Trade setup for 22nd December

  1. Yesterday was a blood bath. I expected this fall but I expected this by the end of December. I thought last 2 weeks will be weak as FII will be low and we may have a 500 point fall in 2 weeks. But this happened in just 2 hours. All due to the new covid strain in the UK. The flights from the UK are cancelled by many countries. This let to the panic selling.
  2. I thought 13500 would be protected but even that did not happen. I had a lot of positions and I had to do aggressive firefighting. I had to play as an expiry trade yesterday. For now, my positions are in a minor loss but it is in control. 
  3. WHO has told that the virus evolution is not new and the vaccines are capable of the new virus as well. So this probably gave some relief in the US markets along with the stimulus.
  4. The US govt has passed a $900 billion stimulus package and $1.7 trillion by end of Sept 30. So this news gave some hope to the US markets and in fact, dow jones closed in the green which was not expected. In the evening, dow futures were down by 500 points. 
  5. Now the major question is what will happen today?. Looks like the fall will be restricted and there might be recovery as the vaccine can handle new virus and yesterday FII did not participate in the huge selloff.
  6. But we did rally a little too much in the last 2 months continuously and this correction was expected. This is what happens when markets rally without brakes. The correction will be sharp.
  7. Today the Asian markets are slightly weak. It all depends on the first-hour move. If the high is held then the fall might be restricted which I feel will happen. 

Many factories are preparing for a shutdown in the UK as precautionary measures. 

  1. No more fresh trades will be initiated in this year. Now it will be just adjustment for the existing trade. If things go out of control then I may cut some in a loss.
  1. FII sold only for 300cr and DII bought for 400cr. This is negligible for the volume they have been doing all the while.
  2. Today FII data will be interesting.