Vtrender Live

A little bit about Me

A Professional index futures trader. Have traded at the NSE and the NYSE as also a few Middle Eastern bourses.Made my first trade in 1998.

Professional:

• Full time professional Trader- First and Foremost. All other things come next.
• Manage a Professional trading room dealing in index futures and commodities.
• Owner of a proprietary futures trading firm
• Counsellor and mentor to a few select accounts.

Training:

• Proprietary trader- Training mostly received through trading with other professionals in different exchanges
• Analyst- Not the kind you see on TV. But have spent hours testing systems, setups, indicators and strategies to have a fairly good idea on what works and what does not in different environments.
• Trainer- Have spoken to and worked with a lot of newbie traders to understand the psyche and the pitfalls

The Vtrender advantage:

• Simple system- Over the years have found a simple way to understand the markets and buyer seller behavior.Trading is a business and has to be treated as one.
• The Teaching- No holding back. The business of trading is learnt only by sharing what you know.Give what you would like to get more of.
• Communication- In this fast moving world and an even faster market, you have to reach out quickly to get correct answers. We have the medium to get you the answers as soon as you have the question.
• Community- Trading cannot happen in a vacuum. Reach out to other opinions and ideas whilst trading your own plan.

Alias:

Operate mostly through the handle- Vtrender. People I have interacted with know me by my first name Shai.I am not one to want my picture front and center.I prefer that traders focus on what I am trying to share rather than who I am and what I have or have not.

Most traders think the important element in success is knowledge. In my trading career I have found that correct knowledge and the ability to change behavior are the most important parts of successful trading. Correct knowledge without behavior modification projects improper execution of an otherwise perfect trading plan.

Even if Sachin Tendulkar walked you through every step from facing the ball to executing the shot, you would still not score like him. It's always in you. If that makes sense, why care who I am? 

Having said that, I'm here to provide you part 1 (the correct knowledge) - for you to modify your behavior and tweak it to your advantage.

Purpose:

• Journal-The website is a journal for me to review my train of thought and approach.
• Link- To provide a good understanding on the role of the "big boys" as they operate in an environment as your own.If you can't beat them, join them!
• Illustrate- To illustrate that trading is a business. There are no winners or losers here or even rights or wrongs.Every trade is an opportunity and the best part is that the next one will still knock on your door!.

Risk aversions / Safe Havens

Viren here.

Since Shai, has announced that we will look at trading and analyzing everything else besides our dear Nifty, I thought that I'll put together a post to give a broader perspective on how in the giant scheme of things- the role played by 'hot money' in equities is influenced by other markets like the commodities and forex markets which determine money flow and risk appetite.


Let's look at what the ES is doing currently :



Good bounce off 1084. Shai's levels have always been accurate. No arguments.
It will be interesting to see if it remains here at 1096 or moves to 1110 today.

Most of you would have read that copper is a leading indicator to equities.



Till that beautiful uptrend is maintained, there is no threat to the equity index chart anywhere on the planet ! Hugh...maybe not with the likes of the Karachi or Dubai stock exchanges. :) . But you know what I mean.

Have a look at another chart.



The chart is that of the AUD/JPY or the Australian dollar/ Japanese yen. Most of you would be knowing of the Euro as a risk currency which appreciates in times of optimism or risk appetite.The Australian Dollar (AUD), the New Zealand Dollar (BNZ), the Canadian Dollar (CAD) and British Pound (GBP) are categorized together.This is mostly because their underlying economies are based on growth dependent exports.Note that these tend to move in the same direction as other risk assets like stocks and commodities, which also tend to rise in price during periods of growth or anticipated growth, and fall in times of fear.

On the other side is the Japanese yen which is primarily a safe haven currency.Along with the Japanese yen are the likes of the US Dollar (USD) and Swiss Franc (CHF).
These labels of ‘risk currency’ or ‘safety currency’ do not reflect on actual quality of the currency as a reliable store of value. Rather they are just labels describing how these behave in times of optimism, aka risk appetite, or pessimism, aka risk aversion.

The AUD is the ultimate risk currency i.e.it tends to rise the most in times of optimism, and fall the most in periods of risk aversion. The JPY is the ultimate safe-haven currency, and behaves the opposite way.

With AUD most vulnerable to move the most during bouts of risk aversion while the JPY is primary safe haven currency, the AUD/JPY will fall most aggressively should equities weaken or rise aggressively should equities rise.

Thus if the AUD/JPY trend is up-risk appetite is on and the trend in stocks and commodities should be higher. If it’s down, the opposite happens.



The above 3 year daily chart testifies. Note the other pair of Eur/ Usd broke Oct 08 lows recently, because both the Euro and the Dollar are susceptible to "news flows" as in the recent greek crisis.

On another note, after much coaxing, I've managed to convince Shai to launch 'Vtrender 2'.I feel that serious eduction in the markets is missing and people invest in the markets as they invest in a lottery.People will put 50,000 in a fixed deposit to get 3000/- at the end of the year after a lot of study, but will not follow 2 bits of advise to make upto 3000/- every day from 50,000/- spent on 2 good Nifty lots.

'Vtrender2' will be invitation only with a small subscription- to the serious traders who want to learn these vast financial markets with us and earn a few thousand along the way.

Estimates for 30th July.

Good morning.

We are playing that pocket of yesterday, between 5385 and 5410 again.

A break of 5385 should move it to 5355 and above 5410 can see 5445.

The value areas are 5402-5411-5420 for Nifty

For the bank Nifty these are 10169-10116-10063.

----

July Expiry-2

I want to take the opportunity to clarify one aspect of the Vix formula.

In the last two expiries, the Vix formula has not come close to meeting it's targets as we had in Feb, March, April and May.Why?

Quite simply,because the calculation is based on the VIX and the Open Interest, with the open interest being the dominant partner.The VIX is a measure of the volatility of an index or any script. Through it we can get an idea of how much our asset can move in a day or any other time-frame of our choice.The formula we have breaks down this time frame for you.Now on expiry day, when options have to be settled ( as these are European) the Open Interest can be used along with the range to get a fair idea of where we close. It will work 10/10 times, provided the Open Interest is resolved.

Today I was watching the 5400 strike all day, but showed no sign of resolution. In the end we had two winners with the PE writers as well as several CE writers ending in profit.

Along with the Vix and the Open Interest, we have added another potent tool in Market Profile. Two days back in this post here I had called for 5382 to be defended. Quite simply because it was the monthly Point of Control or the place where buyers and sellers agreed on value for the month.

When options become more liquid here and we have a strike price every ten points instead of the current 100, as we have for the US SPX Index in the SPY, our tools will be more reliable. Promise!

Here's a look at the August future, from where we have to take levels from tomorrow :



The best trade today was in the bank Nifty, but there were several others like Axis bank, Tata Motors, SBI which were having very good market profile set-ups.

I made 15 points in a Nifty trade all day today, but made 17 points in Axis bank and 14 points in tata motors in minutes all in high probability trades.

We looked at the Nifty and the Bank Nifty so far, but it is clearly time to unleash our wonderful methodology on other setups and on a new platform too !!

Estimates for 29th July.

An expiry day has many pulls and pressures and most day traders simply take the day off. Today's day will not be without it's share of surprises with the 1.3 Cr of OI looming large at 5400.

The open has been kind to the buyers and a move above 5400 should setup a move for 5421 and 5435.

Watch 5385 on the downside.Refer to last night's post.

----

13.38

1.2 Cr + at 5400 July still, that means that both PE and Ce writers are expecting a finish at 5400.

Market profile tells me that 5421 is on, and depending on whether buyers hold there, a further push to 5435/5445.

Guess 5420 is the decider level...we turn back both PE/ CE guys will be happy. If we move up then CE guys cry!

Reverse applies below 5385

---

3.43

Nifty moves in a range of 5382-5415 in the July future today, hugging quite close to the 5400 strike where at stake was an Open Interest of 1.2 Cr.

In the end the writers at 5400 who had written yesterday were forced to cover and a few more. Have a look at the chart :



11,37,500 shares got added in the 5400 CE yesterday and 22, 75,050 were reduced as of the close today.

Clearly the writers from yesterday lost out.

We auctioned in the 5400-5415 range for all of the afternoon not quite close to 5420 we wanted but quite away from the value low at 5385.

The market will be ready to give us a clear message from tomorrow again, with expiry pressures out of the way.

July Expiry

The expiry day in the Indian markets is always a special day and tons of analysis has been done on the importance of the closing price on the activity of next month futures.

It is a commonly held belief that the expiry closing price acts as a support or resistance to next month's price and action.

The market action in the afternoon was expiry related and put a question mark on where we close tomorrow.However we have two parameters with us -the OI/Vix and Market Profile to see where we end tomorrow.

The range for the day tomorrow based on the Vix formula we know, works out to 5452-5342 on the spot and 5445-5340 in the future. This is just a range and not targets- the nifty should trade between these ranges tomorrow, based on today's vix.

Now let's see what Open Interest is telling us :




The 1.3 crore of unresolved OI at 5400 is a very large one and generally should point to a close right around today's closing levels.

This is the best scenario and also right in the middle of the Vix range of 5445-5340.

However the market is not known to spend an entire day auctioning in a 10 point range! It will push and pull at the OI writers at this strike to wean them off their positions.Frankly speaking the 11 lacs written today at 5400 call, one day before expiry is downright stupid and goes against my belief of writing calls.These guys would have been better off purchasing the 5400 put today, if their view was that bearish.

Let's look at what the volume profile chart says.



5386-5398-5421 are the value areas for tomorrow.

We already know that 5386 is a good support for the market and halted the downward momentum of the afternoon.If price manages to auction below this level tomorrow, then we get to the other end of the VIX range at 5340 and the 5400 call writers of today do not look that stupid!

However, should the Nifty hold value area low at 5386, then I've painted three yellow rectangles on the chart representing a low vol region which represents a chance for the market to auction there tomorrow.This zone between 5408-5428 should decide the OI at 5400 if it auctions for a while there.

The open should make things more clear..

Estimates for 28th July

GM all.

The nifty is again opened within value and range of yesterday.

The value areas are 5447-5435-5423 for the Nifty and for the Bank Nifty they are 10129-10072-10009.

In range bound markets, value areas are a definitive guide to the nimble trader.Use them.

I'm expecting one push to the 5465 region today. That will be possible only on a clean break of value high today.

----------

10.32

Just to add to my comment on price and derivative of price..
Most of us will look at a price chart for a signal, then look at their fav indicator for a confirmation ( newbies do it the other way around).

The way I like to do it, is to read a signal and use price itself to confirm it.

As in BN view above, it is telling me it wants to go down, but I will again wait for price itself to give me that signal.

EOD 27th July

The real action today was in the Bank Nifty index with the RBI rate decision controlling tape movement before 11.30 literally.

But first let's have a look at the Nifty.



A choppy day within the 5408-5465 zone or neutral land.

Value slipped a bit lower today, only a tad and once again we saw the seller emerge at 5460. But a test of 5411 was bought and took the market all the way to 5460.

We maintain that we will be bearish only when 5408-5411 is taken out on volumes, but the upward momentum will return only when 5465 is taken out. Incidentally profile gave us this level first on July 23 right here in this post. Till then let's play this bracket.

Here is also a chart of the consolidated profile for this expiry :



5382 is what shows up as the POC and should be defended in the next two days.

For the Bank Nifty lovers, here is a chart of the profile today :




The larger value area shows the presence of larger TF participants. Notice the bounce from 9940 levels which itself is got a lot a value region lows.There will be good trade opportunities on this chart tomorrow.

Estimates for 27th July

GM all.

The value areas for today are 5450-5439-5428 for the Nifty and for the Bank nifty they are 10064-10035-10004.

The markets have opened at 5435 within value.

We had mentioned 5423-5466 as a zone to watch (or 5408-5486) for changes in the momentum of the markets.

Quite visibly in the past two sessions the markets have chosen to rest between these two points.So we will be in for a period of some range bound moves till one of these two points is taken out.

For the past two days, the market has chosen to sell at the open and consolidate the rest of the day.Let's see how today pans out.

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10.49

Today's trade is different as the market waits for a news trigger.

Let's wait for the event to get over. there will be adequate trade opportunities on the other side.

5408-5438 are very good ref points. Either side of which you can get 20 points.

Don't push for a trade. Let the trade come to you.

-----

12.47

Rising interest rates pull the market up in the very short term but are the first in the process of an economic slowdown.

Infact they are an indicator to what the think tank actually feels about the economy--it is cooling off.

Next if we see falling commodity prices in the market, we have another indication that the slowdown has moved to a 'slump' before we get to the third critical stage which is a 'gloom'.

https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmFLPbPoJ0yxZL8UzdI4BnBqmZY-SVddg5MYnrUl_ean6bGHiRN1yTFQpCVSQ2XN3hGnI9Ap_uHJTAobjgjjQFLbhIybZTcHaOY0McKFYYgVxPfBgu0SAZINB2e5-47_-Huv-eS0vKflw/s1600-h/cycle.gif



---

13.31



It's been that day with a lot of movement around the market profile value area levels given in the morning.

First the market auctioned all morning below value low.

Then came the news trigger and a good rise straight to POC.

Then the market was deciding to stay between POC and VAH or go the other way.

At the moment it is trying to auction above value high, but has failed twice so far.

A break above value high at 1050 decides the day for the buyers.

----

Estimates for 26th July.

Good Morning All.

The market's have opened within friday's value and have been quickly rejected near the 5466 level we have been watching.

On the lower side, 5423 is the first line of support.

As on friday, for the upward momentum to return, 5466 and then 5486 have to be taken out.

But also noted is the fact that there was no significant selling in the 5423-5430 zone.

On another note, on expiry weeks Reliance Indutries generally does well at the start of the week.

Look to buy above 1062 as a swing trade set-up.

I will put up a chart shortly.

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10.30

Expiry week :

There are normal weeks for trading and then there is an expiry week.

I have always looked at the expiry week as a "special" week to trade and have made different rules for it.

Most of you would be familiar with our expiry calculations of the Nifty based on the VIX.

In expiry weeks, I also recommend the buying of stock and index options which I would not do on any other week simply because the NSE is not very liquid in stock options despite having the Nifty which is the No 2 traded future in the world.

In expiry weeks, time premium as a factor is out of the option math, and if you are clear on the direction, it is very easy to take a leveraged call ( or put).

I have also noted the behavior of certain stocks to be a bit different in this week, irrespective of the trend they may be in.

Now there are no certainties, only probabilities for us to take our trades.

One such stock is Reliance. It is my observation that a large percentage of times, the stock does well in the first part of the expiry week.A back test has yielded good results even when the Nifty has been drifting down.

Have a look at this chart too :




Notice the high vol region around 1057 levels.

Using that as a support the stock can move higher to 1074 and 1090.
Value area low for friday was 1062.

As mentioned, traditionally too the stock has done well at the start of the expiry week.


-------


10.57

Value areas :

10036-10060-10083 for bank nifty
5442-5453-5465 for Nifty.



----

13.04

SBIN:



SBI was a very bad trade.

Trying to pick a bottom is in itself bad.

Perfect trend day in the stock.

My reasoning was that the consolidated value ( 2 yellow lines) would support the price at 2441-2444.Instead it moved swiftly in the other direction taking our stop at 2436.

The seller has been strong since morning in the stock and has been in control as what happens in a trend day.

Looking ahead 2418-2425 should be a reference level now.But not a candidate for longs at all.

In a trend day, we do not take an opposing view. Lesson learn't again.


---------------

3.20

US futures currently at 1099 levels, above the value area high of 1097 from friday.

1096.5 is also the level where the seller was overcome.

Looking for that level to hold up in day trade today over there for a target of 1129 and 1159.

Nifty has got strong supports in the 5408-5411 region.I won't think of shorts till that level is broken down.

---

Estimates for 23rd July.

We have had a market opened above range and away from value, implying the longer term participant controlling the tape for today.

Expect a large move either side today.

For the upward momentum to continue, price needs to auction above 5465 first and then 5485 on the hourly.

---

10.07

The following are the value areas for today :

9994-9935-9912 price profile BN
5423-5389-5376 price profile Nifty.

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11.46

Often the market throws at us recurring patterns which look simple and symmetrical in hind-sight.

An example would be the last range between 5355-5411 which was predictable till it had to give way.

I was looking at some previous charts and found this symmetry.

I don't want to read too much in it, but helps to keep it at the back of your mind.



Notice the similarity in the bar action as pointed by the yellow arrows and notice the similarity of the opens.

I maintain what I posted in the morning: the positive momentum continues only on an auction above 5465 levels.

Estimates for 22nd July

Good Morning All.

The markets seemed to be coiled up again this morning.

I missed the entire day's action yesterday, and am back just looking at my charts.

Will post some charts and analysis in a bit.

-------------------------

10.16



Here is a chart of the Nifty future.

We can see that the market is auctioning currently below yesterday's value implying that sellers are in control.

Incidentally yesterday was a classic action of 80% rule again, open below value went to hit the POC as we expected in the EOD post and went up all the way to touch value high, before meeting sellers again at 5408/ 5411.

Who says that the market action is boring--It is so damn predictable :) .

Let's look at the Bank nifty chart



If we look at the chart, we notice that that value is being created lower as also an auction below the 9968 zone which we have been marking out all of last week.

The chart wants to go and meet 9842.

---------------------

Profile chart

Here is today's volume profile chart of the Nifty Future.



When the market comes off a balanced profile on a normal day, with a range extension that fails, there are enough clues for the market profile student that the previous range would be tested and the longer time frame participant is trying to exhibit control.

Viren commented in the comments as early as 10.00 in the morning that the range of the past two sessions would break.For the rest of the day, it was only a matter of which side the break would come.

Since we had a balanced profile the previous day, the market had not tipped it's hand hence it was necessary to watch the previous days values especially the point of control, to see buyer/ seller influence.

Accordingly we lay out two possibilities an auction above POC and an auction below POC, based on the info the market was providing.

As can be seen from the ovals, the market auctioned above POC in the first half and sustained below POC in the second.Then it was just a matter of time before the levels of 5374 and 5355 were met, considering that we knew early on that it was going to be a wider range day.

For tomorrow, notice the POC of today's profile has not moved down a lot from the previous POC, hence we can expect a move back to it in the first session.

Watch value areas at 5363-5382-5401 ( volume profile)

and listen to the message of the market.

---

I will be out in meetings tomorrow and may not be able to post. Have a great trading day.

Estimates for 20th July

Good Morning All.

Yesterday's print of 5415 in the NF formed an unfair high or excess in the hourly TF.

We also saw buyers yielding to sellers at this level of 5411 which we have been talking about on this blog for several days now.

Once again our view remains that an auction above this zone puts the buyers back in control.

Yesterday was a normal day with a range extension which failed.So the tape is telling us that longer term participants are wanting to come back in, but at the moment the control remains with the short term participant.

On the downside again 5355 and 5367 EOD remain our levels to watch.

5403-5392-5382 are our values for the Nifty.

10032-10010-9989 for the banknifty.

------------------

9.18

Sell Bank Nifty below 10030, Sl 10050, target 9990.

----

9.33

Bank nifty at 10000. Book partial profit and hold bal with sl at cost.

------

10.03

Yes I know it has been a minor 30 point scalp only. But what can you expect from this market which has moved in a 30 point range for the past 4 days now.

I wanted to give a sell in Nifty, but knew that yesterday's value high at 5393 would come in the way. the low so far is 5393.2.Only a break of 5391 can take it to 5382 now.It's overlapping values within a 5355-5411 which is a 55 point range.

------------------

10.48

You are welcome to post anything on this blog--anything at all to help us better our trading.

The only exception I have is with blog salesmen and their " Look at what I achieved " statements without putting any reasoning/explanation to their achievements.

I also noticed EOD yesterday that I hadn't responded to a few questions. Sometimes I do get absorbed in the flow of the markets. If you feel that i have skipped your question, please paste it again. I assure you that it is accidental.

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Estimates for 19th July

Good morning all.

5374 is the open of the day and if bearish views are disappointed, it has to be an understatement!

I want to turn your attention back to a previous post: http://vtrender.blogspot.com/2010/07/eod-14th-july.html.

After the high vol downmove on the 14th, we were waiting for a confirmation or follow up action, which incidentally has not happened yet.

Just to refresh it is 5367 EOD or a break of 5355-5411 either side on the hourly, which will confirm or contradict that volume.

The value areas for today are : 5391-5382-5374 for the Nifty.
And 9982-9964-9947 for the Bank nifty.

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9.20

CME-

The Nifty has started trading on the CME from today.

The link to the action is : http://www.cmegroup.com/trading/equity-index/international-index/emini-sandp-cnx-nifty-50-futures_quotes_globex.html.

We will keep an eye on the volumes to see how it will impact the action on the NSE.

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10.30

Guys, I've started this blog as a platform to share and communicate ideas and not as a medium to take a potshot at other people's views and analysis directly or indirectly.

I want everybody to take a leaf out of Girish Desai's book and VJ and Mok, Daruma amongst others who foster the development of ideas.

It is human nature to be critical of things we do not understand or agree with.

We cannot be served well in sharing negative views.Instead let's believe in the sharing of an idea to serve us all better.

Let's focus on the markets, discuss what we are looking at and look at making money in the markets.

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12.15

Earlier I put out an alert for a long trade at 5411.

We had held the view that a break of 5411 and an auction above it would denote continuation to the upside.

Have a look at this chart :



From value high, the Nifty future made a very good move to 5415 on very good volumes.

The evidence pointed to a continuation.

However the profile started showing a slowing down immediately ( yellow Oval) with most of the auction being below 5411.

This was a first doubt. I still thought that the market would return to auction above that level, but subsequent action failed.

Hence the exit.

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Know the Flow !

Some facts and some questions for you as I do a round-up of the week's action in the Nifty as well as the US Futures the ES.

First the facts :

You and I trading between 1-40 lots of the Nifty Futures constitute only 3 % of the Volume generated at the exchange.

97 % of the volumes goes to mutual funds/DII's, FII's, P-notes, and institutional houses like UTI and LIC in that order. These guys have got professional knowledge,institutional analysis and uncanny execution styles.They plot every trade and scan the volume charts and the volume patterns.They don't have magic indicators only a keen understanding of price and volume, backed with a strong knowledge of how the market operates.

Now the questions :

a)Are you as a trader aware and make use of these facts?

b)Do you spend time searching buyer/ seller patterns on a chart or is the time spent on looking at what your favorite indicator is doing on that chart?

c)Is your search for knowledge of the markets qualified as a search for knowledge of an indicator/system ( holy grail?) or that of the price-volume relationships of the markets?

There are no bulls and no bears only buyers and sellers- you have to be the right one at the right time.

Institutional level analysis should include knowing who is in control of the tape, when this control begins to change, where the volume is concentrated and where it starts thinning down.

I'll leave you to hunt for the answers.

---------

Let's focus on the charts and the message they are giving :

First a look at the ES chart which broke down yesterday




The chart is that of the SPX futures for the past 5 days.As you can see from the high volume at the top of the chart, the seller tried repeatedly to break below the 1083 level and finally managed to break it on Friday.Notice the high volumes ( yellow ovals) on the breaks.

Sellers have again regained control now over this entire high vol zone between 1074-1096.This zone becomes a resistance point for that market going forward.

Let's look at the Nifty Future.



This is a chart of the developing monthly value of the future for the july series.

The chart clearly shows a double distribution pattern developing with price currently at the upper high or above the developing value at 5375 levels.

A break below the developing high can mean a quick move to the point of control currently at 5308.This level should provide the first level of support.Below this price can make a move to 5251-5231 ( yellow ovals) which should be the second line of support, below which things turn decidedly bearish.

Purely the fact that we auctioned above value high all through this week, kept our bias positive for the week.

However the markets were on 'hold' mode all through thursday and friday, awaiting new information.

With the decline in the US markets, I feel market participants would get the impetus to come out of the "neutral" zone.


5355 on the hourly and 5367-5375 EOD continue to be our reference lines to the downside. 5411 will be the reference level to the upside for Monday action.

Bank Nifty :

Here is the weekly profile of the Bank Nifty future :



This one seems to be forming a P shaped profile with the point of control for the weekly shifting right near the top and large volumes in the 9970 region.

It points to sellers right at the top.

In my post last weekend here we had mentioned 9715-9756 as a reference level for the seller. Once that was overcome it was a straight one way march to 10024 reached this week.This next week, the profile shows that it will be not as easy and sellers should exhibit control early in the week.

Daily value areas are 9989-9969-9949.It's clean sell below 9940 for 9840 and the previous consolidation region of 9765.



Enjoy your weekend.

Estimates

Hello all.

Apologise for the late appearance. I'm typing this out from a friend's office, as we have a major internet outage at ours.

The value areas for today are 5399-5385-5378.

The market still is in neutral mode or "hold".

Yesterday's levels of 5411-5355 are still valid as the market makes up it's mind.

Trade accordingly.

I will post updates once I'm back in my office.


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Estimates for 15th July

Those of you who read my post last night posted here would know the importance of 5408-5411 as a reference level for today's action.

An auction above it would mean that buyers are back in control after yesterday's downmove.

Lower down 5355-5367 still continue as important supports.


---------------

10.30

HDFC

We had discussed HDFC as an earnings candidate two days back. Girish had pointed out that it was reporting earnings on the 14th, but I was unsure whether it was at the opening bell or close.

It did report yesterday but not at the open. The stock managed another "P" at the open.

Have a look :



Once the news trigger was out, the stock just had to respect the profile.

------

10.56

Here is the updated version of the chart I posted last night:



The minus development region or the low trade zone between 5383 and 5408 is being addressed as we speak. I was wanting this auction to go a bit higher to 5408 rather than the 5402 we have at the moment.

We'll not take trades here in this zone, but look to buy above 5411 as it is the previous day's value area.

On the other side, you can short below 5380 for 5355, but I don't rate it as a high probability trade.

---

15.26


I was expecting a resolution to it today, but nothing in today's tape indicates a major change in the market pattern.

One can say that the sellers were unable to drive it down further, or the buyers were not able to take it above 5411.

My view is still positive as long as 5367 is protected EOD or 5355 is not taken out on the hourly.

But I'll suggest to lighten up, as the move which we wanted today can unfold tomorrow also.

Let's stick to our levels. The market is respecting them and we have no need to worry.

------

EOD -14th July

Earlier this evening I had a longish discussion with Viren on the state of our Nifty, especially after the high volume downbar visible in the afternoon.

At one point I felt that it would take out 5367, but later felt that it was a shake-out designed to catch weak hands. You can catch my real-time reaction to that move in the comments section of the last post.

Viren and I felt strongly that as long as price closed above 5367 our reference level for the Nifty as well as the US futures closed above 1083 levels, there was no need to push for any shorts.

Incidentally the US futures are currently at 1093 levels, after having bounced off 1084 which is the low thus far.

Here is the chart of the past two days of action in the Nifty Future :



Even though the move today was a high volume downmove, price still needs to confirm it the next day. In profile we always look at close v/s open for a relationship from one day to the next

The chart shows the swift move down from 5408 to 5384 matching the intensity of the move up from the same levels yesterday.The arrows show that the profile here is not developed or a low trade facilitation zone.

Ideally the market should auction between these two levels tomorrow in the first half before deciding what to do at 5308 which is to go up or come down.

Estimates for 14th July

Generally my assumption of a day like yesterday followed by a gap open the next morning, points to a high for the day being made in the first 90 minutes of trading.

5465 will be on watch on Intra basis for signs of resistance.

5367-5379 are today's supports.

----

Estimates for 13th July

It's earning season and a lot of moves in the market will either make you a lot of money or leave you with a lot short!

It depends on how good you read the tape.

I will put up a chart of Infosys later to tell you what we thought of it prior to it's earnings release.

For today, the market will again have to hold 5367 and 5355/ 5344.

The value areas for the Nifty are : 5387-5376-5365

For the bank nifty they are : 9783-9748-9716.

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9.26

Infosys:


Last week I did three trades on Infy. Two winners and one loser. So I was keeping a close eye on the action unfolding.

Have a look at the chart:



This is a profile chart for the past four days.

Notice the chart making 'P' type profiles for the past three days.

In Market profile a "p" denotes long liquidation or selling at the top.

Each of those days had sellers right at the top, so it was a simple arithmetic which said that sellers would step in at the open today.

Also notice that we are presently rotating at 2830, which is a high volume node from the 8th of July.

Also 2800-2820 as mentioned earlier was a seller zone, taken out by buyers last week.

This break has a very good chance of halting right here at 2800-2830.

---

10.42

If you are using an MP chart you will see the single prints in this 2800-2820 range.

These are good indicators of direction.

I still consider 2800-2830 as a 'no trade zone'

The market has to auction above 2830 convincingly for longs.

Also note that today being a results day, better to give the market a few more points in range. We can't be precise on a level today.

------

11.35

Reliance:

We have been following reliance as well on the blog, and have noted often the presence of the seller at 1090 levels, as well as 1045 being an important ref level.

Have a look at this chart :



Notice the selling at the top of the chart.

Now see the bracket forming, two yellow lines.

I don't want to be taking a trade at the current levels, as it gives equal chances to a move down in the bracket as well as a break-out above.

Let's just say, if you want to be a buyer, buy only when the bracket is resolved.

-----

Estimates for 12th July

The Nifty future has opened at 5370 levels up above the reference line of 5367.

If this level holds up during the day, look for a continuous move higher.

The Bank Nifty's open at 9716 puts it between the reference levels of 9715 and 9756. Again, buyers are in control as long as 9715 holds.

----

12.01

Nifty at 5365.

These are important support points for the Nifty now.

Buyers have overcome 5344-5355-5367.

It's important that the Nifty stays above these levels now, otherwise we see a print of 5308-5314 next

-----

12.04

Shai said...

We are not doing great on the global score-card.

So this mini upmove of the morning will be arrested.
July 12, 2010 10:50 AM

----

It is getting a little more muckier globally.

Or you can still call it a reaction to IIP.

Make your choice for the reason. Does not matter as the charts projected weakness.

----

3.36

We have a balanced profile at the EOD.The market has not shown it's hand through the profile, but the close above 5367 and the fact that 5355 was defended, means that we are heading higher.

Bank Nifty has also broken above it's range.

Use the mentioned levels to manage risk.

---

Week-end charts

We will start trading on Monday with the indices at major reference levels.

I want to start with a chart of the Bank Nifty Future.



This profile chart clocked from the 21st of June shows the downtrend till the 30th of June, the balancing of the profile from the 30th of June till the 5th of July and the subsequent move thereafter.

The current chart of the last working day, shows again value being created upwards, hence the trend remains up.

I've also market out 9715-9756 which is a seller zone, where the buyers will be tested.9580 and 9480 would be two important supports for the market for this week.

Market profile students would have known the positioning of value downwards in the first part as sellers being strong, the balancing in the middle shows equilibrium returning and now the value areas pointing up shows buyers in control.

Classic Buyer-seller action in that chart.

The chart of the Nifty, though showing the same trend has a bit on uncertainty in the middle.

Have a look :



The two 80+ point moves up and down on the 29th & 30th and that on the 6th and 7th were noisy as participants tried to seize control, but the upward movement of value in the last two sessions is not in doubt.

But as we have been pointing out repeatedly, only a close above 5367 seals the move- up for the buyers.

5308 should emerge as an initial support for the market for the coming week.

We'll continue to watch on Monday.

Estimates for 9th July

We have a Game On today between confident buyers and aggressive sellers.

Hopefully they resolve the range of the past three weeks once and for all.

The value areas for Nifty are 5339-5327-5314 and for the Bank Nifty they are 9631-9610-9581.

Value high at 5339 and the seller at 5344 if overcome can mean an auction to the 5367 zone, where a slow down can happen to decide further moves.

----------------

9.26



I've taken a long at 5345 with a stop at 5327 for 5367.
July 9, 2010 9:23 AM

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Bank Nifty is also a buy above balue at 9632 for a tgt of 9680. Sl 9600
July 9, 2010 9:25 AM

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11.25

Nifty at 5366. Cover 50 % and rest sl at cost.

---

11.34

Book 50 % profits in BN here at 9665.

Hold bal at cost.
July 9, 2010 11:33 AM

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11.43

My reasons for exit in the Bank Nifty as well before we hit our target was the fact that we hit 5367 on the Nifty.

Over the years, I've learn't not to give back to the market hard-earned gains, especially at pivotal points.

Profits are always better in the hand than on the screen !

Looking further, if our cost holds, we should get to 5382 on the Nifty and 9715 on the Bank nifty.

I've received emails from readers that often they trade in single lots of Nifty. I would suggest 2 or 3 lots of Mini Nifty in such cases rather than one lot of Nifty.

It is also important that when a trade moves in your direction, you let it run. The second run is risk-free.

Estimates for 8th July

Good Morning.

Some firecrackers in the US markets last night. A quick look at the charts tell me that it was high frequency trading which carried the market all the way up from 1043 to 1059.Only Buyers.

We got a gap.And we are near 5320 levels again.I posted a chart yesterday of an auction between 5272 and 5320 being important for the market today. Let's see how it pans out.

On another note, I want to stress to my readers the importance of inter-market analysis in your study. The header of this blog mentions it as a study of market profile and inter market relationships.If you have to make serious money in this market, you have to develop the edge in identifying the movement of 'hot money' through other foreign markets, commodities, bonds and currencies.So far I have kept it to the US markets, but we will soon involve the rest for getting a better picture.

----

14.10

I've stayed away from doing a lot of trading today. The gap up ensured that the market belonged only to scalpers this morning, quick to run away with a 10-15 point gain.

5339 has been the high of the day, very close to the level of 5344 we have been watching.An argument can be made for a trade both ways: a) Trend is up as long as 5225 holds or b) trend is down till 5367 is not taken out.

The fact that we have sold aggressively from these levels as also the up-down moves of over 80 points each, make this a treacherous market to trade.

----

15.10

We have done intra-day trades on the blog so far.On days like today, where the market didn't give much confidence for a trade either way, I felt the need to put a system in place which will work for us regardless of gaps, other markets etc.

So I dusted some old notes and have managed to put something together for a positional set-up based on MP levels.

I have put it across to Viren for his views and we will run the trades here live on the blog.They are basically swing trade set-ups with a stop and reverse system ensuring that we will always be in a trade.I figure that the trades will run between 2-7 days duration. Once it works with the Nifty, we'll bring the Bank Nifty as well.

I hope to foster a better understanding of market profile through this.

Once we put up a few trades, I look forward to your comments towards the same.

I've found a name for it too !! A.I.A.T --always in a trade. how's that?

----

EOD -7th July

At the time of this post the US futures are trading near the high value node at 1043 levels.I doubt that there exists much upside for that market from here today, but the question which is open is whether it manages to close above that level.

I'm going to turn my attention to the football game coming up, and take it up tomorrow,but wanted to post this chart of the Nifty.

My interest in the ES this evening is only to know where the Nifty will open tomorrow. As mentioned we were anticipating a gap open.



The chart is that of the Nifty future for the past 5 sessions.

The yellow horizontal lines show price acceptance for these days or value being created. The move up yesterday afternoon was rejected this morning by a single print selling tail from 5289 levels to 5272. This was a zone where the auction didn't happen the rest of the day.( second arrow).

So tomorrow can we auction above 5272 and in the 5272 to 5320 zone? If we do and stay above 5272 then I would consider that as the first step in the move to 5367.

We will also observe if the ES manages to stay above 1043.

Estimates for 7th July

The markets have opened down as compared to yesterday's close.

The little weakness was there in the charts and we made a mention of it at the close yesterday.

For today, we want to see 5270 being protected by the buyers, for the upmove to have any chance.

On the upside, resistance is again at 5317.

---------

10.43



As traders most of us have been brought up on a mechanical trading system which can give us automated signals to trade on.

The so called search for the "holy grail" of trading is the search for one such system which can help a trader by taking away his decision making ability!

The truth is that the best system of trading and the holy grail is within you !

Only you have to empower yourself to make the decisions for your trade, rather than your mechanical system.

The reason I like MP is that it is not a readymade system which gives signals. As a trader you have to stand up and identify the signal.There are many other systems where the trader takes precedence over the system simply because he makes the decision.

I mentioned to you yesterday that you identify your trade in the chart through price and volume and use everything else for a confirmation.Trust me you will emerge a better trader.

----

11.17

This market is looking for cues to the upside from the US markets. Till the US futures trade above 1043 levels, the reversal over there is not confirmed.It can also show levels of 990 in the short term. Currently at 1020.Keep an eye on it.

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Bank Nifty-6th July

We are still having problems with blogger. Evidently they are undecided whether they will allow comments from all commentators or only people with a blogger account.

Hope they resolve it soon.

Viren drew my attention to a set-up he has been back testing with volume profile charts.

Have a look at this chart :

.

Let's focus on today's profile, the extreme right on the chart.

According to Viren's set-up, if in a trending day the point of control closes near the extreme in a volume profile chart, then there are good chances of a reversal the next day.

If you look at the profile from today, we had a strong uptrend day and the point of control is at the top end of the range.The point of control represents the best value for the day, or the level at which buyers and sellers agree on value. In a strong uptrend, this only means that there were heavy sellers in the Bank Nifty at the top today.

We'll put it to the test tomorrow.

As with all set-ups this one has also rules, and one of the rules is that the open the next day, should be within range.

So we wait for the open tomorrow and if we get an auction below 9556, then we short for 9458.

Estimates for 6th July

I'm almost certain that we will have an eventful day in the markets after three lackluster days of trading.

We have opened again within the 5231-5285 range mentioned yesterday.

The safest thing would be to wait for the range to resolve.

5253 would be the pivot around which a move to either side should materialize.

Further down 5196/ 5185 would have to be protected by the buyers.

-----------------

9.24

Buyers are showing their hand in the first 25 mins of action.

I'm buying the fut here at 5253 with a 20 point stop.Tgt 5285.

---

10.10

There seems to be a problem with blogger, as comments are not coming through.

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10.21

I'm beginning to look at 5320 already today. Let's see the price-vol at 5285 first.

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10.54

Nifty is near the top end of the 5230-5285 range. The high so far has been 5275.

Suggest to book some profits here at 5273, as the auction can slow down. You can add if we take out 5288 with volumes.

Needless to say, the stop of the balance is at the pivot of the morning at cost.

----

12.25

The auction has definitely slowed down in the past hour and half.

Some levels I am watching now in view of new information :

a) Auction below 5262 will be first sign that things are turning for sellers.
b) Auction below 5252 will confirm the same.
c) Auction above 5276 will mean bias moving up again.
d) Auction above 5288 means we are heading for 5320.

Trade accordingly.

Stops for morning longs can be brought to 5261.

-------------

12.57

5285 done.

-----------

13.12

I received an email from a reader. I'm reproducing it here :

Dear Shai,

I do not see you using macd's and stoc's in your charts. How can you be sure of the strength of moves without the use of these? I see every other analyst use something or the other, but on your charts I do not see anything.Can the market be traded without rsi, macd, stoc and moving averages?

Rajeev.


--

Dear Rajeev,

I used to use all that you mentioned, some time back.Down the road, I started exploring options for leading indicators, which would put me a bit ahead of the move to unfold.I found that only price and volume would answer my queries.

I'm not dissuading anybody from using the macd, stoc, rsi etc. They are very good confirmatory indicators.Please use them to confirm your trades.But for direction, look at price on a chart and see how it moves with volume.

For the strength of moves, it again is price only.Let's say you use the floor pivots for your trading. If price moves from R1 to R2, would you say that the move is strong? The same can be said of S2 to S1 or pivot to R1.

I don't use pivots, but use market generated levels to qualify my trades.If the market moves from one of my levels to the next, I gauge the strength accordingly.

Rgds,

Shai.


-----------------
----------------

14.04

Those still holding longs, suggest to book out in the 5308-5316 range.

---

14.40.

So we have had a good move today, about 80 points from the bottom at 5233 to 5312 so far.Does that mean that the trend has changed to up?

I'll say No, not yet. I still want to see that close above 5367 to get us out of the woods.

For tomorrow, I think we again have a side-ways to a slightly down move. It's important to see how sellers react then.

Sellers have kept quite near 5230 levels. I am sure they will show up again here and at 5344/ 5367 levels.

I'm signing off...see you guys later.

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Estimates for 5th July

Good Morning All.

We are arriving at trading this morning with a fair bit of uncertainty whether the markets would be open this morning or not.

The uncertainty would mean a drop in trading volumes during the day. Please trade in liquid counters only.

The US markets are closed today, so it will be interesting to see how the market responds today.

The markets had taken support at 5225 last week.I will be watching the 5216-5225 zone for weakness.5262-5272 is resistance on the move up.

-----

Week-end charts

Here are some updated charts from earlier this week.




The weekly consolidated profile is here :



The bank nifty chart:



The US futures charts :



My comments on all of these charts are documented in previous posts.

Nothing in the action on Friday on any of the posted charts changed anything with the analysis.

Looking forward to the open on Monday.

Let's take it from there.

Estimates for 2nd July

The Nifty index has opened at 5254 and quickly moved above 5271 which is what we expected yesterday afternoon in the trade alert.

The open signifies that not much has changed from yesterday's close.

For the upmove to continue, 5265-5271 has to prevail.

On the lower side the support at 5225-5231 has been well documented.

The value areas for the Nifty are 5261-5251-5241

For the Bank Nifty they are 9395-9368-9341.

------

On another note, I received some mails about the bearish prognosis for the market presented in the charts yesterday here.

Yes the charts are bearish and point down.

However, I did make a point that if we close above 5367 then bulls have an even chance.

There is nothing new the charts are projecting. We have been saying it all along in the past two weeks.

Profile charts

The trading range in the past two weeks has been 5225-5377.

Viren had mentioned in the comments today how the CE writers at 5400 and the PE writers at 5200 have been adding Open Interest.

Girish had put in a request for profile charts.

Here they are for the past two weeks, nine trading sessions :



Notice the supply coming in at levels of 5320 and 5344 and the value slowly drifting lower.

We maintain that the market needs to close above 5367 for the bias to turn upwards.

Till then every move up to 5244 will be sold into.

Here's another look at the chart from a weekly perspective.



The value area on the right is developing and will take into account the auction tomorrow.

However the lower value created is clearly visible.

On an hourly timeframe we have been held up at 5225 where buyers have showed up.

But the charts clearly show the on an end-of-day basis there are dark clouds looming over for the bulls in the market.

If things don't change a lot tomorrow, then next week 5225 is surely to break.

Join me then to catch the action as it happens.

Estimates for 1st July

A 100 point down day, followed by a 100 point up day. It's anybody's guess where we go today.

Yesterday's rally in the afternoon was based on the assumption that the US markets would hold on to the yearly lows and rally. Well they didn't. In fact they broke down and we are seeing the ES now at 1020 well below it's 1032 previous lows.

We have opened around 5270, 46 points down.

5256 and 5225 are the levels to watch on the downside.

5256 is value area low from yesterday.

-----

10.49



The chart above is for the NYMO.

I last commented on the NYMO here. There are other refernces you can get if you hit the search box to your right.