Last 2 days were a Wonderful Selling Opportunity – Start Building SHORT or Buying PUT Option on Nifty.

So if you think last two day's stock market euphoria (most of the markets were up 8-12%) means the government’s newer and bigger bailout plan is going to be a success, think again. The epicenter of this crisis was never in the stock market.

From the very outset, it has always been in the bond and credit markets. It’s in the bond and credit markets that …

1. subprime mortgages first collapsed,
2. mortgage-backed bonds turned to dust,
3. commercial paper (short-term IOUs) was crushed,
4. interbank lending froze up, and
5. the entire global financial system came to the brink of what the IMF chief called “a systemic meltdown.”

While stock markets have enjoyed a historic rally in last 2 days, bond markets are suffering a dramatic decline which is a clear indication that govt initiatives are not a solution to this crisis.

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HBJ Capital’s View for Wednesday….
After 6-7% of rally during last two day, in next couple of days we will be back to square one. Market will no more falls like the way it was falling 5-10% daily but it will die slowly. What I mean to say that you will expect Nifty to fall 2-3% on daily basis with some consolidation (no more upside or bounce, at most it will be flat or down closing).

1. SHORT Nifty Future and go for tour come back after 3 days, by Friday you can see Nifty at 3200 level again. So one can expect fall from 3500 to 3200 in next 3 days. This is assuming that US/UK govt are not going to take any major action other than the one announced already.
2. Buy Nifty 3400 PUT Option which is trading around Rs 95. Since expiry is close just a week away hence we would not suggest buying 3200 or below PUT Option.

We are expecting Nifty to open flat or +/- 1% but it will close more than 1% downside.
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We’ve been hoping for a rally like this. Now we’ve got it. This rally gave you a great chance to get rid of all the stocks you were unable to sell while the market was crashing. Each time the government has come out with a new great idea for saving the financial markets, it has given it a new name with a new twist. So, as we warned you earlier not to read too much in to this rally and be prepared to see the bottom again. Don't forget to keep accumulating 10in3 stocks for lifetime wealth creation.

-HBJ Capital Team