Trade setup for 21st December



 Stock markets are on fire. Stock markets have rallied and closed in the green for last 5 days consecutively. Usually, December is a silent month but this year December is turning out to be an exceptional month. The reason is simply because of the liquidity gush. 

Finally, the US congress has agreed for a $900 billion covid stimulus. It was on the expected lines. Now let's see if markets factor in this and fall or will the rally continue.

Now cases in the UK is increasing at a high rate and all European countries have stopped planes from the UK to their countries. Cases are also increasing in Australia as well. There is a new mutation of the virus which the UK authorities say that it is out of control. Now it will be interesting to see if this news gives a trigger for the markets to fall if any. Many flights getting cancelled during the festival season is negative news for many industries. 

I don't expect a major correction. A small correction in the bull market will be healthy, For this expiry, 13k will be strong support and 14k will be strong resistance. Let's see how it trades for the next 9 sessions. The problem is markets are rallying with new bad news coming. This is somewhat surprising.

One thing I saw on Friday was that there was some selling in the last hour. The markets did not end near the day's high n Friday. So this makes me feel that the trend might change from here and we may go for a consolidation phase. I will probably sell 14000ce, 14100ce.

Many stocks like Kotak, bajfinance, are trading at all-time high. The RSI of nifty is above 70 and this is the time to be cautious. Also, the PCR is 1.8 which shows that the markets are overbought. But liquidity has to reduce or end to get conviction to go short. 

MY TRADES

  1. Planning to do this trade
    1. buy 13900ce X 1
    2. sell 14000ce X 1
    3. sell 14100ce X 1
    4. sell 14200ce X 1
    5. buy 14300ce X 2
  2. My butterfly trades will be in good shape today as my reference was 1 strike below which will pay off.
  3. I am working on an intraday strategy. Will tell that once I get a conviction on that strategy. 

INTERNATIONAL MARKET

  1. The US markets closed in the flat. There was not much that happened as the stimulus was scheduled for the weekend. Let's see how it reacts today. The futures are in green. The banks in the US shot up as they can now buy back shares.
  2. European markets closed in the red and the European futures are in deep red due to new lockdown and restrictions.
  3. Today morning the Asian markets are in the red. SGX suggests a 60 point gap.
CRUDE AND $
  1. Crude is at $50
  2. $ is at 
FII AND DII
  1. FII has bought for 2700cr and DII have sold for 2400cr. 
  2. LIC told that they have made a wonderful profit by selling. I will be definitely applying for LIC IPO when it comes.


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