Monday

NIKKEI and NIFTY: Protecting Our Profits

Post a Comment October 12, 2009 – 8:15 am |   | Permalink |  Print This Post |

We have closed $1/point (out of $5/point) of our long NIKKEI from 9580 at 10098, booking a profit of 518 points x 1 = $518. Judging by our track record of picking turning points (ie not very good), we will only unload 1/5.  We will unload another $1/point at every 50 point intervals.  Stops for the rest are now raised to 10020, ie locking in profits of 440 points x $4 ($1760). The NIKKEI could easily go ALOT higher, especially if the Dow takes another major wave up and beyond the 10000 mark. As per our previous post comparing the Nikkei vs the Dax, the Dax has a tendency of making double tops, whilst the Nikkei adheres to lower lows and highs - we are bracing ourselves for the possibility of this. Hence tight stops on our longs. When our shorts are in the money, we will have a longer leash to let our profits run.

NIFTY is trading in a tight range, currently up 0.71% at 4960. Our short $5/point from 5050 was also stopped out at 4980 (close to the high of the day at the time of writing), booking a profit of $350. All technical traders are set on the 4900-5100 range. A Break either way technically indicating a 200 point run up/down. Most are riding the rally with unrealised profits and tight stops in place. Perhaps that is a better way of trading, ie identifying a trend and making it your friend. Those who follow our trades regularly will know that we are not textbook abiding traders - infact we probably break most rules. The Dax is now close to its previous peak of 5780 (thereabouts), whilst India’s NIFTY is about 2% off its peak. So there is a risk of the NIFTY going crazy (ie 2% at least) again to keep up with other markets in the short term. All unhedged positions will therefore have a stop.

The time it took for us to write the above have seen the Dax rise to 5784, NIFTY at 5010, and Nikkei at 10114. Looks like markets are on steroids again this week. Our order to short the Dax is now at 5810, ie slight overshoot of 5800 as per our round number theory.

Good luck to all.

Update: The Dax hit a high of 5816, triggering our order to short at 5810 above $5/point. It is currently trading at 5777. We will put our stops at our entry point.

Update: Nikkei $1/point closed overnight at 10148 (long entry at 9580) booking a profit of $568.