why markets have a tendency to remain weak in jan?

7 out of last 11 years the market has slipped in january
out of remaining 4 times,
it has remained unchanged once,
slight up after minor dip twice,
and clear up once.

-

this is clearly skewed towards weakness

what can be the reasons?

1. the first reason lies in the "christmas factor". christmas (like diwali and id) is the pinnacle of celebration of spirit of life! nobody sells-off during christmas. record superduper buying takes place. not so much of stocks but stuff and services. and all that on cash and credit. why i said "cash and credit" is because all in all, as the christmas and new year hangover ends, the following happen
a. cash in hand goes down, fresh investment dips and redemption pressure increases.
b. credit card shopping stares in face, and further risk taking takes the back seat.

2. second reason has something to do with the "31 march" factor, especially in india
a. tax investments take the driver seat instead of stocks.
b. tax liabilities etc. take control of the available resources. 

gtalk between China and Russia

CHINA: Good Morning RUSSIA

RUSSIA: Good morning

so, what’s the plan for new year bash ?

CHINA: with family......at home tonight.......on the famous mall road tomorrow!!!

and urs

RUSSIA: very much at Home

CHINA: i was just spending some time to understand what

RUSSIA: I never venture anything on the 31st night. often keep myself in the quite mood.

CHINA: nifty might do this year!

RUSSIA: ok

CHINA: that's good! same here...

RUSSIA: so, what does your study says?

CHINA: nifty around 3200 is a possibility which can't be ruled out

RUSSIA: that scares me

CHINA: i am looking at 10 yr nifty chart

RUSSIA: ok

CHINA: atleast 55% chance....

and that is hell of a chance

RUSSIA: 3200 nifty means my portfolio will be just 10% of the value invested

CHINA: i forgot that

u r an investor too

RUSSIA: very very much

CHINA: don't panic, just don't ignore that

RUSSIA: sure,

CHINA: besides, it will not drop the apple on newton's head

it will happen so slowly

RUSSIA: what my main concern is to know, what went fundamentally So wrong that, everyone on the street is so bearish.

CHINA: that nobody will feel it much!

RUSSIA: also, I was watching an interview yesterday

CHINA: there is hell hell hell lot of liquidity in the world....pumped to avoid default after default after default without any gdp growth........

see i didn't watch any interview.....

i just opened the 10yr chart

with a mood to analyze this aspect

and look what has just sneaked in my head

RUSSIA: wherein, motilal oswal guy was stating that, market often makes bottom when 99% people believe that market is heading even lower and start to sell their portfolios in Losses assuming that, they will enter at lower levels

could be

I don’t say it would not.. go down from here

CHINA: motilal oswal is a big big name. i agree with him

RUSSIA: but wondering what will be the spare of Indian economy after such down falls

CHINA: but a lot lot people are looking for upside as well

if we analyze indian economy, we may be shocked!

RUSSIA: yar, there are always 2 sides of a coin, people are bullish & bearish

what shocks you after analysis ?

CHINA: local economy mess coupled with global meltdown can cause this

RUSSIA: I agree, but still 6% GDP is better than 2% of the west economy

CHINA: govt can't take any political decision. no reforms (much needed) possible till feb elections.

see, the premium indian markets command is because of 8% growth rate not 6

RUSSIA: veer ji, I am of a camp, that nifty may go till about 4000 and make a reasonable ground to invite FIIs to invest for the next 10 years

CHINA: ultimately, fundamentals decide where market goes after all drama

RUSSIA: 3200 is bit too much of Pessimism

CHINA: just take the market to 4000, don't need any more pessimism to take it down to 3200

RUSSIA: correct

CHINA: let’s ask ourselves a basic question

today

RUSSIA: which amount to about 10% down from here

CHINA: i repeat - today

RUSSIA: pls

CHINA: are we seeing economy improving?

i ask a few qs

1.

interest rate going down?

not as of now

not today

RUSSIA: true

CHINA: 2. fresh capacity building taking place in various sectors?

no

3. is rupee ok

RUSSIA: no

CHINA: 4.

any chance of 1991 like policy boost?

this govt is crippled

5.

what's happening globally? is the worst over?

well,

the worst hasn't yet started

all europe, china and US are busy

since 1 year now

to stop the avalanche

how?

mindless liquidity pumping

where has the money gone?

nowhere...it is out there

RUSSIA: all above is true on the face of the mirror

CHINA: has the economic activity picked up to engage that money

no

ok

forget all this

let us

just try to list pro's

in favour of rise

1.

pl help me

just because it has fallen so much and

just because indicators are enough oversold

is no reason for nifty to go to 6000 and beyond!

RUSSIA: agree

fully

CHINA: nifty can't go that up without fii's

RUSSIA: very true

CHINA: fii's are not jerks to put their money in india...looking at our state of affairs

fii's would like to keep liquidity to face any eventuality in europe

see. one thing i always believe in

that

no real turnaround comes

in ;life as well as economy

till real real trouble

no jerk wakes up till real crisis

just look at the 10 yr graph

RUSSIA: ok

CHINA: we are slipping since nov 2010

earlier it looked like some correction

now it looks like slippage

2003 to 2007 was different

RUSSIA: but, we haven’t reach a level... where our economy has to see the graveyard

in such times only, smart money is invested... check what major investors like Jhunjunwala did in the past

CHINA: there was no graveyard situation in 2008 as well

conditions got created

RUSSIA: but veer ji, Guys invested in 2008 have made money even till now

let me prove it

pls allow me

TCS was below 600 now 1155

pls note Kotak was 280. I bought touched 900 before split and even now 455

SBI / TATA STEEL / even mid caps were dam cheap except the infra sector

almost all stocks bought in 2008 gave good returns

I will share an excel sheet with you

right away

I am not saying by any mean that, WE ARE NOT IN MESS

CHINA: times change

and we are at one of these historic turning points

RUSSIA: agree.. but cannot rule out the turnaround could be for positive even ..

one thing I have learnt

CHINA: yes, it can be. we should indentify the trend

RUSSIA: Stock market world wide

CHINA: courtesy u

i have been

pushed to start looking at swings

RUSSIA: discounts all what is to happen ( Future)

CHINA: i disagree with this a bit

this is spread by big money

big money knows it is going to do what it is.

goldman sachhs knew that subprime collapse was coming

infact they had betted heavily on it

RUSSIA: before a company starts to performs, you will see the stock jumping up with the next quarter results

CHINA: only they and players like that knew it

RUSSIA: i am no where denying it

CHINA: u know the difference between halaal and jhatka!

fii's believe in halaal termination

by that definition they are................

RUSSIA: all I am saying is... we may well be close to bottom as well and things may start to change now... I remember my early days of speaking with you, where in you yourself mentioned... that, In your views...

Market has either entered or about to enter for a long bullish trend

CHINA: RUSSIA even i am learning,

RUSSIA: we all for that matter

in punjabi there is a proverb..

CHINA: as a trader i like up as well as down equally.....u as an investor + trader naturally need to be worried

pl

RUSSIA: Ghar Pakki vekh ke kachi ni thahi di

I invested by mistake at the peak of 2007. and saw meltdown in 2008/2009

CHINA: i'm sure u and i will atleast be cautious after this

discussion'

RUSSIA: with bank going out of business ... us market being killed

yet , they are much better than any of us

today our problem is in 2 areas

1) Inflation which directly results in interest rate

2) Govt need to get up to do something on policy

Milesh shah is the best tech guy I respect the most in the stock market

The Guy behind ICICI prudentional

now with AXIS BANK a fund manager

as Fund manager

CHINA: yes, but govt is presently in minority. unable to get anything passed....just see fdi in retail.....opposition will want to kill the deeply injured govt completely.......no 1991 for another year.

what does milesh say?

RUSSIA: He did say.. that FIIs are so smart that, while they sell they also make market so lazy and Tired that, Investor lose interest and in suicidal thoughts, often kill their portfolio by jumping in the well

CHINA: well, has such a scenario come?

RUSSIA: and FIIs buy

CHINA: if not yet, it is on the cards?

RUSSIA: to be honest.. I don’t know

But one thing I know

for sure

Investor never lose money

trader does

u may have to wait for some time

But lf one is investor

3 year down the line

CHINA: pl add a few words in that line "Investor never loose money" so that i agree

that

RUSSIA: the same money gives you atleast 2 times

CHINA: Investor never lose money IN FUTURE-SECURE BUSINESSES

RUSSIA: See, the definition of an investor is not, That you invest today and keep your neck again and again on the screen

I have something to share here

Milesh said once

CHINA: yesterday, ;looked at suzlon after a long time. i had last bought it at 110 and sold at 123. yday, it was 18

pl

RUSSIA: That, Even when u plant a seed of mango tree... you got to wait for 12 years to get mangos..

I know brother

some sector never saw the sunshine in last 2 years

I will tell you something

There was stock call Raj infra or something like that... was available for just 60 paisa in 1990

to 1992

nobody bought

some did

stock now is 125

another example

HUL ... darling company

agree ?

CHINA: i agree.....

RUSSIA: do you agree ?

did not do anything in the last 10 years

stock was below 150

for all this while

now 425

what I am trying to say is... A specific sector

does great stuff in a particular time

CHINA: RUSSIA, why not act as a "fund manager" instead of an "investor"

RUSSIA: one has to identify

hahhahah

not my cup

CHINA: 150 in bank would have become 600 in 8 yrs

no no, u got me wrong

what i mean with "acting like a fund manager" is

that we should not be emotional with specific stocks

and be cunning like a bania

RUSSIA: correct

that’s ryt

veer ji, you must notice one thing

CHINA: put money where rokra is

RUSSIA: get this very clearly

CHINA: RUSSIA, life is short. need to see money multiply

i also agree that surplus ,money can be invested..

should be invested

RUSSIA: what happen when RBI is on the run to increase the interest rate

market often get in the same mode as we witness today

i have something to share with you

let me call you

expecting solution to the european crisis?

dear venkat, solving the european crisis is like treating a chronic drinker.

if u abruptly take him off the alcohol (easy money supply, poor fiscal discipline, weak economy)
he is likely to show symptoms of alcohol withdrawal
which can be silent or life-threatening!

some of these symptoms are

increased pulse rate
increased blood pressure
increased temperature
restlessness
disturbed sleep
anxiety
nausea and vomiting
headache
irritability
tremor
hallucinations
seizures
and coma.

many of these symptoms are already there in the european union.

withdrawal symptoms last longer in older persons (economies)

withdrawal can complicate other illnesses (political, social, geogrpahical)

--

patients (like india) who are infrequent or moderate drinkers are less likely to suffer withdrawal symptoms.

--

gradually reducing alcohol consumption results in lesser withdrawal effects.

and such a course needs time, will power and luck!

--

if the world is a family
some countries in the european union
are not the only ones needing this daredevil de-addiction rescue.

there is a chronic patient on the other side of the atlantic.

as a member of such a family of chronic alcoholics
india has to bear with sleepless nights!

facts are facts

5oct, 02.15pm

dear sim

you have asked whether i still stand by my options data analysis (as of now) especially seeing the stretched scary continuing fall.

350 years ago, galileo was summoned by the catholic church and taken to task for having said that it was the earth which revolved around the sun and not the reverse.

galileo was coerced to change his statement into "the sun revolves around the earth".

when he came out, his students and admires were angry with him

"why did u change ur statement?" they asked
to which he had famously replied
"the sun will not start revolving the earth just because i changed my statement!"

so, how can i say that nifty will give way

especially since the options data as of now clears shows MASSIVE out-of-money put buying.

there is an army of retail traders waiting down the lane for nifty to fall and rain money on them. as i said in the morning, operators will loose much more on downside than upside. upside they stand to gain. of course it is also true that they can't wind up the act without a trigger.

the fact still remains that fundamentals effect equity, equity effect futures, futures effects options, and options is what reveals the game of operators.

the very fact that you and others are so much in panic shows that operators are being successful in what they are trying to do.

i don't mind the operators crashing the nifty, but there has to be supporting data.

even i am now eagerly waiting to see what happens next.

i want to see how operators clean up the mess they have created without burning their own fingers.

what the smart money may be planning!

dear friends,

recently i have been working hard to find and understand some reliable methods to know what the smart money is doing, what the "deep pocket" operators' next move is expected to be.

i have been fortunate enough to crack one of their code using put call data for all strike prices.

in this thread, i will be sharing my open notes regarding my analyses of "smart money" plans for immediate future based on my new method. i will try to update this daily (time permitting).

(please note that this method needs further work and my analyses must not be based for blind trading by anyone. please treat this thread as pure sharing of my notes. please do your own research before trading. also, pl note that as put call data changes everyday, fresh analyses is required everyday. in case i fail to update this thread daily, pl take this caution in consideration)

Js

=======


pl follow the link below for the updates and discussion.

http://www.mudraa.com/singlepost.php?messid=102662

what do rsi and willaim%r say?

one of my pride learnings have been rsi and william%r.

in this thread i will be sharing the outlook for nifty as well as bank nifty etc. on the basis of these two super indicators.

i wanted to keep this thread different from the one based on options data for 2 reasons

1. options data is an altogether different language

2. options data can tell you reasonably accurately for the next 1-2-3 days whereas indicators can help you see a few days or weeks or months in advance.

(please treat this thread as pure sharing of my notes. please do your own research before trading.)

 Jagmohan



http://www.mudraa.com/trading/103696/0/what-do-rsi-and-williamr-say-js.html