Saturday, April 16, 2016

How will this Sunday be - Black or Grey?

Yesterday my call-to-action in US markets was for booking profit at 17900/17950 in Dow. Check it out here. That call was given before the markets opened. Dow opened at 17925, reached a high of 17938 and finally closed at 17987, down by 29 points from last closing.

Trade in US markets was testimony to the confusion that prevails in trading community. Tug-of -war of sorts between bulls and bears, if you may! This situation of uncertainty is mainly due to a divided house on how Doha Meet on Oil Production Freeze will pan out coming Sunday.

Frankly speaking I have no hopes from Doha Meet of major oil producing countries. This aspect I had covered in my last post Bears Sharpening Daggers - US Markets in Danger of Bear Grip

How can you expect consensus from a motley crowd with divergent geo-political interests and views? Some of these countries have been serious adversaries for a long time with ethnic and sectarian undercurrents. And we are supposed to pin our hopes on a consensus from them? Not me.

What we can expect tomorrow is Black Sunday, as Doha Meet winds up with no production freeze. I say Black Sunday because that will galvanize a furious sell off in oil prices. Presently equity markets are moving in tandem with oil market, and hence I leave it to you to draw conclusions. Since equity markets are not decoupled from oil prices, I expect a mayhem in US stocks.

The best case scenario is that the sell off in equity markets takes place in slow motion. Big players may choose to exit their positions in a classical "Distribution Process" so that they can obtain reasonable price for their huge long positions.

So you may witness very high volatility with spurts of buying interest emerging and trying to draw eternal bulls into a bull trap. That is the shade of grey for you!. Keep out of markets and watch it from sidelines till dust settles down. I will keep you posted and immediately inform you as and when that happens. Be safe, be happy - adopt a no-trade strategy for the moment!!!