Morning view before market open

Markets closed in a traded in a small range on Monday after a big gap

down opening and then rallied the next day 1200 points after a gap up.
Overnight gap up and a huge engulfing candle on Tuesday made
everyone bullish. US markets fell on Wednesday and overnight sellers on
both sides were butchered on consecutive days.
GDP numbers are below expectation and RBI will have to revise GDP
numbers for the year. With our markets out performing global markets
these numbers can have an impact as Global markets are trading on a
different trajectory.
With crude falling and Dollar index relaxing it can be a confusion expiry
to start the day with. With SGX falling from 17800 levels during the
holiday and a gap down is evident due to global sentiment. With a minor
gap close to 17400 levels it will be interesting to see if buying emerges or
goes on to close the gap.

EOD data
Strong OI built up is seen on two previous sessions to touch 39800/40000
levels but closing a little lower. Shorts covering rallies are furious and a
sudden fall can bring in panic for PE sellers.
Data was extremely bullish and no one would expect a gap down.
OI build up on 39000 CE shows extreme bullishness but we will be under
pressure from global market cues. 39000 PE also sees huge build up and
PE buyers will be extremely happy with the gap down.

Market psychology on overnight players

Expect covering to happen at open and we can see one up move as profit
is booked. It will be interesting to see if PE sellers go aggressive at open
to take the market higher.
Patterns can be seen made to throw out people creating huge over
positions. Overnight players feel cheated and market will do this once in
a way that will shake you up.
It is times like these that you believe in your plan and keep going. There
will be odd days were your stop losses will be hit. That does not mean
your strategy will no longer work. That does not mean you will skip and
move on to another strategy.
You have to observe data and chart patterns over a period of time before
you decide or conclude that this strategy is no longer working.
Market does not want players to enjoy the same kind of run and will
create some kind of panic. Days like these you have to accept the broader
market sentiment and stay light.

Words of wisdom
Traders with low capital stay light as one day’s move can wipe out your
trading capital. If you are working on a trading plan have long term
visions to observe trends and introspect periodically. A bad month does
not mean you move on to another strategy which has paid off well in the
recent past.

39500 analyses
Textbook copy of 39500 CE which would have induced trader to keep
calls and carry forward them looking at the short covering that happened
on Tuesday.
Absolutely if you are a trend player you will carry calls looking at such
data.
Similarly big players who wrote PE will need to manage this opposite gap
down move so it will be interesting to see how they manage these
numbers. If they manage then the ones holding overnight positions can
exit with a small profit/loss.
Point will be if big money manages to take the market higher once again.
Retails are the ones who did well with Puts being carried and they will be
the ones who will have a laugh at market open.
Unfortunately bulls will need to give up if we continue to go down after
market open.
 Nifty view
NIFTY has similar data like Bank nifty and it will be interesting to see how
Nifty reacts to the gap down.
Banks, IT and Reliance and all were helping Nifty the previous day but
nifty looks to be a little better than bank nifty at least at open.
Looks like some expiry move in fin nifty on Tuesday was used to be
manage the index.
17700 with low to closing to highs and still shorts in system t
17700 puts added positions and will be rewarded
Advice on overnight positions
If you are holding Puts trail your stop loss.
If holding call; hold for 10 to 15 mins and then you can expect based on
price action.
Options premiums indicate an interesting open as stop losses can be
huge and get ready to average for 50-100 rupees where you would have
rather done in 10-20 rupees.

How market movement is made?

Two big money players fighting it out on either side and get ready to see
Algo bars on both sides.
20 day MA can be tested and if broken then you can see more pain on
the down side.
Shorts still holding fort can indicate writing at higher levels.
With VIX remaining in same place it means shorts are not leaving the
system and can come in with fresh shorts added and more fall can come
on rise.
Trending OI indicated a perfect trending day with new highs created
every hour yesterday.
Let’s hope some sense prevails
 Moring trades – 9:15 AM
Opening is massive and it’s purely to wipe out overnight sellers playing
directional. PE sellers will run for cover at open as we are opening wiping
out 75% of previous day gains.
Stay light as there can be some serious short covering happening.
Protecting capital is crucial as we cannot confirm till where this move can
go up to.
As there is no signal in morning trade it is good to wait and watch for
clear tend to emerge.
As there is divergence in data and price it is better to wait and let the
market settle down.
It’s not only FII buying that will make you go bull in open as you have to
see global sentiment as well.
It’s about two big players who would have carried positions and one is
trying to overpower the other. Small retail players need to stay light and
wait for clear trends.

With OH on both sides in Bank nifty it can be a writer’s paradise or we can

see one side taken off and then a move on the other side.
Reliance, TCS and Infosys are falling more which indicate Nifty can be the
weakling among the two.
OH on Nifty can be hit. VIX does not look to give you any comfort
VIX is not falling and getting in 20s.
Bank nifty looks to be the index that is used to manage Nifty.
PUT trade seems to be an interesting one but need to wait it out for some
clarity in data from 9:30 AM
Wait for the 2 candle to form.
If you cannot average positions don’t even think to enter a trade.

9:30 AM
A combination of long un-winding and short build up is showing up in
both CE and PEs. Premiums are equal on both sides and we will need to
wait and watch.
Several OH hit on call side in Nifty now need to see if it will do the other
side
Premiums are the ones that are melting and the problem is do the bulls
have the fire power to close the day gap and take market higher.
Nifty looks to be weaker than Bank nifty.
39500 call being written / need to see how much more will be written.
 10:00 AM
Market is getting into consolidation zone and can frustrate both buyer
and seller on both sides.
Retail will want to see a move happening quickly to ride the momentum.
Moves are getting erratic and getting stalled as well.
September series seeing some wild moves on the first day itself and small
players with small stop losses are going to be hit in the volatility.
We are seeing rejection happening at higher levels and every dip is being
bought as well. Such profit booking and immediate buying will remind
buyers of the trending day that was witnessed yesterday.
Will the bulls be able to take it higher is what is left to be seen. Bank nifty
looks to be extremely bullish and is going all guns and nifty not doing as
much as bank nifty is.
Will need to see more validation before going big
Moves are happening with volume and RSI is good. It is very rare to see
such moves completely with volume. Each candle formed is coming with
volume showing the strength of the bulls in the first session of the day.
o Every minor dip is being bought
o One more attempt is being made to go higher
o Bulls seem to be on a rampage here
 o On a 60 min futures it’s indicating a short covering
o Not even a medium range fall allowing a decent entry near the
WMA and super trend
o All minor dips being bought and not allow entry without a bigger
stop loss
o Interesting to see if a small move happens towards super trend and
WMA

10:30 AM
It is still risky to a trade on the put side. One dip till these levels will allow
us to get into call side rather than put near the VWAP.
Need to be careful in the day as we are rallying against the global trends.
Price is not within super trend and VWAP which means we can see writing
happening within this range.
If you are not getting a trending move from close to VWAP it can be easily
hitting stop losses as stop loss will be bigger.
Some kind of resistance is coming in from 39600 levels which is close to
the previous day high as well.
Trending OI indicating some longs unwinding into the mid-session.
When you are taking support trade the fall need to be with low volume if
it comes with down with low volume or else bears can break these levels
and go down further.
Now that the super trend is broken the only level of support is the VWAP
and writers can keep it in the same place.
Positional our markets can be bullish if these levels are maintained for the
day.
Volatility is really high and one candle is seeing premiums jumping from
150 to 200 points.

One more attempt being made to take market to higher levels.

o Let’s see if they can cross the super trend with volume.
o WMA is now being used as support and super trend may play
resistance.
o When you see a vertical move happen you can see a parabolic
opposite side move in the second half as well.
o Bulls looking to defend levels multiple times
o Long build up happening now
o VWAP looks to be the level to watch for.

If VWAP is broken with volume you can see all hell break lose on the other
side. However, as we are rallying against the global trend it can be dicey
from here.

o Slowly profit booking come in

o Shorts slowing starting to emerge
o 39500 can be the clue today
o We can see writers coming in on both sides
 11:45 AM
Market has made a temp top and remaining in a range. We should
remain light when markets trade in a range in the mid-session after a
strong up move or down move. Expect a big move in the second half if
serious profit booking happens.
Market is rally in opposite of what the global is doing so we can expect
profit booking
VWAP when broken can see some move with volume

Volume is needed to break VWAP else we can see a quick reversal that
can take stop losses.
Two attempts are already made and support taken. We need to see if
they can break with huge volumes so we can ride the trend on the down
side.
Nifty will show the way and we can trade in bank nifty as it can play catch
up.
Nifty and bank nifty have broken VWAP but not with a follow up candle.
Whenever we have seen that VWAP is not broken with volume a quick
reversal can be seen to keep levels in control.
When there is no follow up and buying is emerging all those who took
new put positions would see their stop losses being hit.
Now it will take more effort for call writers to do it again with even more
volume.
39400 if given up then we can see 39200 as the next stop in Bank nifty.
39500 writers are covering up now as they seem to be in panic.
This is going to be a trap for buyers and sellers on both sides.
This is a hard market to trade and this volatility is going to hit your stop
loss on both sides.

12:00 PM
It’s all sources based info and if Taiwan news should be critical then DOW
would have fallen 500 pts by now. When VWAP is broken there has to be
a follow up and with thin volume the bulls will defend their level. We have
seen this in the past and can see that happen again today.
It’s not only that the PUT writers are being taken apart. Sellers are being
taken apart on both sides with swings happening on both sides being
seen and stop loss being hit on both sides.
If you think big guys do only selling today is the day to see buying
emerging from open levels taking market higher and being kept in range.
Even the move on upside is not coming with volume and pure expiry
moves being witnessed here. You can see rejection again from the rise
now from the super trend.
People on small stop losses will be hit. You can see traders place stop
losses just above important levels like VWAP and super trend. These stop
losses are being hit and coming back again below super trend.
Looks like more of stop loss moves happening around today.
When you look at trending OI data for any trend emerging you can also
see Big OI to see if any movement is captured there in strike prices. A
clear view of which strike prices is seeing more activity happening. You
can go with such strike prices to maximize your profits.
Nifty is clearly trying to break the level and go lover but the volatility is at
crazy levels. Bulls are trying to protect the VWAP level one more time.
Trailing stop loss is being hit in our trade which is fine. When you see
trailing stop loss being and price moves again in the same direction you
can enter the trade again.
Long unwinding seen and profit booking can be seen as put OI also is
coming down.
Some kind of profit booking can be seen looking at global cues from
European market open as well.
Dollar index again moves higher.
As a scalper if there is multiple stop loss being hit then don’t go for
aggressive quantity.
Words of advice
You can only avoid panic when there is volatility and you have an open
position with MTM swing both sides are when quantity is within control.
Quantity should always be for the risk capacity and the loss you can
afford.

01:00 PM
Patience pays and there will be opportunities that and you just need to
wait for the right opportunity and take the trade. Opportunities will come
by and all you need is one or two good trades.
There was a gap in the 12:55 candle and we waited for the gap to be
filled and entered the put side trade. We entered and got out in seconds.
That’s how you scalp and use opportunities available to us.
No call side trades unless all VWAP, super trend and WMA is broken with
volume.
With no follow up candles with volumes you can easily see moves on the
other side taking out small players with small stop losses.
This is simply being managed around the VWAP levels where both call
writers and put writers will try to hold levels and stop losses being
triggered on both sides.
The up move at 13:20 up to VWAP level saw rejection and immediate
price coming back to lows.
Days like this are very important to stay light when you have already made
money in the morning.
Slowly but steadily the market is coming down. However, it’s coming
down with small up moves hitting stop losses.
Stay light stay light till you see a decisive move with a two candle being
formed.
Two candles formed at 1:57 levels and small entry made and trade
initiated and adding some more quantity on rise to average position.
Market is looking to fall and all rises being sold now.

02:00 PM

Market taking support at 39000 levels and any opportunity now is only at
the super trend levels.
Market can get volatile around 39000 levels.
Bounce is coming up but premiums are crazy and volatility is high and we
should stay light.
Need to only wait for an opportunity to ride the run if any. Time to stay
light and wait for a clear move
Not necessary to trade every candle just because markets are opens from
9:00 AM to 3:00 PM.
With low volume super trend is being broken and heading to VWAP
levels.
Sellers determined to write both call and put side.
Every candle is playing like a hero or zero by the way.
If markets are being kept around VWAP levels then we will not see any
other move from here on.
No moves when you see price between VWAP and super trend expect no
more moves as writers are controlling the market.

03:00 PM
Even after 3 PM if you are not seeing any level broken then only premium
adjustment moves will happen.
Avoid trades as these moves can only dent your capital as unwinding will
happen on both sides and premiums will only erode.