Month: June 2012

Last Friday after the market closed I had posted a composite chart showing cumulative volumes for the Nifty in the range 5600-4500.

 

You can find that chart and that post here – https://www.vtrender.com/content/composite-and-orderflow

 

Based on that chart, we had argued for a move to fill up the low volume region below 5200 right upto 4970.

 

Here's a fresh chart :

 

 

Today's close is exactly at the lower end of the April bracket near 5155- 5165.

 

5155 is an HVN on the larger composite above which it reenters a balance area which has another prominent HVN at 5212.

 

Both these zones should get supply, as the seller will try to come back in.

 

The high volume zone below this is at 4970 region, which should support any move lower.

 

Monday's trading would have the market absorbing news from the  EU zone as well as RBI.

 

As mentioned in the trading room, headlines are the biggest risk to the market in it's current uptrend.

 

In case the market can absorb all the news and stay the course then we have a larger move developing into this balance zone which should take the market upto 5380 levels.

 

Remember balance zones are value areas and the value area rule also called the 80 % rule applies to all situtaions.So it it enters this zone and stays inside for a few hours, it would make it to the other end of the range in 8/10 cases ( 80 %)

 

The sellers best chance is to step in on Monday morning as an open drive and push the index lower. If that does not happen, we see the market go much higher.

 

 

Shorter term Composite

At Vtrender we have always believed that the banks play a critical role at market turns whether the context is intra day or swing.

 

The BankNifty will always set the move up before the Nifty catches up and recent brokerage reports from prominent houses testify that FII's are playing even bigger roles in BankNifty than ever before.

 

In the trading room at Vtrender, we monitor charts of the BankNifty and the Nifty side- by -side and this simple exercise gives great clue to market direction.

 

Like today, when we came into the market in the context of a balance zone as a background, it was easy to see BankNifty slip below Value area low first and break the previous day's range setting up the big move in the broader index.

 

Let's look at a slightly bigger perspective as the index will be called into play for the RBI event on Monday.

 

 

First the chart and then my two bits on why the market sold off after the inflation news.

 

From the lows of 9036 on 4th June to the recent highs at 10170 in the BankNifty future, the index has risen over a 1000 points and for the first time today in this run-up we saw value created lower today.

 

Secondly today's move off the POC of yesterday shows a decisive rejection of yesterday's value

 

And last but not the least, the entire run up has the highest volume at 10050-10080.

 

Put it together and you can see that the seller is back in the banknifty. However it is not yet confirmed that these are strong hands at play and only a bigger push below the 9760 level will confirm that the seller has taken over the short term trend .

 

Ahead of the news on Monday, it is difficult to see large market participants committing themselves in a big way and the likely possibility is that we may rotate back up tomorrow if there is no seller at the open.

 

The test for both buyers and sellers will come at the 10080 level if we do get back there again.

 

I don't like to react to news, as everything eventually builds up in the price, but market sentiment towards news plays a big role in positioning thee days.

 

After the data was out on inflation, the market grasped that there would not be a big rate cut on Monday as inflation has not cooled down in the past there months. The Governor is caught between the devil and the dead sea and whilst the consensus is that there will be a rate cut, it cannot be claimed for certain in light of the policy adopted from last year.

 

The move up of 1000 points on low volumes has been pure short covering in the BankNifty on the expectation that there would be a rate cut.on Monday. Anything other wise would send the index down in a hurry.

 

After todays' down move odds are high that it would pass off as a non-event. But we'll leave that for Monday.

BankNifty Profile check

 

 

*** Shai **, Welcome to the Vtrender conference room!
[08:54] Shai C: Gm all
[08:55] J C: Gm friends!!
[08:56] r m: Good Morning folks!
[08:56] r m: Hi Shai, JC 🙂
[09:00] Pasi C: GM all
[09:02] J C: Hi Rm:-)
[09:07] Shares Trader: GM ALL
[09:07] r m: Hi ST 🙂
[09:13] Shai C: test
[09:14] Shares Trader: Hello RM, Shai
[09:15] J C: shai..the tos scr pls..tx
[09:15] Shai C: sure
[09:19] Vicky M: Good Morning Everyone 🙂
[09:20] Vicky M: hi Shai, RM, JC, ST, Pasi
[09:21] J C: hi vick…
[09:21] J C: *vicky…
[09:22] Shares Trader: hi Vicky
[09:23] r m: Hi Vicky 🙂
[09:24] Shares Trader: wht cud b targets shai ? NF
[09:25] Shai C: USDINR sl 55.53, intra can touch 54.85 today
[09:25] Shai C: watching NF for crossovers above 5121/ 10077
[09:26] Shai C: 2 sided movement possible
[09:26] Shares Trader: k
[09:26] Pasi C: ALGO 5113  can be bought/@shai
[09:27] Kris 123: Gm All 🙂
[09:27] Pasi C: Hi kris
[09:28] Shai C: Pasi ignore the open ones
[09:28] Pasi C: ok
[09:28] Shares Trader: n also @ close
[09:29] Kris 123: https://twitter.com/cvkmohan/status/202680126213857280
[09:29] Shai C: if this weekend was spain, then weekend will be greece again
[09:29] Kris 123: Here is a tweet that I made on 16th May!!
[09:30] Shai C: Good trade, atm call would have paid more
[09:30] r m: Hi Kris 🙂
[09:30] Kris 123: Hi RM 🙂
[09:30] Shai C: and vix took away maybe 20 %
[09:31] Kris 123: @Shai – true – actually I added some 5000CE on the second trading day of the series – at 40-45 zone – which is also booked out!
[09:32] Shai C: open gap staying- bullish
[09:33] Rahul Goel: Hello all gm
[09:33] Rahul Goel: shai did not take the position onf riday since lot of data points were coming out on weekend
[09:33] Rahul Goel: now should I take the buy
[09:33] Rahul Goel: or wait
[09:33] Shai C: buy abv 5121 only
[09:34] Shai C: res at around 5155
[09:34] Shai C: spot
[09:34] Kris 123: I could not locate the chat transcript where I was saying about 2nd day of series making a low – and we rally hard – I remember Girish and Rm also being present
[09:34] Shai C: remember 5165 is the lower base of the big balance zone from april
[09:35] Kris 123: We are 350 points from there in NF and 1K points in BN – hope Master passes me now atleast ! 🙂
[09:35] Shai C: 5165 nf- 5212 NF will produce about 250 points whther resisted or supported
[09:37] Shares Trader: Great Trade Kris
[09:37] Shares Trader: i do rember abt u saying 2nd day of series making low 🙂
[09:37] Pasi C: produce 250 points means  5165+250/5212+250  or  5165-250/521-250?@shai
[09:38] Kris 123: https://vtrender.com/content/trading-room-chat
[09:38] Kris 123: I could find the link 🙂
[09:40] Shai C: yes Pasi the forst one
[09:41] Pasi C: ok
[09:45] Shai C: 5119
[09:50] Pasi C: bought@5123 sl plz @shai
[09:50] Pasi C: spot
[09:52] Shai C: pdh is best for swing
[09:52] Shai C: but a smaller sl is day low
[09:52] Shai C: as it's open auction
[09:58] Pasi C: ok
[10:01] Kris 123: we are at 10 – look for some IB extension on the upper side till 10.15 🙂
[10:07] J C: another 8 min & top of the day is made shai…or v ignore that today…
[10:11] Shai C: It's not a 100 % rule, but we will play it that way
[10:12] J C: m just looking at es…
[10:12] J C: & tats y the doubt…
[10:13] Shai C: this is the new contract in ES
[10:13] Shai C: esu2 is sept
[10:13] J C: k…tx
[10:13] Shai C: that would be 1331 in june
[10:13] J C: got it…
[10:19] Tanay B: good morning to shai & all      from a new one
[10:19] r m: Good Morning Tanay
[10:21] Kris 123: GM Tanay – Wishing you the best of trading results!
[10:24] Shares Trader: Shai, chances of eneterign into  friday Range ?
[10:25] Shai C: Gm Tanay
[10:25] Shai C: ST if that happens we will see VAH as profile is thin
[10:26] J C: shai pls elaborate on profile is thin…
[10:26] Shai C: currently the paly is 3IB where we can have the highs made around IB or IB + few minutes
[10:26] Shai C: *play
[10:27] Shai C: JC there was no volume ditribution for that move from 5035- 5078
[10:28] Shai C: No volume distribution = poor structure
[10:28] Shai C: poor structures will always give quick moves
[10:28] J C: got it…tx
[10:29] Shai C: in MP it is called minus development
[10:29] J C: k…tx
[10:30] Tanay B: thanks  rm,kris & shai
[10:31] Tanay B: @shai,    follow request @twitter pending.    pl see it
[10:38] Shai C: Tanay – done
[10:38] Shai C: break of IB is the next trade
[10:39] Shai C: Long abv 5121 for 5144 with sl at vwap
[10:39] Shai C: shorts get bigger mileage below pdh 5079 only
[10:40] Shai C: but small shorts can be tries below 5096 for 5079 pdh with stop at vwap
[10:40] Shai C: *tried
[10:42] r m: @Shai, looks like your twitter account has got some intruders, it is tweeting spam 🙂
[10:43] Kris 123: @Rm – I thought Shai really made that work from home Mom money 🙂
[10:44] r m: lol
[10:45] Kris 123: Hmm.. Shai started sending direct messages as well 🙂
[10:55] Shai C: direct msg?
[10:55] Kris 123: nothing Shai – your twitter spam – as direct message.
[10:55] Kris 123: now it should be fine! 🙂
[10:57] r m: Sucheta Dalal's account recently began tweeting at a feverish pitch about a weightloss program 🙂
[10:57] Shai C: 🙂
[11:03] Rahul Goel: shai can u put the charts for copper for a minute
[11:06] Shai C: gap up holding in copper
[11:06] Rahul Goel: hmm okay shai
[11:06] Rahul Goel: actually did not take the buy on tht day
[11:06] Rahul Goel: so now will wait for vwap visit to take a buy
[11:08] Shares Trader: RM..whose Sucheta Dalal ?
[11:09] r m: Ex Ind Exp journalist who exposed Harshad Mehta scam 🙂
[11:10] Shares Trader: ohokk
[11:10] Shares Trader: boring tradign day so far
[11:10] Shai C: IB rule in USDINR
[11:11] Shai C: sl abv dpoc
[11:11] Shai C: 55.38
[11:44] Kris 123: such beautiful days to trade!
[11:45] Kris 123: I am in the third trade for the day – vwap bands and IB high tell that it is safe to trade the range!
[11:47] Kris 123: ofcourse – when we are clear that we are looking at peanuts – we will collect peanuts!!
[11:49] Kris 123: done!
[11:49] Kris 123: it can go more – but – I am trading only peanuts – 10080-10030 !
[11:50] r m: peanuts in Andhra are quite large compared to what is available elsewhere 🙂
[11:51] Kris 123: @Rm – there are people here who trade 1K points a minimum – and 50 is peanuts/popcorn only – nothing more! 🙂
[11:52] Pasi C: we have 5 min candles?@shai
[11:52] r m: @Kris 🙂
[11:52] Pasi C: oh sorry we consider only volume and price na ok
[11:54] Kris 123: around 12.35 we should be above IB high – and away from vwap bands
[11:56] Arun Madan: Hai Shai.. GM… For the past few days I am just observing the OF charts and I need some clarification
[11:57] Arun Madan: Its only a basic information, can you spare now else after 3.30
[12:00] r m: @Arun, some basic info on the charts is given here – https://www.vtrender.com/content/trading-room-charts-explained
[12:00] Shai C: Hi Arun- sure you can ask your questions
[12:03] Arun Madan: whats is the yellow band and white band?
[12:03] Pasi C: blue OF plz@shai
[12:04] Shai C: yellow band is today's value area- where about 68.3 % of todat's trading took place
[12:04] Shai C: white bands are vwap extensions of the main orange vwap line
[12:06] Shai C: as a rule, the mkt has a 5 % chance of staying abv the white band
[12:06] Shai C: and when the mkt moves beyond these yellow lines, a trending move is possible intra day
[12:09] Arun Madan: when we initiate larger move either breaking of white band or yellow band?
[12:11] Shai C: if you want to initiate trades after 10.15 am IB period, the nest and safest trades are break of IB area
[12:11] Shai C: *best
[12:12] Arun Madan: where the Blue-Red indicator change right?
[12:13] Shai C: blue red is more of a swing indicator and tells you that mkt will stay up if blue and down if red
[12:14] Arun Madan: ok thanks Shai i continue my paper trade for some more time and mail you if further assistance requirerd..
[12:15] Shai C: sure
[12:15] Shai C: the alst change of signal was on fri at 4918
[12:15] Shai C: when siognal changes best to go with the signal with a 40 point stop
[12:17] J C: shai..do u data on how many points after the OFLsignal…the prob of it being successful is >=90%
[12:19] Shai C: that kind os data would depend on the day type when the signal was generated
[12:19] Shai C: diff to compute
[12:19] Shai C: but if we apply basic market profile, we can increase the odds of spotting the right signal
[12:20] J C: k..tx
[12:20] Pasi C: shai can I request u one thing
[12:20] Shai C: like 2 mondays back we broke abv the 4970 bracket
[12:20] Shai C: that was a strong buy even though OF was in at 4918 the previous day
[12:21] J C: sure…
[12:21] Shai C: same thing for the 5040 bracket
[12:21] Shai C: and 5135 on fri
[12:22] Shai C: sure Pasi
[12:24] Pasi C: The alternative ways(sms through twitter)we adopted to deliver calls is not serving the purpose@shai
[12:24] Pasi C: posting calls in announcements is the best way I feel@shai
[12:25] Shai C: ok, will try to work a way to display calls on screen
[12:27] Shai C: watch BN for a move abv IB hight to confirm
[12:28] Shai **: still good- [09:33] Shai C: buy abv 5121 only
[12:28] Shai C: let the EU volatility off play off
[12:28] Shai C: 12.30
[12:30] Shai C: http://www.forexpros.com/indices/indices-futures
[12:32] Shai C: that IB band trade has failed
[12:32] Shai C: mkt abv 55.39
[12:32] Shai C: 1.2620 in the euro and 82 in the dollar are imp ref points for this week
[12:33] Shai C: mkt abv 1.26 and dollar below 82 points to risk ON, good for equities
[12:41] Shai C: spain is up 5 % today
[12:56] Pasi C: Good vwap band trades today
[12:56] Pasi C: may test our patience to break IB today
[12:59] Shai C: euro selling off
[12:59] Shai C: broke 1.2620
[13:00] Shares Trader: greta..BD
[13:04] Pasi C: short below 5096 on in NF?@shai
[13:04] Shai C: yes small qty, sl 5106
[13:04] Pasi C: ok
[13:11] Shai C: not staying down
[13:11] Shai C: buy abv vwap will bring IBh again
[13:13] Pasi C: 5106  🙁
[13:14] Shares Trader: Shai, no algo ?
[13:14] Shares Trader: @ 12.58
[13:15] Shai C: no
[13:15] Shares Trader: k
[13:15] Shai C: Bn at 9993
[13:16] Shares Trader: ok
[13:34] Shai C: back to prem in NF
[13:35] Shai C: 5100 ce has not made new highs
[13:36] Shares Trader: Neutral cnetre or extreme ?
[13:37] Shai C: looks more of a center from here
[13:38] Shai C: can't rule out a move to 5144 though
[13:40] Pasi C: centre is 5110?@shai
[13:41] Pasi C: 5112?
[13:43] Shai C: 5112
[13:44] Pasi C: ok
[13:44] Shai C: buying coming in slowly
[13:44] Shai C: watching BN abv IBH for confirmation
[13:52] Shai C: just get the feeling that this new move from 5015 has enough steam for another 90 points
[13:52] Shai C: maybe by wed
[13:52] Shai C: If Bn continues the rally then a high probabaility sell on RBI day should come
[13:53] Shai C: * SELL on RBI news
[13:57] Shares Trader: whn is RBI meet Shai ?
[13:57] Shai C: next mon
[13:57] Shares Trader: thnx
[14:01] Pasi C: Green globe
[14:14] Shai C: vix is up today
[14:16] Pasi C: BN not confirming
[14:25] Shai C: european bears look at the next tgt ITALY- http://www.telegraph.co.uk/finance/financialcrisis/9323070/Italy-in-focus-amid-fears-of-contagion.html
[14:40] Shai C: some news coming from S&P
[14:41] Shai C: will go to pdh
[14:41] Shai C: 5092 algo
[14:43] Shai C: pdh hit
[14:45] Shai C: 9975 algo bn
[14:45] Pasi C: buy?
[14:46] Shai C: no buy till pdh crosses
[14:47] Rahul Goel: shai can we take this sell at 9960
[14:47] Shai C: this can bring 5050/ 5035
[14:47] Shai C: rahull wait for a small pull back
[14:47] Shai C: very extended below vwap
[14:47] Rahul Goel: ok
[14:48] Shai C: it 's news driven led by some neg s & P comments
[14:50] Shai C: Moody's will be called in before the day is up
[14:50] Shai C: 🙂
[14:50] J C: 🙂
[14:50] Rahul Goel: will try a short near ib low
[14:50] Shai C: S&P : India may become 1st BRIC Nation to lose Investment Grade
[14:51] Shai C: Notice the 'May'
[14:51] Shares Trader: 😀
[14:51] Shai C: plenty of space for a clarification
[14:51] Kris 123: When the vwap band is at ib high – and if we find it difficult to cross in the first couple of attempts – it is a safe sell – I guess this is another example- hope some one utilised this! 🙂
[14:52] Rahul Goel: Bn and nifty both giving sell at the same time
[14:52] Rahul Goel: now
[14:53] Kris 123: Is that algo at 9950?
[14:53] r m: 9975
[14:55] Kris 123: [09:29] Kris 123: https://twitter.com/cvkmohan/status/202680126213857280
[14:55] Kris 123: The exit was well timed! – Master you approve? 🙂
[15:00] Shai C: yes kris I'm your admirer 🙂
[15:00] r m: 🙂
[15:00] Shai C: algo at 9975/ 5092
[15:01] Shares Trader: Shai, did u imported data again..cz i can see NF algo @ 12.48 nw
[15:01] Shai C: yes I noticed that now too 🙁
[15:01] Kris 123: @Rm – copied the whole transcript – just in case shai claims that he lost connection – so that this transcript stays on vtrender 🙂
[15:01] r m: lol
[15:01] Shai C: 🙂
[15:03] Shai C: I think the key slap on the face is the use of the word first in that s&p communique
[15:03] Shai C: slap on the face for the government of course
[15:03] r m: the head of the govt is immune to slaps (on face or  elsewhere) 🙂
[15:04] Shai C: MMS's retirement is confirmed
[15:04] Shai C: along with a host of congress leaders unless they switch before the elections
[15:05] Shai C: staying below pdh now
[15:05] Shares Trader: VAH visit possible shai
[15:05] Shai C: ruppee has reacted so we can be in for a touch of 5033 tom
[15:05] Shai C: 25 mins left?
[15:05] r m: yep
[15:06] Shai C: BN is going lower
[15:06] Shai C: the holder of a sell will benefit
[15:06] Shares Trader: s..so today or tomoro open intresting
[15:06] Shai C: intra dayer from 9980 should book part here 9928
[15:10] Shai C: now RBi director talking down rate cut hopes
[15:10] Shai C: instant reaction in BN
[15:13] Shai C: ST is pushing NF along
[15:13] Shai C: no tom …happening right now
[15:13] Kris 123: 4914 is the fairest price last month – we reached 5114 today – 200 points – I rest my case! 🙂
[15:14] Kris 123: and – to repeat – we should continue with our bullish bias as long as 4914 is held!
[15:15] Shares Trader: 🙂
[15:15] Shares Trader: chk daily chart NF
[15:15] Kris 123: [10:26] Shai C: currently the paly is 3IB where we can have the highs made around IB or IB + few minutes
[15:16] Kris 123: 3IB at 5050 is done – Master – hats off! 🙂
[15:17] Shai C: No Kris- I was refering to a 3IB day from friday when highs get made in the first session
[15:17] r m: now low in the first hour tomorrow 🙂
[15:18] Kris 123: that is what happened – highs are made in the first hour – 3IB downside is my interpretation 🙂
[15:18] r m: 🙂
[15:19] Shai C: we should auction this zone tom
[15:19] Shai C: 5035- 5080
[15:19] Shai C: 2 fast moves- now market needs to auction it
[15:20] Kris 123: @Shai – so you think 5000PE+5100CE can be sold here?
[15:20] Shai C: a break below 5030 however can briong 4975/85
[15:20] Shai C: Kris expecting vix to keep rising this week as it is news filled
[15:20] Kris 123: so – no point writing then!
[15:21] Shares Trader: not very clean chart..bt Ok http://i45.tinypic.com/2s96a81.png
[15:21] Shai C: unless you want to hold it till next mon eve
[15:21] Shares Trader: so may b as Shai said..some rotations  n thn 4960
[15:21] r m: Thanks ST
[15:22] Shares Trader: itne gande chart ke liye kaisa Thanks RM
[15:22] Shai C: I saw in the daily the top today the same as 8th may
[15:23] Shai C: check that auction on 8th- 9th may
[15:23] Kris 123: so – more shorts will be brought in! – so I can retain my hopes of 5400 atleast! 🙂
[15:24] Shares Trader: ys Shai 8th may
[15:24] Shares Trader: same high
[15:24] Kris 123: @Shai – I guess it will be flat to negative opening tomorrow – is it?
[15:24] Shares Trader: 5125 on 8th May
[15:25] Shai C: menatime our euro bears have brought euro below 1.2626 again
[15:25] Shai C: day lows now
[15:25] Shai C: and a possible move by the es in the previous bracket 1288- 1329
[15:25] J C: carry shorts shai…
[15:26] Shai C: take some profits, but short is right
[15:26] J C: k…tx
[15:26] Shai C: good chance that we stay right here
[15:27] Shares Trader: VIx 6% +
[15:29] Shai C: 5000/ 5100 pe writers staying
[15:29] Shares Trader: my VAH targt missing by few points..n days over
[15:29] Shai C: it's done
[15:30] r m: Thanks friends, bye all, have a nice evening 🙂
[15:30] Shai C: 5037 vah
[15:30] Shai C: bye guys
[15:31] Shares Trader: bye all
 

Chat transcripts