Where is the DOW headed now?

The Dow Jones Industrial Average after hitting a bottom just below 6.5k in March 2009 is now trading up above 10K, a whopping gain of 50% for all those who bought in at 6.5K, so what could be the next move, would it up or would it breakdown yet again, is this the correction to the major downtrend that saw the Dow Jones loose more than 55% of its value in a matter of 1 ½ year between October 2007 to March 2009 or is it just a building phase of the new bull market, Lets delve into the history and look, the DOW started its most bullish phase in 1995 at 4K’s and ended it at 12K in 2000, although the DOW managed to break past 12K in 2006 we cant call this a new bull market because it just satyed above 12k for a year and then even broke the 2002 bottom, so all in all the 2000 – 2008 could be called timewise correction for the bull market from 1980 – 2000, The Dow after cutting about 7.5k points from 14k to 6.5k has added about 3.8K points to trade at 10.3K that is it cut 50% of the fall which could be still called a correction, at the same time it reached the lower trough of the trading range of 10 -12K where it traded in 2000 – 2002, and 10 – 11 K trading range of 2004 – 2006, now this lower tough of about 10K which acted as a support that time could be the resistance this time round, so the level of 10K should be watched, also the markets don’t go down or go up in straight fashion they always tend to test the bottoms as well as the tops and for that matter the bottom at 6.5k has not been tested so could it be that the markets will break again and move down, lets keep our finger crossed and see what happens.

Maintain the shorts but be cautious

As I had mentioned in my previous post, HDFC did not move to the expected target of 2300 Intraday, it took support at 2342 and reversed; it triggered our intraday stoploss and went upto the target of 2430 where we had positioned ourselves to go short, now as I am writing HDFC has opened up at 2476 but it could not hold at that point and hence our first stoploss of 2460 should not be placed if by any chance it still excels 2460 50% of the position should be exited while the remaining to be exited if it crosses 2500 and if it doesn’t hit these stoplosses we can held the short positions in short term.

Hero Honda too excelled our first stoploss of 1520 but didn’t sustained over there so no need to cover the short, but any movement above this exiting half the positions is necessary which could be again built close to 1585, Bharti Airtel too opened up at 800 and hit our first stoploss, but no need to panic as it too as not sustained at that point, but we need to be extremely cautious.

Strictly maintain the stoplosses as by taking bearish positions we are fighting the strong enemy by the name US Federal Reserve and all the policy deciding Major Central Banks of the world who might even drop money from Helicopters (this are the comments by Ben Bernanke, Chairman of US Federal Reserve) to inflate the economy and cause disasters for many people living below poverty line in India as well as the World and anyways we are here to make money and to make money we have to keep our hearts out and trade with our brain so strict stoplosses and keep in mind we are in a recession but it could be deflated inflation or hyperinflated recession wherein 1 Crore note would be required to buy bread, so be cautious and don’t be over confident.

Targets for short selling

After a strong downfall from 2618 to 2144 HDFC has given a correction (this is a correction till it doesn’t trade beyond 2450 – 2460) and traded up to 2430, now HDFC might resume the downfall, so as of today one can go short for a target of 2300, HDFC is currently trading close to 2380 one can keep a stoploss close to 2398 next 2406 and lastly at 2415 and go short on HDFC for a target of 2300 intraday. Also if by any chance HDFC trades above our stoploss wait for HDFC to move past 2430 and then short HDFC Future with a stoploss of 2460 (cash) and 2500 for a minimum target of 1800 in coming 2-3 months.

Hero Honda to seems to be topped out and could be a target for short building the first minimum target on it seems to be close to 1200 which could be achieved within 1-3 months, the next target on it seems to be close to 900 which could be achieved within 5-6 months possibly by year end stoploss for all this positions is a trade by Hero Honda above firstly 1520 and next 1626

Bharti Airtel to seems to be in a phase of distribution and could be a target of shorts with a stoploss close to 800 and 850 for a target of 500 in next 4 months