Markets have a way of tricking us into believing that the obvious is going to happen. With the US bailout package secured, no one thought that the markets would crash the way they did. Also the technicals were not showing anything so depressing, infact the stochastics were showing that we might have had an upswing in the near 2-3 days. So how much more before we start to go up? In the short term seeing the Relative strength index, we are at 34 (30 is usually considered the bounce back) it seems that we dont have a very long way to go before we end this downtrend (at least in the short term). For this bear hug to end, we will have to stay above 4050 cosistently. So what can be the strategy to trade in these markets:
Small Contra Position of going long with naked NIFTY calls: I would be very tempted to try this out as the risk reward scenario looks good for this kind of trade. But on the other hand the technicals donot support such kind of adventurism. Also on e would be tempted to buy in cash in this falling market. However every day wherein we postpone the purchase we thank our stars as the next day the markets tank! Its a falling knife, but a little bit of nibbling maybe not such a bad idea if you know what you are getting into.
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1 comments:
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Sharon
http://www.autoloans101.info
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