Month: August 2013

On twitter today Viren ( @VirenRasquinia) made an interesting observation on the holding of FII's in index futures.

 

 

With today's EOD data the shorts have added 249445 contracts this series and from the 14th this addition is now 197156 contracts or roughly 79 % of the total short buildup this series.

 

The ever dependable RM (@sharma_rm) maintains a neat data base of the FII activity. Here is a snapshot

 

 

What started off as long liquidation on the part of FII's is now metamorphosing into a short buildup rarely seen before.

 

My immediate interest and the subject of this post is the short buildup in index futures from the 14th of August prior to the Independence Day holiday

 

If 80% of the short interest has come in a week's time then it does set up an exciting series close considering that we have only one week left to expiry.

 

So I plotted a volume at price chart along with a vwap from the 14th to see how the new shorts are placed after today's rally.

 

 

The vwap from the 14th is around 5450 NF. This will be the price below which the shorts are expected to be comfortable or stable.

 

If you check the OI graphic on tuesday 20th Aug FII's had not built longs in futures or even options and hence that gap up was quickly faded.

 

Even today's data does not show long buildup in futures, infact they have sold futures into today's rise.However the shorts entered at 5700 and 5595 in the chart above are profitable and have an option to book if price probes higher.

 

So we'll watch 5450 ( +/ – 20) for signs of further shorts or short covering in tomorrow's session.

 

Anything is possible in the markets of today and just being an FII does not grant one immunity from market losses. Tomorrow is the weekly close too ahead of what has been a big series.

 

Trade safe.

 

 

 

 

FII data ( short term)

One of the better days for a Market Profiler to look forward to in the trading calendar is to identify and work a trend day Properly.

 

These trend days are the easiest days to trade and can create a big impact on your account if used properly.

 

By definition a trend day would have an open at one end and a close at the other.

 

So we would have a day low made in the first hour or trade and a day high in the last hour to constitute an Up Trend day.

And a Day High in the first hour and a Day Low in the last hour to make it a down trend day.

 

We had a trend day yesterday in the Markets.

 

These trend days originate from balanced profiles or days previous when there are two distinct players in the markets who move the market either way sometimes both ways.

 

These days are often followed by the trend day when one player takes control at the open and the other player covers or liquidates during the session creating a large movement in the price range.

 

We call this One Time Frame Movement.

 

One of the easier ways to identify trend days is to judge the Open type quickly and identify single print buying or selling seen usually in the first 20 minutes of the session.

 

Here are some stats for the Nifty in the past one year showing the incidence of trend days:

 

 

In the chart above the sample size is in blue ( 340 sessions) in the lower pane and the green pane has the Up days where close in the last hour was at the high point and the low was made in the first hour.

 

Similarly the Red pane has 67 down trend days.

 

In all 121 out of 340 days or about 35% of the time you could have just taken a position and let the market do the rest.

 

Let's look at the BankNifty :

 

 

In the BankNifty we had 128 trend days in the same sample size.

 

A typical trend day would mean about 300- 450 points in the BankNifty and about 120- 160 points in the Nifty.

 

Most People play for rotations on such days whereas a simple HH- HL chart on a 30 minute scale will show the trend clearly.

 

Watch out for these day types next.

 

 

 

Trend Days