Month: November 2011
The morning’s open was an open Drive from the Point of control of the previous day, confirming a change of sentiment over the weekend.
The single prints at the base of the profile and the O print below the first alphabet D is always a confirmation that in 90% cases what begins at one end will finish at the other end! Profile told us very early that this would be a big day and the rest of the day we were content to buy all the dips and wait for the market to take us to profitability!
Our OrderFlow which operated entirely on the Market Profile Hand Book was quick to spot the longer time frame presence and printed us a buy at 9.15 am.
The charts above are 200 minute charts of the USD-INR, then the Nifty, BankNifty, Gold, Silver, Copper and finally Crude.All charts are for a period between 28/10/11 and today.
These are also all the instruments we track in the trading room and send alerts for.The purpose of the charts are to show the effect of a falling INR on stocks and commodities.
It’s easy to see the effect of a falling INR on the Nifty and the bankNifty in the top 3 charts .INR has been the story of the past one month and we have made a special place for those charts in our trading room!
Ever since RBI intervened and seems to be selling dollars at the higher levels of 52.3 to 52.7, we seem to be having a floor on stocks and the greens at the end of the charts in Nifty and bank Nifty seem to suggest that.
Globally and even here, a rising dollar seem to be having the least effect on Crude ( last chart) and it is the best performing chart of the commodity space at the moment.
Gold also ignored most of the rise in the dollar and Silver had one large down day attributed to the margin hikes in China.
The INR is still at 52.2 levels currently the previous lows from 2008 and till this goes down to maybe 50 in the next one to two weeks, upsides in stocks will remain capped.
The expiry day today was very non-volatile and kind of an anticlimax to the fears expresses by participants that the expiry will be at the lows of the series.
The OrderFlow on which we heavily rely to note the trend of the market printed us a buy call at 4674 today, just past noon.
In the trading room we have been carefully observing the value area being built yesterday and today between 4650 and 4700. Many times it is important to note what the market does in it’s time rather than clock time which we determine and impose on the market through our opens and closes. The rhythm of the market is best understood through buyer seller reactions and responses from prominent zones like the previous day’s Point of control and the day’s vwap.
Early this morning the POC pushed the market lower and kept resisting the market’s attempts to go higher early afternoon. But once it was crossed there was no looking back. A quick calculation of the value area meant that a break would give double value or another 55 points. So we had an intra target of approx 55 above POC which was where the market finally settled for the series.
Here are 2 trades we picked up this morning on the BankNifty
The market was trading at 8634, when we noted heavy volumes at 8542, about a 100 points below.
Next it seems they covered with same volumes at 8526.
The third trade was back at 8634
All 3 trades took one sec to finish and were done at 10: 50: 26 and 10:50:27.
Butter fingers again?
On Friday the markets had finished a Neutral Extreme, which in Market Profile means that you should have an open above the close of the previous day for trend continuation.
The open early this morning was far removed from that close and OrderFlow quickly determined that sellers were present in the market and active. Generally smart money at the open has a very good idea of where they expect the market to go and detecting their presence straight at the open was a big edge.
We were short at 9.17 am this morning.
2 minutes later the OrderFlow confirmed a sell signal in the Bank Nifty as well and the smaller Initial Balance of the morning was a clear give away that the Market would go to levels of 3 IB today.
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Our net gains in today’s session total 81 points in Nifty, 173 points in BankNifty and 4.2 points in Copper per lot !!