
S&P500 index: is a top already in?
S&P 500 update: where is the top?
S&P500 continues its rally
S&P500 remains resilient
S&P500 ready to dive?
S&P500 Update: May 19, 2009
S&P500 Elliott Wave update:21 May 2009
S&P 500 breaks higher: update 2 June 2009

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Dubai Index

Posted on November 11, 2008 by Ramki

On 15th October, when Dubai was trading at 3427 I warned that we could see 2760 if it started to come off quickly. Today it reached 2343, and a lot of investors are worried. A safe level to buy will be around 1860 in the index. As always, when one is trying to pick a bottom in a bear market, the amount risked should be small. Only when we get a decisive turn should we expose ourselves to a larger amount. Here is your chart of the DFMGI.

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SNP500 revisited

Posted on November 10, 2008 by Ramki

On November 3, a day before the US election, I wrote that the S&P index was still in a downtrend and we should use any recovery to the prior high of 1045 to get out of longs. I also suggested that should we reach 1136, we should turn short there. As it turned out, the high was only 1005. Today the front page news is all about the huge Chinese economic stimulus package ($586 billion). Asian equity markets have all reacted positively. The SNP futures are up nearly 20 at the time of writing. So what does all this mean? My guess is we could end up with a complex pattern that will be hard to predict. I stick with the proposition that if we reach (the now revised resistance of) 1129, we should turn short, of course with suitable stops. However, I do observe some resistance even at 1015. But I would not turn short there. Am I sure we will get this rally? No. All I am saying is there is still a chance for this rally, and if it happens I will sell into it.

Related S&P500 links:

Was that the stock market bottom?
S&P500 and Citi
Fifth wave extensions can make you rich!
What is a significant rally in the stock markets?
Harmony in markets: S&P500
S&P 500: Potential Ending Diagonal Triangle
Ending Diagonal Triangle in S&P500?
S&P500 Elliott Wave update
S&P500 index: is a top already in?
S&P 500 update: where is the top?
S&P500 continues its rally
S&P500 remains resilient
S&P500 ready to dive?
S&P500 Update: May 19, 2009
S&P500 Elliott Wave update:21 May 2009
S&P 500 breaks higher: update 2 June 2009

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Nasdaq Top 100 index reviewed

Posted on November 9, 2008 by Ramki

A few days back (23 Oct. to be precise) I posted the chart of the Nasdaq top 100 index while referencing to Trader Mike’s post of a potential symmetrical triangle in the Nasdaq Composite index. I figured that it is time to take a look at that chart again. There are two charts posted here and you might find it worthwhile to spend some time studying both. Basically I still think we will see around 1140 in the Nasdaq 100 ( which roughly corresponds to 1400 in the composite). The rest of the comments appear on the accompanying charts.

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Blood on the street as Sterling chops around

Posted on November 6, 2008 by Ramki

I warned you folks about this chop in Sterling Pound . In just 40 minutes, Sterling had dipped from 1.5830 to 1.5720 and raced higher to 1.6020. What should one do in such a market? The most sensible thing to do is to go out for a snack. Why get involved in the middle of a deadly game? Wait to see if we get to 1.6450, and maybe sell a small amount there. If it goes down directly, well, nothing is lost. I always believe that money not lost is money gained. Enjoy your weekend. Ramki.

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Get ready to buy Citi

Posted on November 6, 2008 by Ramki

I hope you took profits on Citi above $14.50, locking in a 25% gain. I suspect that the current decline will be the final push, the catharsis! (Here is your chance to click on this word and check its meaning!). Unlike the previous trade, we should aim to hold the stock for longer. In time, we will see the price double. Don’t be alarmed if it falls more than my suggested target. (Remember, I originally said we could see it down to $10.40. Refer this post ).  We are turning  medium-term investors in Citi now! Good luck!

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