On 3rd November I warned you to get out of your Reliance Industries holdings near 1480. (see the post here.) I think the stock will bottom out between 855 and 905. However, being small investors, we should start buying from Rs 925. Sure, a lot of bad news could still come from India. But at this level, Reliance will be a great buy for the medium term. 
The most difficult time to trade any instrument is when it is in a complex 4th wave position. I think the Euro is currently in that position. You might see the currency come down, and just when you think it will continue lower, it could abruptly turn around and race higher. Again, when it is near the top of that rally, many pundits will call for it to go higher still, and hey presto! we could see it dumped all of a sudden. Take a look at the chart and stay away from the Euro for the time being. 
You might have been saved by my previous post but believe me, the Pound still has the potential for significant wild moves in the next few sessions. Read the chart for the comments.
Some of you must have bought Citi when it was trading below $12. (see my post Let’s join the “Rescue Citi” effort! ) Sure I am looking for this stock to double in the medium term. But if you are like most traders who want to pocket some quick money, then be ready to sell on any move towards 14.50. I don’t think we will get past 15.25 this time, and would be more than happy to sell at 14.50 and wait for another dip to buy again.
What is the outlook for S&P500 once we get the US Presidential Election results? This is the question that most traders of US stocks and options have in their mind. Let me start with the assertion that we are still in a bear trend in the big picture. Bear market rallies are common, and often take us up by 25% or more. But inevitably, the trend will reassert itself, and we will be back on our way down. So use this rally to get out of those stocks which you might have bought too soon, and wait for better levels to buy them back. As for sell-levels, well, I think 1045 should be a decent level to get out, but if we get to 1136 levels, I might even think of turning short on some weak stocks! To sum up, don’t overstay this rally in the SNP500 beyond 1136. Actually you should watch what happens at 1045 and run for cover if we start coming off from there.
Related S&P500 links:
Was that the stock market bottom?
SNP500 revisited
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
The Indian Central Bank has cut rates, and Reliance looks well bid. Should we buy Reliance here? My response is No. We will see another dip in this stock and let us look at it again at that time. If you have purchased this stock when it was around 1000, then you should look to get out on this rally. I would be surprised if it stays above 1480 for long.
Having failed at 1.6670 levels, the Pound has come off by over six big figures already. Question is whether we will see 1.5250 soon? There is not much of a doubt that GBP/USD is in a bear trend, and some might think that all we need now is an overlap of 1.5934 to call a direct test of 1.5250. I would like to be a bit more careful in making that call just now. What makes me cautious is the sideways drift from the top. I would really like to see it come down a bit faster than this. Let us see how Asia handles the currency and then decide the next trade.
The Forex markets have been known to be very liquid. But today the liquidity was at its lows. Spread on GBP/USD was 15 pips wide for a mere 10 million quote even when London was in full swing. I imagine this must have been the case even yesterday in NY time because the currency just tore straight up. Can you believe it, but Sterling was at 1.6715 on Oct 22, down to 1.5265 on Oct 24 and back here at 1.6670 on Oct 30? This is crazy! Anyway, I am still of the view that Sterling will come off a bit from here. We will probably see 1.6350 in the next few sessions. I know fortune favors the brave. But it will be the foolish who venture into thin markets with big positions. 
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