Trade setup for 18th Aug



Sorry for not blogging for some time now. I am busy with many other things. Diversifying my business into other sectors as well. 

Coming to the markets, it looks like we will make all-time high very soon. All technicals and fundamentals have gone for a toss. Sometimes FII can take all analysis for a ride.

The macro data of many countries are showing improvement. So the chances of a recession may be low. But still, analysts fear of a recession.

The FED in its last meet saw that inflation is slowing. But still, they believe that a 75bps hike in interest is needed in September.

We have been closing in the green for 7 consecutive days. Today is the 8th day and in history, the 8th day has been in the red. There are also times when nifty has closed in the green for 10 days straight and on the 11th day it has closed in the red.

It is clear that the move is funded by FII flows. In the last 6-7 months they sold for almost $33 billion and the markets fell close to 18% in the last 1 month they have pumped $3 billion and markets have almost recovered 15%. We are just 700 points away from ATH. This is crazy. Imagine what will happen if they pump the remaining $30 billion.  

If you follow technicals then RSI is shouting and telling you that the markets are overbought. Many indicators are suggesting that a pullback can be expected. But the question is, will there be one?

Dow jones closed in the red yesterday after 5 days of rally. So it's highly likely that we will also close in the red.

The Chinese house developers are in great trouble as the defaults have increased and the sales have slowed down. Will this trigger the fall of the markets?? US house market triggered a recession. Will the Chinese house market trigger another recession? I don't think so.

Tencent has recorded its first-ever revenue decline.

Now US and Taiwan are talking about improving business. This has angered China. Will they react?

Frankly, I am confused about whether we are in a bull market rally or a bear market pullback.

MY TRADES

  1. I stopped doing intraday as I found some major flaws in the system. For now, I don't know how to fix them. Will try my hand again in intraday if I can fix that. 
  2. Now the momentum in the market is good. No one knows where will this continue. But definitely, it cannot continue for long. After sometime or immediately markets may fall or go sideways. So the best trade is call ratios. I have executed the below in the next monthly expiry
    1. +1 X 18500ce
    2. -5 X 19000ce
    3. -5 X 19200ce
  3. Similarly in banknifty
    1. +1 X 41000ce
    2. -5 X 41500ce
    3. -5 X 42000ce
INTERNATIONAL MARKETS
  1. US closed in the red after 5 days of green. Nasdaq fell 1.5%
  2. Europe close in the red. 
  3. Today the Asian markets are in the red. SGX is suggesting a -ve opening.
CRUDE AND $
  1. Crude is falling as demand is going down. Now it is below $94
  2. $ did not go beyond 80. Its now close to 79.4
FII AND DII
  1. FII bought for 2350cr and DII sold for just 500cr

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