The day before yesterday India's inflation data came out and it was bad. Not many paid attention to that and the markets rallied as if nothing happened. Yesterday, the US inflation data came out and it was worse than expected. The expectation was high because the crude prices had fallen in the last month and analysts expected that inflation would improve. But that was not the case and they learned that inflation is much more complex than crude price.
I was warning all that even if you don't keep your positions low for Indian events, it's okay, but you need to be very careful with US events and keep your positions low. The reason is when our events happen it's mostly during market hours and you get the opportunity to exit, but US events happen during the night and things happen in a gap up/down.
Now the next event is FED event on 21st and now its expected that the rate hike will be high. Analysts are expecting a rate hike of more than 75bps or 100 bps.
Yesterday the dow fell close to 1200+ points and nasdaq lost 5%. This is the worst single-day fall from 2020. Now we need to see if there is follow for this.
We closed above 18k yesterday and today we will be way below 18k. In yesterday's blog, I clearly told not to jump and go long just because it is above 18k. You need to see if there is a follow-through. It's obvious that today it will close below 18k.
The dow gave back what it had gained in the last 4 days which was the support area. Now it is back to that area. If dow falls another 1000 points then it would have broken all support. If dow and Nasdaq have to bounce then this is the area. Let's see if there is any buying that comes from here.
Now the trend is clear. But by chance, if we close above 18k in this month, then don't think, you can go long by investing everything. I will be taking leverage and going long after that.
Now keep an eye on crude, $, bond yeilds and $ index. This will give more clarity.
Let me tell you, if markets are cracking then none of the technicals work. People who tell that it will take support at 20, 30, 40 dma are all fools. Dont catch a falling knife. Let it settle first. Till now FII buying was there and every dip was bought. You never know what will happen now.
Yesterday, bajaj twins, RIL, HDFC, banks, all contributed to the rally. Let's see how they will react today.
MY TRADES
- I had executed strangles. My ce was in danger till yesterday. I took the bet of taking the risk without adding any extra legs. Today they will be in wonderful profit. I will close the ce and take some closer Ce
- I will sell 18000ce for tomo agressively
- All are down and out. SGX is 300+ down
- FII bought for 2000 odd cr and DII sold for 1200+cr
- We need to see if $ goes beyond 80 now
- Crude is at $93.5
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