DOW RECORDED THE SHARPEST FALL EVER IN ITS HISTORY IN A SINGLE DAY.
DOW GOES DOWN 998 POINTS, THE LARGEST SINGLE DAY DROP EVER AND THEN RECOVERS. BLAME IT ON TECHNOLOGY, BLAME IT ON GREECE, THE BLAME GAME WON’T HELP.
Accenture dropped from US$ 41.94 to a mere 1 penny. Yes, no typo here. A 99.98% drop here in just thirty minutes. P&G was down from 62 to 39. Exonn Mobil also suffered similar fate. The volatility was up by 60% to 39.94%. This was just not panic. It was induced panic. Baring a technological goof up, such a fall despite having digested the ECB decision, is impossible, NYSE and NASDAQ are screaming that there was no bungle up of the systems, but there’ll be few buyers for such a theory.
Waiting on the sidelines may have spared many investors the wild swings of recent days. The Greek storm continues to rattle world markets. Risk appetite has tumbled and will take a while to recover. Other members of ‘PIIGS’ like Spain and Portugal are staring at further downgrades.
The domestic market fell for the fourth straight session even after witnessing some bouts of recovery. The fears of Greece’ crisis that could spread among other Euro Zone countries and selling in heavyweights like Reliance Industries and Infosys Technologies led the market to extend its losses. An upbeat employment data in the US and easing food inflation back home (coming down at 16.4% from 16.61%) also did not help the market and it ended in red.
EXIT ALL LONGS IN THE FIRST HOUR. NO RECOMMENDATIONS.
Nifty today may act out the session as under:
SCENARIO 1: Open around 5005-5020 and then loiter between 5020 and 5050 for a major part of the day. This would be falling off the cliff.
SCENARIO 2: Open between 4985 and 4950 and then do bungee jumping back to 5015-5020 levels.
SCENARIO 3: Open around 5050 (highly improbable though) and climb towards 5100 as if it didn’t care and then around 10:00 in the noon, just nose dive by a percent and a half to 5005 levels.
The RIL and RNRL judgment comes in at 10:30 AM and make no mistake, the half hour before the decision is made public, it will only rub salt to wound rather than act as a balm.
Whatever unfolds, it is pertinent that the positions be hedged. The best mantra which we have practiced for our clients and enforced upon them too is, “NO OVERNIGHT TRADES”
THE MOST IMPORTAT RULE IS : NEVER EVER TRY TO CATCH A FALLING KNIFE. LET THE DUST BE SETTLED AND YOU WILL GET ENOUGH SCOPE TO TRADE SAFE.
Courtsey:: some portion I have copied from a mail received from a forum
