The Gate of the Hell

The Gate of the Hell

Dear folks if you are bull on economy and stock markets and if you had not read our last blog then you must be finding yourself standing in front of the gate of the hell. As per our last blog we did had asked bulls to exit long profitable positions and we expected return of bears which is what we really are feeling in the markets.

 Bears have successfully broken 200 DMA on S&P and if it remains below it is expected to fall to 1290.Our darling Dollar is seeing comeback and we at wiTdom had always remain in love with Dollar. Dollar Index is above 81 if it crosses above 82 then this gate of hell will be open for the bulls by the bears.

We gave Exit call on long position when Nifty was some where near 5850 and sensex was at 19000 and by our knowledge these where the recent highs for the markets.

Fiscal cliff, Tax and Subsidies are the new problems which America will be struggling to overcome in coming days. In India and else we see ca-pex cycle slowing and business confidence at very low level. Unemployment is very high and business leaders are in no mood to invest in there business. We are very sure that Europe is going to bust in coming days

Now it’s to seen how aggressive bears get to break important support levels and make this market free fall. If  Nifty stay below 5580 and 5410 then it can fall way back to 4780.

But bulls are gone fight back and try to save themselves but we think its advantage bears.

Thanking you

Atul Sikrai

Vice President

wiTdom investment advisory.

 http://satango.blogspot.in/2012/11/monkey-business.html

http://knowlezhrbanco.blogspot.in/2012/11/knowlez-is-power.html

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Toxic Structral Isuues

Toxic Structural Issues

With the blessing of Lord Ganesha as projected in our last blog we expected tactical technical rally and stock index has moved up more than 15% and stocks in specific has moved up in range of  40-90%.

We suggest our readers to book this humongous gain. As structural issue within the economy still exist and all is not honky dory.

During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system. Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.

We at witdom expect lots of toxic assets within our financial system.

Spain banking system is in deep trouble. From our sources we come to know biggest Real Estate players in Spain may go bust any time. Fiscal cliff problem in America will come as big negatives in coming days. We sound bearish and cautious on financial system for coming days.

Thanking You

Atul Sikrai

Sr Vice President

Witdom investment advisory

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Tactical Technical Rally

And that folks is the real question. Are we in a new secular bull market, or just a tactical rally within a trading range stock market that we have envisioned?

During times of high volatility and great economic uncertainty, it pays to remember that stocks represent partial stakes in operating businesses. Therefore, as long as the businesses you own are producing satisfactory results, it is best to ignore the market’s temporary appraisal of your holdings. It is worth noting that during secular bull-markets, stocks outperform bonds and cash.

A secular bull market has to be backed by a productive driving force... a new technology or industry that employs people, expands real production, and increases standards of living. We have seen none of that since 2000. Both the housing bubble and the current stock rally have been liquidity-driven, not productivity-driven. Until the next big technology takes root, we are destined to see repeated cycle of large rallies followed by failure to lower lows, and the efforts of the Fed & ECB to counteract the nature forces of recession will do nothing but accentuate those swings.

Since (unlike some people and/or groups) I tend to buy low and sell high - this hurts me how???? Every completed cycle sees my portfolios larger. Even if the system crashes - dividends tend to stay ahead of inflation. - Dividends were one of the very few things that were able to stay relatively ahead. My Portfolios will also do well in this environment. Even a secular Bear has quite a few up cycles in it - it is not really a problem IF you are prepared. As I said before "Bear markets simply put good stocks on sale." I believe this is a quote from "The Contrarian Investment Strategies" and is fitting at this point.

last few years??? I do not know about how anyone else did .The dividend paying stocks that I bought on sale were largely responsible for this performance. By the end of the year - not only was I ahead, but my portfolios had hit a new high and are still hitting new highs this year with no (or very little - I would have to check to make sure) cash added from my pocket.

Out of my being curious - what kind of hedges do you use? My main "hedge" is my trading portfolio.

Thanking You

Atul Sikrai

Sr Vice President

WiTdom investment advisory

Pandora Box Of Financial Worms

Pandora Box of financial worms:

"Open a can of worms" metaphor is a modern extension of Pandora's Box. In the original story, a mortal was warned not to open a box belonging to Pandora. When curiosity got the best of this mortal, she opened the box and inadvertently released numerous plagues on the world. According to legend, the only thing remaining in Pandora's Box was a creature called Hope. In this same sense, to open a can of worms means to release a host of often irrevocable problems or complications. As long as the "can" remained sealed, there would be no harm or foul.

Financial stores routinely sold cans of worms and other popular live baits to humans, who often discovered how easy it was to open a can of worms and how difficult it was to close one. Once the worms discovered an opportunity to escape, it became nearly impossible to keep them contained.

The ramifications of the LIBOR scandal (what Warren Buffett glibly called a can of worms) grow by the day. Criminal indictments of individuals, even if firms are too big to indict, appear to be in the making, as the tsunami's shock waves are about to spread to many of the usual suspects. One can only imagine the trial lawyers licking their chops.

Central bankers and regulators, understandably panicked at the height of the crisis, may have been complicit in some of the distortions in an effort to create the pretense of financial system stability. However, like the so-called "war on terror," we find the war on financial system collapse is filled with ends-justifying-the-means moral and legal questions.

LIBOR has become the central grid of the global financial system, directly or indirectly linking the vast majority of savers and borrowers across markets and national boundaries. It also links risk transfer via the multi-hundred-trillion-dollar global derivatives markets. And don't believe the experts when they say this is "only" a short-term interest rate. Three-month LIBOR is the foundation of the term structure of interest rates; a change in LIBOR changes the forward rates by simple arithmetic.

Thanking you

Atul Sikrai

Sr Vice President

wiTdom investment advisory.

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Euro Ray Of Hope ?

Shares are set to surge, with appetite for risk assets seen rising after European leaders agreed on a supervisory body for euro zone banks and to allow them to be recapitalized directly by the rescue fund without adding to government debt.

But I'm a bit still cautious as we have seen the cases where different leaders later say different things and we find out that there remain disagreements. As a result, the greenback (Dollar) is expected to slip against the Yen, Euro and Indian Rupee.

High-beta currencies like the Australian dollar, which shall enjoy a surprise short-covering rally. These gains on the euro zone news.

European leaders agreed on Friday to create a single supervisory body for euro zone banks and allow them to be recapitalized directly by the currency area's rescue fund without adding to government debt.

Still, there was a degree of skepticism with me waiting for more clarity about the measures agreed. I want to point to considerable execution risks in the move to empower the ECB with a supervisory role that could prove to be contentious. Besides, the market would soon start to question whether the euro zone's rescue fund has enough resources to recapitalize banks and buy peripheral bonds given the huge debt liabilities of both Italy and Spain.

Thanking You

Atul Sikrai

Sr Vice President

wiTdom investment advisory

Zombie Banks.

As per our last blog stock market around the world went up.

We think that temporary up move is now over .We are expecting another round of sell of coming. Economic outlook still remains weak. We suggest you to book profit on all your long trade. Professional traders can go short.

Let’s talk about zombie banks in our banking system around world.

Here’s a simple explanation for why the world’s zombie banks remain so reluctant to write off worthless assets. wiTdom still see a huge hole in the banks’s books that its executives have yet to admit. Had zombie banks taken swift action sooner to mop up and replenish its balance sheet, it might not be in the precarious position it is today.

Other struggling lenders in Europe and the U.S. will see both examples as more reason to paper over their losses, which will make their problems and the eventual cleanup worse. Delay- and-pray is never a good strategy. Unfortunately it’s the only one a lot of zombie banks have left.

Some of the Zombie (Scary banks) is yet to be unearthed. We see lots of trouble in Euro zone. We expect S&P to fall to 1280.You can also go short on Nifty with SL of 5255.

Nifty is expected to fall back to 4780 if 5000 is broken. Bear case for Nifty is supported because rain has been delayed and is expected to be below average. Inflation is still the concern. No rate cut by RBI .Fed kept its gun powder dry. Absence of QE3 is end to near term up move in speculation.

Thanking you

Atul Sikrai

Sr Vice President

wiTdom investment advisory.

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Where there is will there is Way!

Pooling Euro Zone Bad Debt

Where there is will there is a way!

Germany has indicated that it is prepared to accept a grand bargain that would provide greater support for its most indebted euro zone partners in exchange for far more centralized control over government spending in Europe. More likely is a plan to combine much of Europe's bad debt into a single fund, with the idea of paying it off over 25 years -- an idea gaining traction in Germany as an alternative to euro bonds, officials say. Changes on this scale would not be easy, involving an arduous process of treaty alterations that could take years, and it is unclear if they would be enough to reassure markets of the euros stability.

  Nifty has formed short term bottom near 4780.We are  suggesting to close all short position with profit and go for adventurous Long on Nifty. Nifty expected to jump towards 5130-5200 in near term future .Things that make us  bullish on nifty is that government is coming back with some reform for growth. RBI expected to cut rate in future. And very important factor is that Rain God has arrived in India.

Now this blog is ray of hope for bulls.

After reaming bearish for last three month we feel markets are showing some near term bottom out stage. Markets around were falling from last 3 months we expect some up move in near term. ECB is expected to cut rates. Even Fed will come to rescue market with help of QE3.

Thanking You

Atul Sikrai

Sr Vice President

wiTdom investment advisory.