tag:blogger.com,1999:blog-51501107132996877552024-03-14T00:56:43.354+05:30Changing Trends in MarketsAnalysis of Stock Markets - India and global including Dow Jones, S&P 500. Analysis of current market trends - long term, medium term and short term. NSE Nifty being covered most and most thoroughly with a keen eye on fundamentals as well.Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.comBlogger146125tag:blogger.com,1999:blog-5150110713299687755.post-84530947337114200772014-05-02T21:09:00.000+05:302014-05-04T17:19:22.314+05:30A look at S&P 500 after a lonf time<div dir="ltr" style="text-align: left;" trbidi="on">
Welcome back!<br />
<br />
(Or should I say welcome <i>me</i> back?)<br />
<br />
Yes dear readers, after a long pause I am here once again with my analysis and let me start with five year chart of S&P 500:<br />
<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-PWeUqPtgJTI/U2O1NLdY5XI/AAAAAAAAAUY/t6lcxXsjrZs/s1600/snp+500+2+may+5+yr.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://4.bp.blogspot.com/-PWeUqPtgJTI/U2O1NLdY5XI/AAAAAAAAAUY/t6lcxXsjrZs/s1600/snp+500+2+may+5+yr.png" height="190" width="320" /></a></div>
I have drawn two trendlines, the lower one is a possible medium to long term support line while the upper one is actual trendline that has been in the act for current uptrend. Traders should keep an eye on this line for this uptrend but once (and if) it is breached the lower one is very likely to provide support.<br />
<br />
The 50 and 200 day simple moving averages (red and green lines respectively) confirm the uptrend but my worry is the gap between the two. The annotations 1,2 and 3 show whenever 50 day moving average is far above the 200 day moving average index is very likes to show correction. So, annotation 4, which shows this gap once again, makes it a possibility that there may be a correction due in near future.<br />
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One important thing to note is that RSI does not show any overbought signs and one can be comfortable with uptrend.<br />
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Volume (not shown) is steady and does not give any clue so I have not included it. <br />
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Now let me present my views on short term chart:<br />
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<a href="http://2.bp.blogspot.com/-RuTs-spVxw8/U2O5SKKEPqI/AAAAAAAAAUk/jsCljq0epms/s1600/snp+500+2+may+3+month.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://2.bp.blogspot.com/-RuTs-spVxw8/U2O5SKKEPqI/AAAAAAAAAUk/jsCljq0epms/s1600/snp+500+2+may+3+month.png" height="243" width="320" /></a></div>
This three month chart of S&P 500 looks very interesting to me. Bulls are trying to make an attempt to conquer the last high that it made. If they succeed then we may see a further higher marks on this chart but looking at RSI and those short candles it seems bulls are getting tired and may take a little rest. A good strategy would be to short it here and look for support at the trendline I have drawn. This line shows support near 1840. As the medium term uptrend is intact one should not be greedy and book profits if it happens as I guessed.<br />
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Happy Trading...<br />
<br /></div>
Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com27tag:blogger.com,1999:blog-5150110713299687755.post-83770016972156333832011-09-17T12:05:00.001+05:302011-09-17T13:10:26.679+05:30The Week That Defied The Weak<div dir="ltr" style="text-align: left;" trbidi="on">Dear Readers,<br />
<br />
This past week was an amazing week in terms of fundamentals and market direction almost all over the globe. The news and fundamental data that drive traders and investors who decide their trading decisions mainly on these things were not very strong yet the markets managed to rally significantly! Let me outline briefly some facts of last week :<br />
<br />
In the US there was increasing unemployment data, declining retail sales, record high poverty level and despite all that the markets were up significantly (Dow about 700 points).<br />
<br />
In Europe we don't even bother to look at the details, the troubles are ubiquitous. In addition, there was another rogue trader scandal and open secret that Greece is on the brink of default which would trigger further trouble for European Union. Despite that the markets in most of Europe rallied substantially.<br />
<br />
In India the inflation data, both monthly and weekly, attempted double digits, before Friday the RBI was supposed to hike rates again and on Friday it did do that. Auto sales are declining, IIP data suggesting substantial downturn and declining value of Rupee putting pressure on imports (particularly oil). Despite all these things, the markets rallied.<br />
<br />
What does all this mean? I have always believed that fundamentals do not drive markets and its the mass psychology that does. There is only one thing that matters and that is liquidity. If traders and investors have money and are willing to buy, then all such bearish news and fundamentals have no power to stop them. Similar thing happens but on opposite way if traders and investors are pessimistic. Then even the best of the data is unable to make them buy. This is the reason I suggest looking at Technical Data rather than fundamental data for trading.<br />
<br />
<br />
</div>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com21tag:blogger.com,1999:blog-5150110713299687755.post-45995682445162139952011-08-24T14:48:00.005+05:302011-08-24T15:07:02.756+05:30The Appealing Chart<div dir="ltr" style="text-align: left;" trbidi="on">Dear Readers,<br />
<br />
Here is one interesting chart which in my opinion is appealing as it incorporates some data important for all <a href="http://www.amazon.com/s/?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969&search-alias=aps&field-keywords=technical%20traders" target="_blank">technical traders</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" />. This is the long term monthly chart of Nifty (NSE Nifty 50) since 2002.<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://3.bp.blogspot.com/-JgVpEWgy2tw/TlTBFcjXvLI/AAAAAAAAARw/BYGyFSkXkS4/s1600/Nifty+LT+Log1.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="193" src="http://3.bp.blogspot.com/-JgVpEWgy2tw/TlTBFcjXvLI/AAAAAAAAARw/BYGyFSkXkS4/s400/Nifty+LT+Log1.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Nifty Monthly Chart from 2002 to Aug 2011 Log Scale</td><td class="tr-caption" style="text-align: center;"><br />
</td></tr>
</tbody></table><br />
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The chart shows us following things which can be the deciding factor for serious traders:<br />
<br />
<ul style="text-align: left;"><li> The trendline from 2008 low to the recent low of June 2011 was violated this month and Nifty is below that line for all of this month so far. </li>
<li>This low also broke down below 50 SMA (monthly) but is just above that now.</li>
<li>This low is also near the support level of the low of May 2010.</li>
<li>The RSI is trending down and has broken down the 50 level. This breach of 50 level was not seen anywhere since the 'recovery' started in late 2008.</li>
<li>The MACD on this monthly chart had already given sell signal in Feb-March this year. Kindly note that MACD signal on monthly charts is very reliable as seen in the past.</li>
</ul>So, the market is at some important price point and case for bulls and bears is 40:60 respectively. The close of this month is going to be important for bulls as bears are having upper hand so far. The problem bears encounter is lack of volume at such an important point but then the month has several trading days ahead for one thing and for another thing, volume is not 'extremely' important for bears as stocks can fall off their own weight.<br />
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The long term trendline from late 2003 low, joining late 2008 low and extended, gives an idea that next support (if bears have an upper hand) is going to be near 3800 on Nifty which looks yummy to bears but scary to bulls.<br />
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There is one more thing that needs attention although some of you might discard it as trivial but in my opinion this is important. RIL (Reliance Industries Limited) has been the king of this market since the start. Note that RIL started going down first and then the rest of the market followed suit. Also, RIL lost its 'most valued firm' status last week (although briefly) which symbolically looks important. <br />
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The bottomline is:<br />
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At this point there may be people buying, but if Nifty continues going down from here, then there is the possibility that we may see even 3800 ish level on Nifty.<br />
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Happy Trading...<br />
<br />
</div>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com2tag:blogger.com,1999:blog-5150110713299687755.post-77765672409625709952011-03-18T13:52:00.002+05:302011-03-18T14:08:31.517+05:30Japan Earthquake and Its Possible Implications<div dir="ltr" style="text-align: left;" trbidi="on">Dear Readers,<br />
<br />
I haven't posted here for long owing to my personal busy schedule which kept me away from stock markets and related events. Last week there was a magnitude 9 earthquake in Japan and <a href="http://www.amazon.com/Nikkei-Weekly/dp/B000071GYL?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969" target="_blank">Nikkei</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=B000071GYL" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" />, Japan's stock market index, plummeted heavily after there were reports of possible meltdown and even possible 'criticality' of Japanese nuclear reactors. What it means is if the crisis goes out of control, there are chances of extreme radioactive pollution whose effect will not be limited to Japan and even Hawaii islands of US may feel the heat. I hope the situation does not go that far away and all becomes well for Japanese people sooner.<br />
<br />
On the developments in Japan almost all Asian markets reacted, some mildly down to some even positive (Indian markets). Most analysts talked about Japan's economy in real trouble with GDP falling etc etc. <b>I agree with the loss of economy and its impact on GDP of Japan but I think this probably is the end of Japan's two decades long problem, economically.</b><br />
<br />
Japan was struggling with <a href="http://www.amazon.com/Debt-Deflation-Theory-Great-Depressions/dp/1453624457?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969" target="_blank">deflation</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=1453624457" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> despite zero interest policy of Japanese Central Bank. Even Japan's Debt to GDP ratio had gone high up owing to the soft monetary policy. Whatever analysts think, I have this belief that some kind of destruction (Shumpeter's Creative Destruction) was necessary for Japan and that was being denied by BOJ and Japanese govt for two decades. Although a natural disaster like this one is not totally comparable nor even wanted, the reality is that this destruction of infrastructure caused by the earthquake and resulting tsunami may result into a positive start for Japanese economy.<br />
<br />
Before I talk more about Japanese economy and the impact of this destruction on it, let me talk about some historical events. There have been so many natural and man-made disasters in the last century but I pick only the biggest ones. Let us start with WWII, certainly not a natural disaster but a man made horror. The last secular bull market started with the WWII. Then, what happened after 9/11? We all know the US markets posted big gains after the unfortunate event of 9/11. Although this can not be an event that could be compared in magnitude with WWII, but once again it showed how destruction did not lead to sustained stock market downside, instead it was the turning point! Then, let us revisit the 2004 South Asian tsunami, what happened? Indian and other affected Asian markets rallied sooner and even economies of these countries grew. Also, the Mumbai terrorist attacks in Oct 2008 coincided with a bottom for Indian markets! There are many other examples but the question is what's the logic?<br />
<br />
Its actually simple. When there is a crisis in a place, there is in fact an opportunity for growth! Yes, the destructed place has to be rebuilt and so there is a flow of money towards the opportunity. It happened during and after WWI, WWII, and it must happen now, in Japan. How long it should take? I think answer depends on the actual situation of nuclear reactors and the radiation threat. If that stabilizes, then we may see Japan regrowing sooner and faster.<br />
<br />
The initial reaction of Indian markets on the Japanese earthquake news was positive. Most probably this happened as investors felt foreign money would now flee from Japan and enter India. <b>I think this is myopic vision and I see the possibility of exactly opposite happening in coming days.</b><br />
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I feel really sorry for the people of Japan who were affected by this disaster, and I have the deepest sympathy for them but this is the reality. The destruction, although very upsetting for many Japanese, may actually bring forward a new age of growth and economic prosperity in Japan. Ironic, but that's how things are sometimes!<br />
<br />
<br />
</div>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-54790947746532389852010-07-15T16:23:00.001+05:302010-07-15T17:58:39.334+05:30Who Wants to be a Gideon GonoDear Readers<br />
<br />
These days there are talks about KBC, a game show on Indian TV based on famous "Who Wants to be a Millionaire". I thought we should think on bigger line and create a game "Who Wants to be a Gideon Gono". Don't ask me who is Gono, I can't tolerate ignorance of one of my favourite great characters that ever happened in human history. Here is a brief introduction first, anyways.<br />
<br />
When it comes to managing <a href="http://www.amazon.com/s/?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969&search-alias=aps&field-keywords=economy" target="_blank">economy</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> the best of the best tend to do worst of their worst as the more one tries to control economy and natural market forces, the more it gets complex and out of control. However, despite being fully aware of this knowledge, there are people and institutions that do try their 'best' and end up in a mess. One such great in contemporary period is Gideon Gono - <span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;">current Governor of the </span><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;">Reserve Bank of Zimbabwe</span><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"> (RBZ). He may not be in headlines for some time but he deserves at least a real Nobel Prize in Economics and National Money Management (in fact, they should add National Money Management as a new and separate category in Nobel) although he did manage to get </span><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><a class="mw-redirect" href="http://en.wikipedia.org/wiki/Ig_Nobel" style="background-attachment: initial; background-clip: initial; background-color: initial; background-image: none; background-origin: initial; background-position: initial initial; background-repeat: initial initial; color: #0645ad; text-decoration: none;" target="_blank" title="Ig Nobel">Ig Nobel</a></span><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;">. I sincerely think he should at least (or we should, the followers and fans of Gideon) register a protest to Nobel Prize Committee and even accuse them of partiality for awarding the prize to Paul Krugman who is only a theorist and ignoring the real man - the man who practised more than what Krugman preached!</span><br />
<span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;">Gideon Gono's accomplishments are not small in any way. Some of his achievements include following:</span><br />
<br />
<ul><li><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">increasing money supply by<b> 20 MILLION TIMES!</b> That's something! He managed to increase money supply in Zimbabwe from $45 billion to more than $<b>900 QUADRILLION</b>. That's no typo! And for those who never heard about quadrillion, one quadrillion equals 1000 trillion! so, 100 more quadrillions and it is QUINTILLION Dollars of money supply!</span></span></li>
<li><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">printing currency notes of $100 trillion!</span></span></li>
</ul><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">Apart from Economics, he should be considered for a Nobel in Mathematics as well, for his contribution to the subject by making every Zimbabwe citizen learn to calculate astronomical figures on finger-tips. And kindly don't forget an important trait he possesses - he is God fearing and extremely religious person. Following piece from <a href="http://en.wikipedia.org/wiki/Gideon_Gono" target="_blank">wikipedia</a> describes my point - <b><i>"</i></b></span></span><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><b><i>Critics have noted that most of Gono's monetary policy statements in the past have had biblical references. Notably, he usually ends in policy statements to the Parliament of Zimbabwe thus: "In the Lord's hands, I commit this Monetary Policy Framework for our economic turnaround."</i></b></span><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><b> </b> I apologize dear readers but I can't help. I am a die-hard fan of this great person.</span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">Now, let us begin the game. All central bank heads of the world are potential participants but in terms of significance there remain only five - Ben Bernake of US, Jean-Claude Trichet of European Union, Mervyn King - man of the "Old Lady" of UK, Masaaki Shirakava of <i>Nichigin</i> of Japan and team Pranab Mukherji - Subbarao of India. Actually 'team India' is confused and playing this game as if it were "How to Become Prosperous with Inflationary policies" as they pretend to be 'worried' about inflation! The game is on and here is a running merit list for the time being:</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><b>Bernake</b></span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">He is also known as "Helicopter Ben" for the disclosure of his intention to throw money from helicopter to fight deflation. However, despite his enormous efforts he is so far unable to push up any inflation. He is actually worried about the Japanese Disease and has even tried monetizing, euphemism for </span></span><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;">printing dollars, not to mention zero-interest-rate policy. But, pundits like Mark Faber are sure he is the most likely candidate to win this game and one day make even Gideon Gono blush.</span></div><div><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><br />
</span></div><div><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><b>Trichet</b></span></div><div><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;">He is head of an entity that does not have much reliability as EU is more a political outfit than financial one. It was proved when last month Trichet took a U-turn in less than a week after pressure from strong EU members. He was against buying govt debt of countries like Greece by ECB and then when pressured reversed his stance. So, he is in this game but like a toothless tiger he can't do much on his own. </span></div><div><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><br />
</span></div><div><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><b>King</b></span></div><div><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;">He is one of the likely candidates to win this game. He is trying to push up inflation the 'best possible way' and does not seem to be worried too much. His advantage is the currency he deals in - Pound Sterling. His efforts to devalue pound are on and there is added advantage of a devalued pound - better numbers in their exports. At least that's what he and his political masters plan there.</span></div><div><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><br />
</span></div><div><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><b>Shirakava</b></span></div><div><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;">He is doing the most efforts and his predecessors have been doing those efforts for about 20 years! If past 20 years record of failure in bringing up inflation is any guide then he is most likely to loose this game. However, if he may have some surprises up his sleeves, then he can be the dark horse.</span></div><div><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><br />
</span></div><div><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;"><b>Team India</b></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">Although India is not significant enough to be considered in this game as participant, the fact that India is a bigggg country population wise, gives team India a wild card entry to the game.</span></span></div><div></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">Pranab babu, the politician and Subbarao, the bureaucrat, are working hard but are confused. They are worried about inflation in India but at the same time their policies of higher taxes and lower interest rates / low CRR are leading to the other direction. Pranab babu even opened the pandora box of fuel-price deregulation and subsidy cuts at a time when food price inflation was already shooting up. Subbarao, though shouting a lot against inflation, is actually doing nothing, perhaps fearing a 'slowdown' in economy if he tightens too much. Or, it may also be possible he is under pressure from industry and ruling politicians. Whatever, one thing is clear - Team India is so far the leader in this game as inflation in India is running in two digits already and if they continue their 'efforts' they are going to win this game by a good margin. </span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">The Chinese refused to participate for unknown reasons. They hinted they would better manage (read manipulate) the 'numbers' rather than participate in a silly game. </span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">The game is still on and it will be interesting to see who turns out to be the winner. Long live dear Gono.</span></span></div>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-74162067617653454652010-07-02T20:29:00.001+05:302010-07-02T20:52:54.832+05:30Indian Reform Story - Oil in StormDear Readers,<br />
<br />
The govt of India decided last week to partially deregulate fuel prices as a step toward financial reforms which started widespread dissent among opposition parties as well as common people . India is a net importer of Crude Oil and it burns up a big hole in Indian budget every year. Govt of India subsidizes refined petroleum products like kerosene, LPG, petrol and diesel in the name of serving the poor and middle class people. Fuel is retailed mainly by PSU (Public Sector Undertaking) firms and these firms are compelled to take losses owing to this <a href="http://www.amazon.com/s/?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969&search-alias=aps&field-keywords=subsidy" target="_blank">subsidy</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> (there are measures taken like 'oil bonds' from time to time to offset some of the losses though). This is an important issue and I felt compelled to post my views on it.<br />
<br />
<b>Some Facts</b><br />
<b><br />
</b><br />
let me start my analysis with some interesting facts about Indian Oil Story.<br />
<br />
<ul><li>Petrol, Diesel, LPG and Kerosene are main fuels. Except petrol, the other three are considered 'fuel for common man' by political class. </li>
<li>Govt of India controlled fuel prices till 2002 through Administered Price Mechanism (APM) and then after abolishing APM, it continued subsidizing 'sensitive' fuels. Today, losses incurred due to subsidy by PSU Oil Marketing Companies (OMC) is partially offset by upstream PSUs (ONGC, Gail etc) which is not sufficient enough though.</li>
<li>Taxes on fuel are very high but still well below European Developed Countries. These taxes, most of which are imposed by state governments, make a fuel cost about double its actual price.</li>
<li>India is one of the largest buyers of crude oil in the world (<span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;">In 2009, India imported 2.56 million barrels of oil per day!).</span></li>
<li><span class="Apple-style-span" style="font-family: sans-serif; line-height: 21px;">Fuel subsidy costs about USD 40 to 50 million per DAY losses to just three major OMCs - IOC, BPCL and HPCL ! (this figure depends on USDINR exchange rate and so is changing all the time)</span></li>
</ul><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><b>The Debate</b></span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">After these facts its clear that crude oil import cost is a big drag on Indian budget. All this subsidy is in the name of poor and middle class citizens and so becomes politically tough issue. All parties when in opposition protest any subsidy cut, although if they were in power, they may well themselves find this subsidy a burden. Bajpai led NDA and I K gujral led JF have shown their intent to do away with subsidies when they were in power. So, all this protest is nothing more than cheap game of politics. Talking about common people, why would they like anything costly? They don't care about budget deficit or oil pool deficit, all a person wants is freebies - as much as can be taken.</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">Then it comes to taxes on fuel. Yes, its quite puzzling why does a govt subsidize something and then taxes it heavily. The petrol that costs about a dollar a liter to consumers, costs only about half a dollar before taxes! Why this nonsense? Well, whatever be the reason, fuel prices remain costly for Indian people despite subsidies.</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">Now, let us think about how these subsidies actually help the poor and at what cost. Subsidy is never a good idea as any item that is subsidized gets misused instead of getting to the 'poor'. Its an open secret that heavily subsidized kerosene is used first as an 'industrial adulterant' with diesel and then 'export item' for smuggling into Bangladesh which has higher price of kerosene. The poor hardly use it and the ration dealers who are authorized to sell kerosene only fill their ledger with fake sales(no wonder there is always a shortage of quantity). </span></span><br />
<span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span><br />
<span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">Similar is the case for diesel - the fuel of transport in India. Because diesel is subsidized, more and more people want to buy diesel powered cars and SUVs - net result? misuse. Also, it is used in power generators as there are frequent and long power cuts in most of India. </span></span><br />
<span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span><br />
<span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">Another heavily subsidized item is LPG and its also misused 'efficiently' by 'innocent' Indians. Commercial LPG users (restaurants etc) are required by law to use a non-subsidized version of LPG cylinder but they somehow manage to get the domestic version which costs almost half of what a commercial cylinder costs. Then, there are 'smart' car owners, who get their cars fitted with cheap LPG kits and use subsidized LPG cylinders for 'better fuel economy'. All in all, govt subsidies are helping all walks of life! (though that is not what it is intended to do).</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">There are three groups of people when there is a debate on fuel subsidy in India. First are those who think all fuel should be subsidized so that it remains cheap. Second are those who would not mind non-subsidized fuel provided govt reduce taxes on it so that in the end there is cheap fuel available. Third are the ones who dislike subsidies and actually want even more taxes on all petroleum (read fossil fuel) products. NOT SURPRISINGLY, I fall into third category.</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><b>Why We Don't Need Cheap Fuel</b></span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">I understand many of my readers think I must be crazy, but I have my reasons. Let us first discuss the economics of fuel cost. Fuel is one of the most important ingredients in an economy and its price does affect overall production and consumption and thus economy as whole. If fuel is costly then industry has higher manufacturing cost for goods and higher running cost for services which makes goods and services costlier for consumers. This cost appreciation results in lesser consumption of goods and services which in turn affects bottom-line of businesses negatively. When businesses earn less, they employ lesser number of people which in turn means even fewer consumption of their goods and services. A vicious cycle starts and overall economy suffers. So, is that all about it? NO. Let me elaborate why its not exactly that way. </span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">First, if there is costlier fuel, people and businesses start consuming less of it and if it is left to market then reduced demand of fuel should result in lower cost. This is simple - law of demand and supply. Some people don't accept this logic as they say a lone attempt by a small country like India can not affect fuel prices as international demand for crude oil is much larger than that of India alone. These people are partially right but given the size of import of crude oil by India, I find there should be at least some pressure on international crude price. </span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">Second, and more important, I am an environmentalist and have openly expressed my feelings about greenhouse gases and anthropogenic global warming. India is FIFTH LARGEST CO2 producer in the world and most of this is generated by burning petroleum products. When govt of India subsidizes diesel and other petroleum products, it indirectly encourages global warming. This is a moral crime. There is no point in paying people to produce excess CO2. If these products are costlier than there are good chances people would use them judiciously. Also, higher cost of energy through fossil fuels means there will be more attention towards alternative fuels like solar energy and hydrogen fuel cells which are comparatively costlier today. What govt of India does to promote <a href="http://www.amazon.com/s/?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969&search-alias=aps&field-keywords=alternative%20energy" target="_blank">alternative energy</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" />? It subsidizes them too! This is ridiculous at best. A better solution is to keep high taxes on petroleum products and low taxes on alternative energy products.</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span><br />
<span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;">Does this mean I want govt intervention? NO. I am never in favor of govt poking its nose in business affairs and economy and that's why I am against subsidies. However, if it has to be 'something' (and this is the case, govt will always want to do something) then let it be only a policy framework at the heart of which is discouraging fossil fuels and encouraging alternative energy. The best way is to let people decide for themselves and let market do its work independently and freely.</span></span></div><div><span class="Apple-style-span" style="font-family: sans-serif;"><span class="Apple-style-span" style="line-height: 21px;"><br />
</span></span></div>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com2tag:blogger.com,1999:blog-5150110713299687755.post-21895955839278914412010-06-25T15:56:00.001+05:302010-06-25T16:00:45.552+05:30Carry Trade, Inflation and Market ForcesDear Readers,<br />
<br />
So we have this news - US Fed chairman Bernake 'softened' his tone and 'vowed' exceptionally low interest rates for extended period owing particularly to the situation in Europe. This is quite opposite to what I thought some time back when several Fed members opened their mouth against low interest regime. I thought that was the start of changed stance by 'Fed Group' and would lead to unwinding of carry trade world over. So, do I change my views? NO. Bernake said what he was compelled to say and markets somehow do understand that this 'renewed dovish stance' is just a camouflage and interest rates are poised to go up sooner than later. Let me make myself clear hear - Fed DOES NOT DECIDE RATES, IT JUST DOES WHAT IT IS FORCED TO DO BY MARKETS. Fed guys are also helpless when facing actual market forces. However, I guess Bernake is right in his thinking that it is deflation that is going to be near term threat than inflation.<br />
<br />
When it comes to investing and markets, small guys look toward news and policy decisions by govt. My neighbor told me yesterday why Indian markets will go up now. He said it was inflation and esp food price inflation that was worrying govt. According to him, this coming year India is going to have one of the best agriculture production thanks to good monsoon and that will drive down food prices which will eventually result in high stock prices. He was so convinced about this that he refused to hear anything against this 'sound' logic. I asked him anyway - what will happen to the rural people who are directly dependent on agriculture? Won't they be in a better state and have more disposable income? Won't they buy a lot more goods and services with the extra income they would have as a result of good harvest? This is where common people stop thinking. A good monsoon is good for Indian economy and then it actually drives up inflation. RBI (Indian Central Bank) is uncomfortable and governor Subbarao has already expressed his feelings. I guess a good monsoon is going to create more troubles for Indian govt as well as RBI.<br />
<br />
Milton Friedman said inflation is always and everywhere a monetary phenomenon and I agree partially. Inflation is indeed a monetary phenomenon but not always. We can see it today - even zero interest rates and 'monetizing debt' haven't been able to lift Japan's inflation and the same is happening in US as well. Bernake can't stop market forces, he can only do what he is told by market forces to do. And, despite deflation being the actual threat, interest rates will have to rise in coming days. In India its a little different - monetary inflation and its threat will force RBI to raise interest rates which will eventually result in deflation.Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com3tag:blogger.com,1999:blog-5150110713299687755.post-14987934609362847462010-06-11T21:35:00.005+05:302010-06-12T14:34:50.500+05:30Funny - The Mainstream MediaDear Readers,<br />
<br />
When it comes to <a href="http://www.amazon.com/s/?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969&search-alias=aps&field-keywords=investing" target="_blank">investing</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> and markets, there are so many available media - electronic media, financial newspapers, websites, newsletters and blogs to name a few. The most popular of these are electronic media, websites and newspapers. Almost all of us who have interest in stock markets and access to internet are well aware of Yahoo Finance, Bloomberg etc and look at these websites for market quotes as well as what's happening around. The question is not how good or bad the content there is, it is how funny one portal is than others are.<br />
<br />
Usually there are quotes of most important of US Indexes - Dow Jones, Nasdaq and S&P 500 and also that of Crude Oil, Gold and 10 Year Bond Yield (Yahoo <a href="http://www.amazon.com/s/?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969&search-alias=aps&field-keywords=Finance" target="_blank">Finance</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> example). Then, there are news items led by 'headline news'. I almost always find these 'news' funny - not because there is some inherent humorous content, but because the 'explanation' along with these 'news' items. For example, a headline or listed news looks like this - "Stocks jump as investors are cheered with *xyz* data". Notice there are two important clauses in that sentence, the 'news' clause ("Stocks jump" in this example) and then 'cause behind it' clause usually following "as". It is this judgement of cause that makes them funny. Now look at this screenshot :<br />
<br />
<div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/_X7A4HUBt4y4/TBJbTJm0ifI/AAAAAAAAAQ8/gtChf9r2lzU/s1600/Yahoo+News.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="197" src="http://1.bp.blogspot.com/_X7A4HUBt4y4/TBJbTJm0ifI/AAAAAAAAAQ8/gtChf9r2lzU/s400/Yahoo+News.jpg" width="400" /></a></div>Look at the indexes - Dow and S&P are about a third of a percent down and Nasdaq is slightly up in green. Now, read the "TOP STORIES" and particularly the 'headline' - "Stocks pare losses as <a href="http://www.amazon.com/s/?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969&search-alias=aps&field-keywords=consumer%20sentiment" target="_blank">consumer sentiment</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> jumps most in 2.5 years - AP". So this means AP reports WHY stocks 'pare' losses after an initial drop after opening. That reason happens to be a 'jump in consumer confidence'. Then we go ahead and read first listed news below the headline - "<a href="http://www.amazon.com/s/?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969&search-alias=aps&field-keywords=retail%20sales" target="_blank">retail sales</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> drop by most in 8 months". So, this is what that caused that initial 'drop' and if you had looked at this portal just two hours back, then indeed it was the headline, not as 'news', but as the CAUSE of that 'drop'!<br />
<br />
Now whats happening here! First there is this 'drop in retail sales' and then there is a 'jump in consumer sentiment' ! How come these two things coexist at the same time? If retail sales are dropping then it can't be 'high consumer sentiment'.<br />
<br />
Well, dear readers, I did not attempt to criticize either the portal or the news providers, I simply put forward the funny thing that emerges out and confuses common readers. I guess the associated reporters feel compelled to associate 'causes' behind market movements, but, mostly what that ends up doing is make us laugh. Let me be clear here, this is not exclusive to websites, this is actually a norm and electronic media (particularly CNBC) is way ahead sometimes on the 'fun meter'.<br />
<br />
UPDATE AFTER ABOUT 30 MINUTES<br />
I found it most interesting to post the changed screenshot just after about half an hour. Dear readers, look at it, read it and then compare to above post and find out even funnier one.<br />
<div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/_X7A4HUBt4y4/TBJoBdPvlII/AAAAAAAAARE/54FBF7eqmkE/s1600/Yahoo+News2.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="182" src="http://1.bp.blogspot.com/_X7A4HUBt4y4/TBJoBdPvlII/AAAAAAAAARE/54FBF7eqmkE/s400/Yahoo+News2.jpg" width="400" /></a></div>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com1tag:blogger.com,1999:blog-5150110713299687755.post-45428013865026362012010-06-04T21:23:00.001+05:302010-06-04T21:26:17.722+05:30Bell Rings For Carry Trade UnwindingDear Readers,<br />
<br />
The <a href="http://www.amazon.com/s/?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969&search-alias=aps&field-keywords=carry%20trade" target="_blank">carry trade</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> currency used to be Japanese Yen just two years back but now its been replaced by USD, thanks to US Fed Reserve. Mr. Bernake and Co. lowered interest rates to near zero last year and the effect was clearly visible on all assets all over the world. So far every Fed statement was more about keeping interest rates low ostensibly to support 'weak' economy and now they are 'hawkish' despite continuing high unemployment rate.<br />
<br />
In my post on 23 March, I warned that 'the beginning' of new era of deflation has started and one of my reasons was fear of higher interest rates. Although we have been getting hints of 'voices' demanding an end to near zero interest rates, <b>today there is </b><a href="http://www.reuters.com/article/idUSTRE65263920100604" target="_blank"><b>this news from Reuters</b></a><b> and I guess this is going to be the beginning of unwinding of US Dollar based carry trade</b>. If my fears prove right then there may be a bigger crisis kind of situation for all assets including precious metals and 'resilient' emerging markets. US Dollar should get stronger as well, continuing its rally against most currencies as speculators unwind their 'carry trades'.Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com1tag:blogger.com,1999:blog-5150110713299687755.post-10449523107539721952010-05-11T18:57:00.002+05:302010-05-11T20:47:34.808+05:30Steroid Works Only for 24 HoursDear Readers,<br />
<br />
When markets closed this Friday, European leaders sat down and decided to show their muscles (<a href="http://indexviews.blogspot.com/2010/05/once-again-governments-and.html">read my last post</a>). Their statements were suggesting they are only next to God and can control markets, particularly that of Mr. Sarkozy. They speedily drafted a 'bailout' package to not only 'cure' <a href="http://www.amazon.com/Imminent-Crisis-Collapse-European-Monetary/dp/1451595441?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969" target="_blank">Greek Debt Crisis</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=1451595441" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> but also their language suggested how angry they were on Euro sellers. What more, the Iron Man Mr Trichet (ECB) also had an about turn on his recent statement of not buying Greek Debt which shows how 'independent' is European Central Bank! Indeed! the 'announcement' of a massive rescue fund did have its effect but for how long? 24 Hours or even less! Euro is back to the territories (in fact below) where it was before the announcement. No wonder I had my doubt on the 'effect' of this 'package'. Also, I read this interesting piece on Bloomberg by John Glover who terms it as "<a href="http://www.amazon.com/Dynamic-efficiency-riskless-uncertainty-working/dp/B0006DIN1O?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969" target="_blank">Ponzi Game</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=B0006DIN1O" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> at the Highest Level". <a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aIFxBow.FVKU&pos=5" target="blank">Here is a link to that article</a> which I recommend highly.<br />
<br />
Now, it seems all the euphoria that made almost all stock markets around the world and Euro to rally like no tomorrow was in fact an expected short squeeze and now it looks like all that is going to reverse. Interesting times we have! Let us wait and see how and what these leaders decide as their next step(s).Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com5tag:blogger.com,1999:blog-5150110713299687755.post-5472918107611110812010-05-08T13:50:00.001+05:302010-05-08T15:10:14.363+05:30Once Again Governments and Interventions<span class="Apple-style-span" style="font-size: medium;"><span class="Apple-style-span" style="font-size: 15px;"></span></span><br />
<span class="Apple-style-span" style="font-size: medium;"><span class="Apple-style-span" style="font-size: 15px;"><div><span class="Apple-style-span" style="font-size: medium;">Dear Readers,</span></div><div><span class="Apple-style-span" style="font-size: medium;"><br />
</span></div><div><span class="Apple-style-span" style="font-size: medium;">In my last post of March 23 I shared my view of how bearish I felt then and called that time as 'the beginning' of new deflation<iframe align="left" frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=chatreinmar-20&o=1&p=8&l=bpl&asins=0961856246&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr" style="align: left; height: 245px; padding-right: 10px; padding-top: 5px; width: 131px;"></iframe> era. Things really got bad in the meantime and stock and commodity markets around the world have fallen sharply. The ostensible reason is Greek crisis but I do not understand the logic at all! If the markets are falling in panic because of <a href="http://www.amazon.com/Imminent-Crisis-Collapse-European-Monetary/dp/1451595441?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969" target="_blank">Greek crisis</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=1451595441" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> then why were they going up like no tomorrow just a month or so back? Situation in Greece and fear of a crisis there is not a news anymore! For at least few months mainstream media is full of Greek debt problems and I did not see many analysts optimistic about some painless solution. So, if it had to be this Greek Crisis as actual cause behind current market meltdown then we should have seen at least six months of bearish trend. No, its NOT the Greek Gods that are responsible, in my opinion, its what had to happen and Greece is just an excuse.</span></div><div><span class="Apple-style-span" style="font-size: medium;"><br />
</span></div><div><span class="Apple-style-span" style="font-size: medium;">However, my point today in this post is yet another foolish attempt by governments across Europe to 'stabilize' the system. European leaders gathered in an 'emergency' meeting today and decided to take 'measures' that will 'contain' this crisis from spreading over and save Euro, <a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=ajq9UXE0UMkA&pos=1" target="_blank">reports Bloomberg</a>. How they do it? They have decided to set up an 'emergency fund' to 'halt the spread of Greece's fiscal woes' ! OMG! Where were they and doing what for so long? Mistakes after mistakes is what politicians do to 'show' their 'abilities' of 'preventing' problems and they mostly end up being problems themselves. Markets will do what they will do no matter what these leaders do.</span></div><div><span class="Apple-style-span" style="font-size: medium;"><br />
</span></div><div><span class="Apple-style-span" style="font-size: medium;">However, I don't criticize their 'efforts' for one reason. These leaders have to show they are 'at least' doing something even though they know the outcome. They just can not sit down and wait for things to happen as majority of general population want their leaders to take steps. This is more a <a href="http://www.amazon.com/Right-Wrong-Compulsion-State-Principles/dp/114432419X?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969" target="_blank">political compulsion</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=114432419X" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> than need of the hour. Let us see how things turn out. </span></div></span></span>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-19962149337729196172010-03-23T17:01:00.004+05:302010-03-23T17:12:11.860+05:30The Beginning is Here.....<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=0393072231" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" />Dear Readers,</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">The <a href="http://www.amazon.com/Financial-Reckoning-Day-Fallout-Depression/dp/047048327X?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969" target="_blank">Global Depression</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=047048327X" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> that started in late 2007 had its effect in stock markets during 2008 and then a spectacular rally occurred in 2009. Now it is 2010 and the optimistic analysts who had bet on a recovery and so far proved right are even more optimistic. I defer. I am convinced that all this <a href="http://www.amazon.com/s/?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969&search-alias=aps&field-keywords=bear%20market" target="_blank">bear market</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> rally is over and next deluge is on its way. 2010 may be worse than 2008 for almost all asset prices and once again we may see people running toward safe haven - USD. Even gold bugs may find insecticides all over the place!</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">After a deflating 2008 we had <a href="http://www.amazon.com/s/?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969&search-alias=aps&field-keywords=inflation" target="_blank">inflation</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> returning at least in developing world which I think has had its run over and will give way to <a href="http://www.amazon.com/Deflation-Survive-Thrive-Coming-Wave/dp/0071382518?ie=UTF8&tag=chatreinmar-20&link_code=btl&camp=213689&creative=392969" target="_blank">deflation</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=chatreinmar-20&l=btl&camp=213689&creative=392969&o=1&a=0071382518" style="border: none !important; margin: 0px !important; padding: 0px !important;" width="1" /> again. We are already seeing so many central banks cutting on excess liquidity and a rise in interest rates is going to be new norm for some time which can reverse only after this new deflation period sets in.</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">When US imposed stiff tariff on Chinese tyres (Americans spell it tire) I saw that as beginning of new protectionist cult and now respected Paul Krugman advocates <a href="http://www.nytimes.com/2010/03/15/opinion/15krugman.html?src=me" target="_blank">25 percent across the board tariff on all Chinese goods</a>! Looks like Mr. Obama, who is celebrating the success of his coveted Healthcare Bill, will follow his advice sooner. If that happens then all this pseudo recovery that was shown in 2009 will disappear. Protectionism will beat all dancing optimists.</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">Emerging Markets like India and China will also suffer as still we are in a world where everything is related to each other and no place is immune to global hurricane. Those who talk about decoupling etc will change their tone and words and again look like comedians (as they did during late 2007, when CNBC was full of those analysts speaking about decoupling of India from US)</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;"><br />
</div><div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">So far, after the start of Global Depression in late 2007, there was a bear market rally in late 2008 and this has been a dramatic period which once again has reignited that old psychology of 'stocks are always a buy on decline'. This is dangerous. This kind of thinking will only help bears gathering prey for entire summer (bears were in hibernation for one year) and retailers are going to get hurt with wounds that will linger on for a long time.</div>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-11083070456928242112010-02-14T21:09:00.004+05:302010-04-14T22:30:47.383+05:30A New Chapter<a href="http://3.bp.blogspot.com/_X7A4HUBt4y4/S3gbVxnpmSI/AAAAAAAAAQg/ITyWjGu7sJo/s1600-h/IMG_0124.jpg" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5438126610960718114" src="http://3.bp.blogspot.com/_X7A4HUBt4y4/S3gbVxnpmSI/AAAAAAAAAQg/ITyWjGu7sJo/s320/IMG_0124.jpg" style="cursor: hand; cursor: pointer; height: 240px; width: 320px;" /></a><br />
Dear Readers,<br />
<div><br />
</div><div>I did not post here for quite some time and the reason is one of the happiest things in a person's life - I had my first child - a SWEET baby girl!!!! (Yes, this is her photo)</div><div><br />
</div><div>I feel how you have wondered about markets doing some roller coaster fun in this period and I will definitely update this blog with my views. Till then, have a good time........<br />
<br />
<b>UPDATE OF PHOTOGRAPHS:</b><br />
For my dear readers who want more photographs of my dear sweetheart, please <a href="http://www.facebook.com/album.php?aid=60595&id=1435306035&l=79d8eec151" target="_blank">click here</a>.</div>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com3tag:blogger.com,1999:blog-5150110713299687755.post-24566491362819513892009-12-28T13:07:00.003+05:302009-12-28T14:17:14.270+05:30Market Analysis Before New YearDear Readers,<div><br /></div><div>Equities rallied last week almost everywhere in the world, almost giving an upside direction for New Year 2010. There are few important things to note though. I will put my views on the possibility of breakout on upside looking at technical indicators.</div><div><br /></div><div><b>Dow Jones Industrial Average:</b></div><div><br /></div><div>This most followed index did manage to close above 10500 (weekly closing) which was proving a big resistance so far for almost a month. However, volume does not confirm a breakout but I give it benefit of doubt as last week was short in duration and the day it closed above this level, had half day's session. However, the daily closing on Dow Futures does not suggest any breakout as the close and high, both were below previous ones. Unless there is clear direction from both the futures as well as index, we should be careful.</div><div><br /></div><div><b>S&P 500:</b></div><div><br /></div><div>This is the index I follow most and in my opinion its far better to look at S&P 500 chart than that of Dow Jones Industrial Average. The S&P 500 index managed to close higher both on weekly as well as daily time frame. Volume has not confirmed but again this may be due to the shortened week. The S&P 500 Futures has also closed on new year highs both on daily as well as weekly time frame and as of writing this post, it is trading marginally higher near 1123. I guess there can be more upside in coming days.</div><div><br /></div><div><b>Nasdaq:</b></div><div><br /></div><div>This index had already given a clear breakout almost on last Monday and had gone up only higher since then for five-six consecutive days. </div><div><br /></div><div><b>Indian Markets:</b></div><div><br /></div><div>The <b>S&P CNX NIFTY</b> index of India also managed to show a breakout kind of move on last week closing. This is the highest close since April 2008 and came on the clouds of rising inflation and worries that RBI (Indian Central Bank) could take steps like raising interest rates. This week will be acid test for for this breakout.</div><div><br /></div><div>Now, let me share this interesting thing I observed. For few days and even weeks I saw US Dollar and equities rallying at the same time! So far it was taken for granted that a strong dollar implies weak equities but that has not been holding for some time. Last time this happened was during late Nov and early Dec of 2008 and we know what happened thereafter - there was a decisive change in trend of both equities and US Dollar. Now, this indicates either there is going to be a change in direction of equities OR this rally may be on strong fundamentals! which I doubt. Let us see how things pan out in new year 2010 which will be an important year for all market participants.</div><div><br /></div><div><br /></div>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-35580252835375421772009-12-09T21:19:00.012+05:302009-12-20T17:43:34.184+05:30CCC - Copenhagen, Climate Change and Climategate<span style="font-family:verdana;">Dear Readers,</span><br /><br /><span style="font-family:verdana;">Today I am not writing about markets, instead, let me tell how I feel about Climate Change and the infamous Copenhagen Meet. Global Warming is not a fiction but a reality, you don't need to check scientific data, you need to only look at your surroundings with a closer look and you will understand how things are changing in real world (forget 2012, the movie).</span><br /><br /><span style="font-family:verdana;">The Fact:</span><br /><br /><span style="font-family:verdana;">The Fact we have today is that our planet is warming. NOBODY is against it as long as I have assessed it following various media - TV, Internet and local people. Almost all know this reality that climate is certainly changing. IPCC scientists gathered data that demonstrates these facts. Al Gore came out with "An Inconvenient Truth", a documentary in which he talks about changing environmental and geological facts. </span><div style="font-family: verdana;"><br /></div><div style="font-family: verdana;">The Doubt:</div><div style="font-family: verdana;"><br /></div><div style="font-family: verdana;">There is one community which is hard pressing on proving that all this climate change thing is rubbish. Their efforts have made it a conspiracy theory and their arguments are as valid as that of scientists. They created real drama out of email leaks of IPCC scientists (Climategate) which suggests that data was deliberately presented in a way that proved their logic of climate change and if all data of last thousands of years is present, then this looks like to be only a warming up earth cycle and not anthropogenic global warming. Among the most vocal opponents of climate change being anthropogenic (caused by humans) are Free Market advocates. Here, I feel the punch. I also belong to that group (Free Market) and at the same time I am deeply concerned about climate change. So, do I have split personality disorder? Or I am plain hypocrite? </div><div style="font-family: verdana;"><br /></div><div style="font-family: verdana;">The above details bring out two points:</div><div style="font-family: verdana;"><ol><li>Climate Change is real and we are definitely witnessing changing weather patterns.</li><li>The cause of this change is doubtful, it may be anthropogenic and it may be a natural cycle.</li></ol><div>The first point is where most agree. We have a changing climate pattern and threats of natural disasters and sustainability of human beings and other life forms is in danger. The second point is where people are divided. Those who believe it is caused by human activities warn of dangerous consequences if we do not reduce our irresponsible actions. While on other side, those who believe this is not anthropogenic, want governments to stay away and let business as usual run its course. Here is one presentation I found on the internet which supports the skeptics views:</div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_X7A4HUBt4y4/Sy4EVVaAkbI/AAAAAAAAAQY/6X7XRp0Mq1Q/s1600-h/Global+Warming+and+Ice+Core+Data.gif"><img src="http://2.bp.blogspot.com/_X7A4HUBt4y4/Sy4EVVaAkbI/AAAAAAAAAQY/6X7XRp0Mq1Q/s320/Global+Warming+and+Ice+Core+Data.gif" alt="" id="BLOGGER_PHOTO_ID_5417272166343283122" style="cursor: pointer; width: 590px; height: 184px;" border="0" /></a></div><div>You can find the link of presenters at the last slide.<br /><br />So, which stand do I take? Well, I am doubtful. I doubt both camps is some ways. However, my personal thoughts are in support of IPCC scientists. I can not digest the skeptics' line that human activities don't have to do anything with the changing climate pattern. We humans have grown from a mere 1% of vertebrate biomass 10000 years ago to 98% today! It means we are effectively in control of things much more than natural courses. See for yourself, the breakthroughs in almost every field of life - medicine, technology, mining, energy consumption and food wastage. We are no more a 'competing' species, we are a CONTROLLING species. We have the power to shave mountains, to stop and change course of giant rivers, to dig miles into earth, to produce obscenely high energy wasting machines and so on.... And along with this 'development' we have always succeeded in keeping one trait intact - IRRESPONSIBILITY. But then that's how life works. Life is never responsible, at least for other fellow life elements. Life prospers on consuming other life forms. This is how nature works. But, if this is true then how come life has succeeded in making itself successful? Well, that's because so far (before humans) life was evolving on consuming other lives in a way that basic equilibrium was established. No animal ruled this planet forever, however powerful it had been. But, we humans seem to be the first animal that will rule this planet, forever. We have become efficient but not responsible. We don't think like an intelligent being when it comes to consumption. We consume as if resources are aplenty and will never run out. What can be worse is we had and still have economists who advocated overconsumption as a means to prosperity. The result? We ended up with a world where resources are fast depleting in a long term view. Those who are more developed, consume many times that is required for them. They believe in use-and-throw. They believe this creates better economic opportunity!</div><div>So, to say that human action is 'not a factor at all' is a very irresponsible statement. </div><div><br /></div><div>The Solution:</div><div><br /></div><div>Here is where I take side with Free Market, Capitalistic society. Whether humans are causing it or not, any forced attempt to stop free markets can not work. Any govt action which threatens free market economy and people's will can not work. In fact, its the free market system that can find the solution. We have found out better and efficient ways to produce energy through course of time without any govt intervention. We developed ways to do things in a better way and most of the developments were without govt action. Whereas, wherever we have govt doing things to 'promote' green energy etc, we see it fail. An example is here in India. Our govt has been 'promoting' alternative energy in the form of solar panels, solar cookers etc with subsidies for a long time, not out of environmental challenges, but out of massive oil import bills and energy security. However, I have not seen those efforts bearing fruits at all. If something is inefficient, then no subsidy can help it.</div><div><br /></div><div>If we had true free markets, then we would have seen a definite change in energy use. Why does Indian govt subsidize petroleum products? Why are the rates kept artificially low at most times? If we had people paying actual price for consuming these products, they would consume it rationally. Indian govt does this and so do many other govts but the effect is positive only for oil exporters. Likewise, the easy money creation by central banks around the world (US, the leader of course) creates opportunity for misuse of natural resources. The global recession that started last year or so, promised to reduce excesses in consumption but again, the govts and central banks made sure people continue overconsuming and now they call for a control? Complete nonsense. Leave people free and let them decide for themselves, only then we can expect reduction in irresponsible actions.</div><div><br /></div><div>The Copenhagen Meet has failed as world leaders could not arrive at some concrete solution. In the end, they managed to leave tons of carbon dioxide themselves which was totally unnecessary. It was supposed to fail as developing countries will not agree (I am not taking sides with them) unless the developed ones actually cut their irresponsible behaviour of overconsumption which leads to more greenhouse gases emissions. Whether the greenhouse gases are dangerous or not, our politicians definitely are.</div><br /></div>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-1316386725637173182009-12-05T16:14:00.005+05:302009-12-05T16:38:49.457+05:30Latest Investment Hotspot: Somalia - Weekend Humour<span style="font-family: verdana;">Dear Readers,</span><br /><span style="font-family: verdana;">In today's world we all as investors are always in search of the latest and hottest investment candidate and place where it can be found. There are stocks and commodities exchanges all over the world where we can buy and sell assets. One who knows or has better idea of which place and which asset is going to produce best returns, can create wealth for himself. So, I thought why not find out something new and big for myself? Here is what I found out - Somalia.</span><br /><br /><span style="font-family: verdana;">Yes, Somalia, the land of pirates. Of late we heard and read so many stories of Somalian pirates hijacking merchant ships and 'earning' obscenely good 'returns'. Now, I am not that 'brave' to start my own venture out there and so I need to invest in some 'reputed' pirate companies. How nice it would be if there were a Stock Exchange which listed big pirate firms of the area! What? nonsense? It may be but this dream has meterialized! There IS a sort of Stock Exchange in Somalia and 'investors' are buying 'shares' of 'reputed' pirate firms!</span><br /><br /><span style="font-family: verdana;">Don't believe me? OK, read following lines:</span><br /><br /><span style="font-family: verdana;" id="articleText"><span class="focusParagraph">"In Somalia's main pirate lair of Haradheere, the sea gangs have set up a cooperative to fund their hijackings offshore, a sort of stock exchange meets criminal syndicate.</span></span><span style="font-family: verdana;">"</span><br /><br /><span style="font-family: verdana;">This is not something I conceived, this is a piece of 'news article' from Reuters. To read it in detail </span><a style="font-family: verdana;" href="http://www.reuters.com/article/idUSTRE5B01Z920091201" target="_blank">click here</a><span style="font-family: verdana;">.</span><br /><br /><span style="font-family: verdana;">Well, on weekends I am in funny mood and stories like this 'inspire' me to share them with my readers.</span><br /><br /><span style="font-family: verdana;">Have a nice Weekend and Sunday.....</span>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-55803356987149323322009-11-30T12:04:00.006+05:302009-11-30T15:16:10.243+05:30Dubai Drama and Continuing Psychology<span style="font-family:verdana;">Dear Readers,</span><br /><span style="font-family:verdana;">Last week there was a scary selloff in both equities and commodities when news broke out that Dubai World, a Dubai firm which has expossure in real estate companies investing in Dubai property market, asked for delay of debt repayment till May 2010. The total debts amounted to around USD 60 billiion!</span><br /><br /><span style="font-family:verdana;">According to mainstream media, this news created panic in 'investors' who rushed to sell whatever they had, equities, commodities etc. as this raised and renewd fears of 'bigger than what looks superficially' crisis. Well, my friend Abhijit told me one thing - "this should be real buying opportunity". He was right. It was definitely the kind of fall a bullish trader needs and those who bought the decline on Friday are in short term profits now and may get even more. However, this is not something new, in fact, this is what we know as 'Buy on Dips Psychology' and works very well during bull markets. Since Mar this year, traders who had this psychology have made very good profits.</span><br /><span style="font-family:verdana;"> <br /> So, what should we learn from this incident? A lot. As long as the underlying up trend is intact, traders will continue to benefit from this tendency to buy on selloffs but this is exactly what I think is important when markets change direction and the underlying uptrend breaks. This very tendency is alive even after a major reversal and traders buy initial 'dips' , then they buy bigger selloffs. Then, this tendency becomes the driving force behind reinforcing the 'reversal' as all those stuck traders sell their 'assets' on a bounce. This psychology does not disappear in early stages of that changed direction and traders gradually shift to 'sell on rallies' from 'buy on dips'.</span><br /><br /><span style="font-family:verdana;"> Traders are not driven by news but its the embedded psychology that drives their decision. News is only a very small factor and does not have big effect on price but it is definitely something which savvy traders can use to look for opportunities. Those traders who take decision solely based on news suffer most.</span>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-23481434643912111722009-11-25T21:07:00.006+05:302009-11-26T09:30:56.041+05:30A ClarificationDear Readers,<br /><br />In my last posts I've mentioned US Dollar and its correlation with equities and commodities and the ongoing price action. Today, I received a phone call from a friend who did not want to put this issue in the coments section and so chose to directly ask me. Here is the conversation we had:<br /><br />He: Do you really think dollar plays actual role in dollar based asset prices?<br />I : I did not write it anywhere, did I?<br />He: Your posts suggest as if US Dollar is driving the prices of assets like equities and commodities?<br />I : Well, it does, but, this correlation is not suggested in my posts.<br />He : So you mean it 'does exist' but not 'shown' in your posts?<br />I : Yes it does exist. But, we can not calculate or even guess the future direction of assets prices based solely on looking at US Dollar index.<br /> Well, we need to understnad the US Dollar index first. before that, we need to look at currencies and how they are traded. A currency of nation A does not have a price unless it is put against that of some other nation, say B. So US Dollar in itself can be evaluated on comparing it with the currency of some other nation like UK. This doesn't give us complete information about USD as it may be strong there but week against Japanese Yen. So, there is the US Dollar index, which is actually an index of USD against a BASKET of currencies. Its actually five currencies against which it is meassured. These are following:<br /><ol><li>Euro (EUR)</li><li>Yen (JPY</li><li>Cable (GBP)</li><li>Loonie (CAD)</li><li>Kronas (SEK) </li><li>Francs (CHF)<br /></li></ol>What it means is we have an index which is meassured against only five currencies of the world. So, the US Dollar index can not give us actual data for this reason:<br /><br />We may have all these six currencies going down and USD index may show stability. It may happen in times like today when every central banker wants a lower valued currency so that their country can stay afloat in crisis.<br /><br />Then, we have also to take into account one important feature - carry trade. In currency trading, its not only the outlook of economy that matters. In fact, traders often find out a currency that has low interest rate and 'carry trade' with it with a currency that has high interest rate. For example, Japanese Yen (JPY) had been used as currency of carry trade because of Japanese Central Bank keeping interest rates near zero. What happens when traders chose a particular currency for carry trade is that currency keeps low against other currencies (against which it is traded, e.g., GBP/JPY). One of the reasons why US Dollar is for a good time losing its value is that most probably it has been started as a currency of carry trade, perhaps mostly for EURUSD pair (Euro / US Dollar). What is more important here is that traders use a heavy leverage in trading currencies - near 1:100. Some brokers offer even 1:400 leverage! So, the thing to consider here is the importance of any change in tide - a trader is subject to high risk if his position goes beyond the interest differential paid by the currncy pair. This can lead to overnight turnover in the direction of currency pair price. This all means one thing - US Dollar index can turn any side swiftly if there is a good enough catalyst.<br /><br />This might be the reason why Gold is rising and making all time highs despite USD at 'only' 15 month lows. Otherwise, US Dollar index should also be at all time low if the correlation was that simple.<br /><br /> This should explain why the value of US Dollar index alone can't tell real picture and so, we must keep in mind that falling value of USD does mean bad for assets but we should not be limited to US Dollar Index. However, as we don't have better indicators, its better to use US Dollar index for our important decisions but only after we take into account many other things.<br /><br />The other things we talked were not important to post here. I know many readers are well aware of the fundas behind US Dollar and currency trade in general, but I felt compelled to post these details for those dear readers who may be new to currency trading and might have been thinking like how this friend did.Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-44082008208790643742009-11-22T20:38:00.007+05:302009-11-22T22:26:32.695+05:30Gold, US Dollar and Equities<span style="font-family:verdana;">Dear Readers,</span><br /><br /><span style="font-family:verdana;">You must be aware of how gold price is going up almost every day. The reserver currency of world - US Dollar has been going down but not making new lows. Instead, it threatened to start a rally in last two weeks. The mainstream media suggests gold is going up because dollar is going down. I disagree. Gold is not 'reacting' to US Dollar in the sense media suggests. If you don't believe my words then look at these charts from stockcharts.com:</span><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_X7A4HUBt4y4/SwlsHFYuZAI/AAAAAAAAAQE/WDldY9VmZoM/s1600/dollar+index+Weelkly.png"><img style="cursor: pointer; width: 320px; height: 198px;" src="http://2.bp.blogspot.com/_X7A4HUBt4y4/SwlsHFYuZAI/AAAAAAAAAQE/WDldY9VmZoM/s320/dollar+index+Weelkly.png" alt="" id="BLOGGER_PHOTO_ID_5406971696595756034" border="0" /></a><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_X7A4HUBt4y4/SwlsHglAu0I/AAAAAAAAAQM/4oj75_pQ-b4/s1600/Gold+Weekly.png"><img style="cursor: pointer; width: 320px; height: 198px;" src="http://2.bp.blogspot.com/_X7A4HUBt4y4/SwlsHglAu0I/AAAAAAAAAQM/4oj75_pQ-b4/s320/Gold+Weekly.png" alt="" id="BLOGGER_PHOTO_ID_5406971703895046978" border="0" /></a><br /><span style="font-family:verdana;">As we can clearly see for last week candles that US Dollar Index chart shows dollar is moving up and comparing to gold chart, both were up last week! Which, according to media and pundits, can not happen. Why at the same time we see gold going up and US Dollar NOT going down?</span><br /><br /><span style="font-family:verdana;">There can be only few possibilities:</span><br /><br /><span style="font-family:verdana;">1. Speculators are betting on hyperinflation in near future.</span><br /><span style="font-family:verdana;">2. Supply of Gold is limited and the way China and India showed their intention of buying gold implies a rise in demand.</span><br /><span style="font-family:verdana;">3. No reason, it might be just a coinincidence.</span><br /><br /><span style="font-family:verdana;">The third one can not be considered as if it were true, then you would not be reading this post. There is definitely a reason and out of the first two, my bet is on 2. Gold real demand might have outdone its current and future supply in a manner that everyone is looking to acquire as much of it as he can. </span><br /><br /><a style="font-family: verdana;" href="http://indexviews.blogspot.com/2008/08/outlook-on-15th-august.html" target="_blank">On 15 Aug I recommended buying gold and a lot of it</a><span style="font-family:verdana;">. Those readers who followed my advice must be happy today, but, I don't reccomend buying gold at this point of time. Its certainly not the right time to accumulate gold as in my opinion it has gone up substantially and so, investors should look at some good correction to buy gold.</span><br /><br /><span style="font-family:verdana;">The Dollar Index (US Dollar) shows its willing to move up after a big fall in last few months. But, looking at the chart, it should first break that downtrend line and rise above 50 SMA (on daily chart). If it does manage to stage a rally then we can see it retesting 80-81 level.</span><br /><br /><span style="font-family:verdana;">Equity markets did not show any directions last week and looked like mostly following US Dollar which kept going up and down but not meaningfully. Indian NSE Nifty shows a Reversal Day (looking at Friday's candle) and there is good possibilities that Indian equities markets may rally next week.</span>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-42910552538075114232009-11-04T10:34:00.008+05:302009-11-06T12:48:37.522+05:30Free Live Charts of Dow Jones, Currency Pairs<span class="Apple-style-span" style="font-family:verdana;">Dear Readers,</span><div><span class="Apple-style-span" style="font-family:verdana;"><br /></span></div><div><span class="Apple-style-span" style="font-family:verdana;">I have added Free Live Charts of Dow Jones index and Currency Pairs like EUR/USD on the top right side of this page. These charts are easily customiz<span class="Apple-style-span" style=" ;font-family:Georgia, serif;"><span class="Apple-style-span" style=" ;font-family:verdana;">able and you can even detach them. I am thankful to <a href="http://www.dukascopy.com/" target="_blank">DUKASCOPY</a> for providing this useful resource to my dear readers.</span></span></span></div><div><span class="Apple-style-span" style="font-family:verdana;"><br /></span></div><div><span class="Apple-style-span" style="font-family:verdana;">For Nifty Futures traders, the Ascending Triangle pattern has failed when it broke 5030 (the trendline support). Those who were long on this pattern should have been in profit as this pattern gave breakout at 4750. Not a bad trade of 270 points of profit!</span></div><div><span class="Apple-style-span" style="font-family:verdana;"><br /></span></div><div><span class="Apple-style-span" style="font-family:verdana;">Now, the Dollar is getting stronger and looking at US Dollar Index, it is trying to break 50 DMA near 76.5. Yesterday it could not close above that but did pierce it in intraday movement. If Dollar continues and gets above this important resistance then we may see it looking at 200 DMA near 81, which means a horrible picture for commodities and equities. However, as long as the downtrendline and 50 DMA holds, one can have the best buying opportunity. Let us see how it behaves in near future. Following chart of US Dollar Index is from stockcharts.com. <a href="http://stockcharts.com/h-sc/ui?c=$USD,uu[h,a]daclyyay[pb50!b200!f][vc60][iue12,26,9!lc20]" target="_blank">Here is the link</a> to this chart.</span></div><div><span class="Apple-style-span" style="font-family:verdana;"><span class="Apple-style-span" style=" ;font-family:Georgia, serif;"><img src="http://2.bp.blogspot.com/_X7A4HUBt4y4/SvEWcsMIYcI/AAAAAAAAAP8/edCnuhBH8Ag/s320/dollar+index.png" border="0" alt="" id="BLOGGER_PHOTO_ID_5400122110348124610" style="cursor: pointer; width: 480px; height: 225px; " /></span></span></div><div><span class="Apple-style-span" style="font-family:verdana;"><br /></span></div>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com3tag:blogger.com,1999:blog-5150110713299687755.post-49563396840306766132009-10-11T16:31:00.009+05:302009-10-11T23:44:14.334+05:30Markets, Politics and The Nobel Prize for Peace<span style="font-family:verdana;">Dear Readers,</span><br /><br /><span style="font-family:verdana;">In last few days we have seen so many things and that inspired me to add subjects other than markets to this post.</span><br /><br /><span style="font-weight: bold;font-family:verdana;" >Markets</span><br /><span style="font-family:verdana;">We saw Global Markets doing nothing significantly except one change - Indian Markets unwilling to go up even when global cues were good. For Nifty Futures, my stand is still for the Ascending Triangle which is intact so far.</span><br /><br /><span style="font-weight: bold;font-family:verdana;" >Politics and The Messiah</span><br /><span style="font-family:verdana;">I was not the only one surprised when they annoounced Nobel Prize for Peace to US president Mr. Obama. In fact, he himself was surprised. I have always had good respect for Mr. Obama, except for his economic policies, but in my humble opinion this announcement of awarding Nobel Prize for Peace is actually a big trouble for him. The Nobel Prize Committee has made him officailly Messiah and tied his hands at a time he is really surrounded by problems Iran, Iraq, Afghanistan and Russia.</span><br /><br /><span style="font-family:verdana;">Iran and its nuclear program is no secret to world and so is the position of US. A nuclear weapon capable Iran is bigger danger to US than what mainstream media discusses. Iran capable of nuclear weapons is direct threat to Israel and surprisingly, the rest of Arab World and they rely on US to counter those fears. I know, many readers are going to argue against this opinion as they have been misled by mainstream media that Arab World is against Israel and they hate US. That is what we have been made to think like, but not true.</span><br /><br /><span style="font-family:verdana;">Russia, since Putin took charge, has shown its willingness to stand against US, esp when US desire of expanding NATO to states of Europe that Russia has influence on. We do remember Russia's attack on Georgia last year which was a clear symbol of Russia declaring its intentions. Moreover, US needs Russia in order to fight war in Afghanistan and counter Iranian nuclear program. Recent decision to backtrack from deployment of missile defense system in Poland by Mr. Obama was probably his side of concession to Russia which in return would allow supplies to Afghanistan through its territory. Another thing that he would have reslished is Russian support for sanctions against Iran so that a strike on Iraninan nuclear sites could be avoided. But, Russia has not promised that as yet and is not likely to do either. To make things worse there was a '</span><a style="font-family: verdana;" href="http://www.timesonline.co.uk/tol/news/world/middle_east/article6860161.ece" target="_blank">news</a><span style="font-family:verdana;">' about Israel's Prime Minister visited Russia and showed them a list of Russian scientists involved in Iranian nuclear program. Also, there was this 'leak' that there is </span><span class="italic" style="font-family:verdana;">a secret nuclear site in Iran being built. The reaction by Iranian president Ahmadinejad was this - </span><a style="font-family: verdana;" href="http://community.nytimes.com/comments/thelede.blogs.nytimes.com/2009/09/25/ahmadinejad-decries-obama-mistake-over-nuclear-plant/?scp=2&sq=IAEA&st=cse" target="_blank"><span style="font-style: italic;">President Barack Obama's accusation simply "adds to the list of issues to which the United States owes the Iranian nation an apology over."</span></a><span style="font-family:verdana;"> This is like challenging Mr. Obama to "do what he can". This shows how confidant Iranian president is about Mr. Obama being a weak US president.</span><br /><br /><span style="font-family:verdana;">The situation is getting worse than what we can imagine as Mr. Obama can either keep quiet or strike. NOW, keeping quiet and letting all this happen may not be the best thing to do for a US president, he can not let the label of 'weak' stick on to him. Then, striking Iran at the time when he is awarded Nobel Peace Prize is equally difficult. This is why I think he is more than surprised about this announcement of Nobel Prize.</span><br /><br /><span style="font-family:verdana;"> One idea that comes to my mind is let the luck factor bear the burden, we can assume Mr. Obama is plain unlucky to have countered these circumstances. In fact, we can even blame his election as bad luck for him given the situation he had when he received presidential vote. Economic situation was bad and there were so many expectations from him. But, this idea fades away when I see how he reacted to those conditions. In fact, he had the greatest opportunity of lifetime! Yes, he could have done the best job by doing one thing - stay away and let the natural forces of Creative Destruction take their course. But, he, like all politicians, chose to intervene. Although this active intervention looks like things are returning to normal, the truth is there is a massive debt unwinding under way and these interventions will only postpone the real crisis.</span><br /><br /><span style="font-family:verdana;">I like him as a person who has a desire to change the world for good, but, I doubt circumstances will let him swim through troubled waters.</span>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-81562324725301838162009-10-04T23:08:00.005+05:302009-10-04T23:42:27.225+05:30Paul Krugman in another Nobel Prize Ceremony<span style="font-family: verdana;">Dear Readers,</span><br /><br /><span style="font-family: verdana;">You know about The Nobel Prizes but probably you are not very familier with </span><a style="font-family: verdana;" href="http://improbable.com/ig/" target="blank">Ig Nobel Prizes</a><span style="font-family: verdana;">. Each year, close to the time when the real Nobel prizes are awarded, the Ig Nobels are bestowed upon scientists whose work "makes people laugh, and then makes them think," says Ig Nobel Master of Ceremonies Marc Abrahams.</span><br /><br /><span style="font-family: verdana;">The official theme of this year's Ig Nobels was "risk"--a nod to the recent collapse of global financial markets. The Ig Nobel prize in economics this year went to the leaders of Iceland's major banks, who were widely credited with destroying their country's economy. On stage to bestow that prize was Paul Krugman, a Nobel Prize–winning economist of Princeton. Did you read? Paul Krugman? The economist who once (in 2003) was 'scared' by inflation and high budget deficit, NOW has changed personality entirely!</span><br /><br /><span style="font-family: verdana;">He was agaisnt Greenspan then, and today, when Bernake is following Greenspan's footsteps, he is happy!!! </span><a style="font-family: verdana;" href="http://mises.org/story/3691" target="blank">This article on mises.org</a><span style="font-family: verdana;"> tells the truth about the Great Nobel Winner.</span><br /><br /><span style="font-family: verdana;">If there is God, then I request Him to save us from these 'Intellectuals'.</span>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com1tag:blogger.com,1999:blog-5150110713299687755.post-77509082352589438472009-09-21T15:41:00.003+05:302009-09-21T16:16:08.751+05:30Nifty Futures Analysis - Ascending Triangle Pattern<span style="font-family:verdana;">Dear Readers,</span><br /><br /><span style="font-family:verdana;">In my </span><a style="font-family: verdana;" href="http://indexviews.blogspot.com/2009/09/nifty-futures-analysis-on-daily-chart.html">post on Sat, Sept 5</a><span style="font-family:verdana;">, I presented the possibility of a strong </span><span style="font-weight: bold;font-family:verdana;" >Ascending Triangle pattern on Nifty Futures Daily (EOD) Chart</span><span style="font-family:verdana;">. The pattern developed and gave a Breakout on Sept 7 and prudent traders must have taken notice. After the breakout (BO) it was important to watch for a retest of BO level and then we got it as well on Sept 14. Following is the latest chart of Nifty Futures EOD with details:</span><br /><a style="font-family: verdana;" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_X7A4HUBt4y4/SrdV17U_49I/AAAAAAAAAP0/pcADtBiKak8/s1600-h/Nifty+Future+Daily+20th+Sept.PNG" target="_blank"><img style="cursor: pointer; width: 320px; height: 201px;" src="http://4.bp.blogspot.com/_X7A4HUBt4y4/SrdV17U_49I/AAAAAAAAAP0/pcADtBiKak8/s320/Nifty+Future+Daily+20th+Sept.PNG" alt="" id="BLOGGER_PHOTO_ID_5383866264491910098" border="0" /></a><br /><span style="font-family:verdana;">Notice the nice rising uptrend line TL1 which also acted as support line for the Ascending Triangle. Even if this pattern fails, I will wait for this TL1 to act as support, most likely where it crosses TL2 at about 4770 (see Down Arrow). The resistance line of Ascending Triangle - TL2 was taken out on Sept 7 and then retested on Sept 14 (see UP Arrow). Now, since then, there is another trendline acting as support - TL3. This TL3 should act as first support if the upward momentum continues.</span><br /><br /><span style="font-weight: bold;font-family:verdana;" >The Doubts: </span><br /><span style="font-family:verdana;">I was not very excited on the BO of this pattern as volume was not higher that could confirm it. However, if price is running on its own then we can not keep arguing against the trend.</span><br /><br /><span style="font-family:verdana;">I am sure you dear readers must have taken advantage of this pattern. Don't forget, if this pattern runs its course then the target is 5500 - 5600.</span><br /><br /><span style="font-family:verdana;">Happy Trading...</span>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-60047818157396882152009-09-12T14:42:00.004+05:302009-09-12T15:35:57.600+05:30The New War Begins Now<span style="font-family: verdana;">Dear Readers,</span><br /><br /><span style="font-family: verdana;">Today I read one news on yahoo finance and it confirmed my fear of governments resorting to protectionism. Politicians are always like that, no doubt, and it was expected. In addition, I expect a lot more of these meassures by lot more (possibly all) governments around the world.</span><br /><br /><span style="font-family: verdana;">First, the news - </span><a style="font-family: verdana;" href="http://finance.yahoo.com/news/US-China-at-odds-over-tire-apf-164626163.html?x=0&sec=topStories&pos=main&asset=&ccode=">President Barack Obama has imposed new punitive tariffs on all car and light truck tires coming into the U.S. from China</a><span style="font-family: verdana;">.</span><br /><br /><span style="font-family: verdana;">This is one small step by The Man which will likely be a Giant Stride for Mankind. The great American President has started New War (they are really good at it - New Wars) and sure it is going to result in other nations following suit. Any sane person with a knowledge of economics knows how bad can this protectionism be for any possible global economic recovery, but politicians don't care about that. They want to please masses and masses like such things, even if its not in their favor! To put it simply, who is going to benefit? the consumers (read masses) who will be deprived of free choice of products and will need to pay more OR the inefficient domestic producers who can sell their products at higher prices without competition?</span><br /><br /><span style="font-family: verdana;">Expectedly, the Chinese are unhappy over it. Read following para from that news :</span><br /><br /><span style="font-style: italic; color: rgb(102, 102, 102); font-family: verdana;">"China strongly opposes this serious act of trade protectionism by the U.S.," a statement posted on China's Ministry of Commerce Web site said. "This act not only violates the rules of the World Trade Organization but also violates the relevant commitments made by the U.S. government at the G-20 financial summit."</span><br /><br /><span style="font-family: verdana;">Why did He do it? Well, the culprit is Healthcare Bill. He needs support of unions for the bill. As its put there in that news:</span><br /><br /><span style="font-style: italic; font-family: verdana;"><span style="color: rgb(102, 102, 102);">While the White House announcement late Friday is likely to placate union supporters important to the president's health care push at home, it could alienate the strategically important Asian powerhouse and trading partner</span>.</span><br /><br /><span style="font-family: verdana;"> Now this is called Double Jeopardy - First, the bill itself is not the right thing to do if one cares about free markets and long term well-being of people; Second, in order to pass the bill, He has done one of the worst possible things a politician in power could do. But, isn't it that the consequences of this move are well deserved by the masses?</span>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com0tag:blogger.com,1999:blog-5150110713299687755.post-33236373758735686312009-09-05T15:03:00.005+05:302009-09-08T00:37:00.372+05:30Nifty Futures Analysis on Daily Chart<span style="font-family:verdana;">Dear Readers,<br />Today I am posing my views on Nifty Futures based on Daily Chart (EOD). This is after a considerably long time when I posted my analysis, partly because I was busy doing other things and partly because I did not find such interesting formation to share.<br /><br />Coming to the point straightaway, let me start with trendlines - Following is the Daily Chart of Nifty Future (Linear) and it show a rising uptrend line holding since March lows:<br /></span><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/_X7A4HUBt4y4/SqI3G9uTp_I/AAAAAAAAAPU/YCrnfoQFB_I/s1600-h/Nifty+Fut+Daily+-+Linear+Chart+Trendline.PNG"><img style="cursor: pointer; width: 320px; height: 231px;" src="http://3.bp.blogspot.com/_X7A4HUBt4y4/SqI3G9uTp_I/AAAAAAAAAPU/YCrnfoQFB_I/s320/Nifty+Fut+Daily+-+Linear+Chart+Trendline.PNG" alt="" id="BLOGGER_PHOTO_ID_5377921497821325298" border="0" /></a><br /><span style="font-family:verdana;">The interesting thing is if we switch to log charts, then this trendline was violated (downwards) in mid-august and since then acted as resistance. However, the resistance was not that strong and my conclusion is this trendline looks not very valid in order to guide us for any meaningful trade.<br /></span><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_X7A4HUBt4y4/SqI3Hpz1eWI/AAAAAAAAAPk/FODT180hTFQ/s1600-h/Nifty+Fut+Daily+-+Log+Chart+Trendline.PNG"><img style="cursor: pointer; width: 320px; height: 263px;" src="http://4.bp.blogspot.com/_X7A4HUBt4y4/SqI3Hpz1eWI/AAAAAAAAAPk/FODT180hTFQ/s320/Nifty+Fut+Daily+-+Log+Chart+Trendline.PNG" alt="" id="BLOGGER_PHOTO_ID_5377921509655673186" border="0" /></a><br /><span style="font-family:verdana;"><br /><span style="font-weight: bold;">The Ascending Triangle:</span><br />The most important thing that took my attention is the development of an Ascending Triangle pattern on Daily Chart. Let us first have a look:<br /></span><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_X7A4HUBt4y4/SqI3HXMEslI/AAAAAAAAAPc/Fs_FEjodfV8/s1600-h/Nifty+Fut+Daily+-+Log+Chart+Ascending+Triangle.PNG"><img style="cursor: pointer; width: 320px; height: 185px;" src="http://2.bp.blogspot.com/_X7A4HUBt4y4/SqI3HXMEslI/AAAAAAAAAPc/Fs_FEjodfV8/s320/Nifty+Fut+Daily+-+Log+Chart+Ascending+Triangle.PNG" alt="" id="BLOGGER_PHOTO_ID_5377921504657060434" border="0" /></a><br /><span style="font-family:verdana;">Now, this pattern is identical on both linear as well as log chart and the implication is - if it manages to get through above 4770 with good volumes and stay there then according to Ascending Triangle pattern 5500 - 5600 is there as target! Falling below 4500 (volume not important) will mean this pattern is failed. Let us see what's in store in near future.<br /><br /><span style="font-weight: bold;">Failing Patterns are in Vogue:</span><br />Having written the above views about a possible Ascending Trianlge, I must remind my dear readers that patterns are not fool-proof and can fail. Recently there were two big patterns that failed miserably! First, there was a Head and Shoulders pattern, which, after breaking the neckline failed. Then, there developed an Inverse Head and Shoulders pattern and it too failed well after breaking neckline!!! Please see the following chart:<br /><br /></span><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_X7A4HUBt4y4/SqI3IADXrfI/AAAAAAAAAPs/8TtezYtEOTg/s1600-h/HnS+Failed.PNG"><img style="cursor: pointer; width: 320px; height: 246px;" src="http://4.bp.blogspot.com/_X7A4HUBt4y4/SqI3IADXrfI/AAAAAAAAAPs/8TtezYtEOTg/s320/HnS+Failed.PNG" alt="" id="BLOGGER_PHOTO_ID_5377921515626409458" border="0" /></a><br /><span style="font-family:verdana;">So, as we can see clearly that in the recent past we witnessed failure of big promising patterns, we must always remember that patterns can fail at times. If this pattern does give a breakout, we should never think that now the target is there for sure. Like what happened with H&S and Inv H&S, it can also show a false breakout, so keep your stops properly.<br /><br />Happy Trading...<br /></span>Harryhttp://www.blogger.com/profile/18298597316683577776noreply@blogger.com2