Will it or Won't it?
I think one question pondering every investor and trader on Dalal street is whether Nifty will crack or whether Nifty will rally? Virtually every investor is out there with one theory or other justifying what the markets should (will) do. In my trading and investing career, this is the first time when everyone seems so confused.
Some suggest volatility is at record low levels and hence markets should crack. Others suggest futures and options data is suggesting towards a crash. The never ending theories of Volatility, F & O, Harmonic patterns, Seasonality and Elliot Wave are all going for the toss. It's not only Technicals, but Fundamentals in their own are taking a beating too. Valuations are touch high, forward earnings are not encouraging, inflation is up, interest rates are rising and production if not slowing is not galloping either. So what should an investor/trader do at this point?
The best way to be in this market is to trade it. Some suggest volatility is too low to trade. Well I would request the skeptics to visit volatility data of stocks since 90's. Volatility is cyclical and currently we are in low volatility cycle. That's it !! This market is absolutely ideal for trading. However, there are few things we need to take care of. While trading these markets, it is an absolute necessity to book partial profits. In this thread I have been posting my live index trades and have been showing how and when partial profits are booked. We are in a phase where trends are being established and reversed too quickly. Hence, we need to ensure, we take some profits off the table in order to keep our equity ticking.
As far as Investing in this market is concerned, I sincerely feel markets are fairly valued. Every year or two, we have got corrections of 15-20% and since the last time that happened was in June - October 2008, I guess we are due for one now. I would be more happy to invest when this dip comes. At this moment, we need to be objective. We need to be rational. And going by this, it seems more logical to wait for a dip rather than to invest in markets which are richly valued.
Coming back to what Nifty will do. I feel markets are hinting towards following its price action closely. By following, I mean, going with the flow. If you see some of my previous trades, I have exactly done that. And I feel at this moment this is the right tactic to adopt. Lets follow the market and let our theories rest in peace.
May the markets be kind to all.
Tc
I think one question pondering every investor and trader on Dalal street is whether Nifty will crack or whether Nifty will rally? Virtually every investor is out there with one theory or other justifying what the markets should (will) do. In my trading and investing career, this is the first time when everyone seems so confused.
Some suggest volatility is at record low levels and hence markets should crack. Others suggest futures and options data is suggesting towards a crash. The never ending theories of Volatility, F & O, Harmonic patterns, Seasonality and Elliot Wave are all going for the toss. It's not only Technicals, but Fundamentals in their own are taking a beating too. Valuations are touch high, forward earnings are not encouraging, inflation is up, interest rates are rising and production if not slowing is not galloping either. So what should an investor/trader do at this point?
The best way to be in this market is to trade it. Some suggest volatility is too low to trade. Well I would request the skeptics to visit volatility data of stocks since 90's. Volatility is cyclical and currently we are in low volatility cycle. That's it !! This market is absolutely ideal for trading. However, there are few things we need to take care of. While trading these markets, it is an absolute necessity to book partial profits. In this thread I have been posting my live index trades and have been showing how and when partial profits are booked. We are in a phase where trends are being established and reversed too quickly. Hence, we need to ensure, we take some profits off the table in order to keep our equity ticking.
As far as Investing in this market is concerned, I sincerely feel markets are fairly valued. Every year or two, we have got corrections of 15-20% and since the last time that happened was in June - October 2008, I guess we are due for one now. I would be more happy to invest when this dip comes. At this moment, we need to be objective. We need to be rational. And going by this, it seems more logical to wait for a dip rather than to invest in markets which are richly valued.
Coming back to what Nifty will do. I feel markets are hinting towards following its price action closely. By following, I mean, going with the flow. If you see some of my previous trades, I have exactly done that. And I feel at this moment this is the right tactic to adopt. Lets follow the market and let our theories rest in peace.
May the markets be kind to all.
Tc
