weekly musings .......

4th april 2009

My monthly levels are out and the charts are looking by far the best in last twelve months. US daily charts are looking extremely overbought and DOW and S&P are not showing very high strength on weekly charts. This leaves room for a substantial correction in the coming weeks unless the markets continue to plough forward this week as well.

Our markets are showing much more strength than the US markets. Generally our markets normally follow strong trending patterns as the markets are dominated by operators unlike US where the institutional investors call the shots. We may continue to move upwards even-though the US markets may dip or move sideways. But the moot point is that this leaves us vulnerable to very deep / sharp correction possibilities which knock the winds out of the individual traders in one go.

Many of the pivotals are overextended. They are due for a correction and just waiting for a trigger. In such a situation it is prudent to trade in options than in naked futures. Option premiums have also moved up so better to play in spreads – bull or bear – depending on an individual view.

SO, CAUTIOUS BUT BULLISH, SHUD BE THE TONE OF TRADING.

Please remember CAPITAL is always scarce no matter what you are and we must learn to respect it. That means you must learn to preserve it at all costs.