Market operators

Believe that most of us have heard of stock market operators. They are known by many different names and they are constantly the blame for our financial losses. In some parts of the world, they are known as sharks, syndicates, big bosses, speculators, liars, cheaters or stock market manipulators. Some of us cheer their existence and their operations while some cursed them as if they are the culprits to our financial ruins. Are they our friends or foes? As the famous saying goes, know thy foes and you will have the upper hand in battle. In this post, I will challenge and dare you to swim with the sharks and eat from the crumbs of their feeds and not to be their feed. Here I would like to bring out some of my personal thoughts on this question that most newbie has.


Ok, here is the short answer. Yes, you are right. They existed and their operations are hidden from most people especially the newbie in these financial markets. I believe if we know them and how they operate, we could actually move along with them. In fact, the whole purpose of technical analysis is to determine the balance of demand and supply and the stock market operators are some of the powerful and rich individuals or groups with much buying and selling power. If we are able to track their movement, we will be able to profit from their operations. However, if we are ignorant of their existence, we could be their next meal.


Basic facts of stock market operators are listed below for your reference.
They work individually or in a group.
They rely on the market trends to help them in their mission.
The general publics are their big customers.
They together work with the public listed company owners or insiders.
They have a main mission objective to accomplish.
The bulk of their operation revolved around the accumulation and the distribution of stocks from / to the general publics.
They are rich and powerful figures but they are also humans that have emotions like all of us.
They have extensive credit facilities and lower transaction costs than the retail investors.
They do make mistakes like any one of us. Their mistake costs millions in dollars.
Market news, stock market analyst, corporate announcements, word of mouth advertising, price bidding and order queues are some of their tricks and tools that they used to achieve their main objective.
They don’t try to pick the bottom or the top like most retail investors do. Again, some of them try to do this and it costs them much sorrow and dismay.
They do attempt to manipulate the chart to trick the chartist whether you like it or not.
They are both the buyer and seller in the queue order at any given time.
They are not doing charity work. They existed to make your money.


It is important to understand them well as they are big volume buyers and sellers. They can tilt the balance of demand and supply. Understanding the above traits of stock market operators will help to clear some of the myths that we have of them. Remember, they are humans like us. Some of the above points deserved to be elaborated further to bring out the secrets of trading methodologies that we will employ in our technical analysis.

Primary market trends are very important to their success and failures. If they judge wrongly on this, they could go bust easily as the power of leveraging will work against them. Remember this, they cannot fight against the trends and they don’t have the strength to do so. Don’t ever think that they can swim against the tides.

If their mission objective is to acquire stocks, they might push down the prices to cause temporary market panics to squeeze out the stocks out from the speculators and investors and this is especially true in certain countries where short-selling is not allowed. The success of this technique will depends on what sort of people that are holding the stocks. This will get rid of the intraday and short term traders. However, they will try to maintain the prices around a certain range as to keep the sellers motivated. Usually the public listed company owners and insider will work in tandem to collect the shares from the general public. After they exhausted the fearful speculators and investors, they will then turn their eyes to the stronger speculators and investors by pushing up the prices higher to catch their interests.

If their mission is to distribute stocks, they will push up the stock prices to catch the attention of speculators and investors. They will work with market analyst to create beautiful pictures of the company prospects. They will work with the public listed company owners and insiders to create scarcity of stocks. At this moment of time, they will also announce all the good news while pushing up the stock prices. They will queue up as buyers and sellers in the order queue. They will buy their own stocks to create volume to entice the crowd to follow. As they bid up and down the prices, stocks were distributed without the awareness of the general public.

I believe that this write-up will increase our trading knowledge and make us a wiser trader. I will continue to write of how we can profit from their operation in future posts whenever I managed to get my time organized.

Morning update on 27 aug 09

Last night us markets closed absolutely flat. Brazil was up by .6%.european markets were down by about .5%.asian markets have opened weak to mixed but may remain flat to mixed for the day exerting a negative influence on indian markets at the start.

For indian markets, being expiry day, it is wiser to avoid fresh trading till 1 pm. Most of your trades even though may look attractive before the entry, may just go the other way after your entry button is clicked. Traders are advised to trade stock & nifty futures of sept series only around the extremities of its daily trading range from its pivot point. Quit at tight stop loss after the support or resistance breached, to pick up again at distant levels to see it giving you profit any time before end. The expiry day being a highly unpredictable day, the less the trade the better it is for future traders.

In case of a fall, long term investors may quietly accumulate cairn ,cipla, biocon , unitech & suzlon, the 5 future jewels for long term purpose. Forget fundamentals or technicals in these & just accumulate these on every fall and forget for next 2 years to see at least 4 times gain in all these 5 jewels.

Markets for 27 aug 09

On wednesday, nse index in spite of all the push to reach 4700 levels, failed to touch it on 3 attempts and could just manage to reach till 4698. However both the august and the sept futures could manage to cross 4700 levels but closed below it. Now everyone is waiting for the expiry day to see whether nifty closes above the 4700 mark or surprises every one by operators action to pull down nifty out of the blue towards 4600 levels. Based on pure technicals, nifty is all set for a mega rise in coming days. Whether the sharp up move comes on expiry day which comes after 5 consecutive days of up days or may come after a pause or mild correction has to be seen. A cross over and sustaining above 4th aug highs of 16002 & 4731 can see a very sharp up move in indices which most likely may come around early september.

If one has a closer look at the hourly chart above , important indicator slow stochastic is giving negative divergence . Interestingly the same negative divergence by the same indicator was observed yesterday also where indices are moving higher but the indicator is failing to make new highs. But the days around expiry being fully under the control of operators, such deceptive indications are part & parcel of the operators game plan. As long as nifty does not fall to breach 4656 to 4636 zone, it will move up & up only. A decisive breach of 4636 with volume can only spell danger for bigger falls towards sub 4600 levels.

Andrews pitchforks median line in blue in the chart above now has gone above 4700 levels and will slowly & gradually pull nifty towards it. The lower fork now around 4600 levels will provide the required support for nifty in coming days. In the daily eod charts daily macd & cci are indicating sharp up moves that may perhaps come after the expiry

Chart for 27thaugust 2009

Morning update on 26 aug 09

As expected, dow from a 110 point + at one time, corrected gradually after the closure of +ve european markets to finally close 30 point up with more important s&p500 gradually inching up to 1028. European markets were up from 1% to .4% with uk ftse closing at.4%. Brazil closed in the red with .6%-ve. Asian markets having fallen on tuesday due to china effect, have opened mixed to mildly weaker & may close flat to mixed for the day again with a -ve bias.

For indian markets, expect a flat to milder opening in line with asian markets. With thursdays expiry considerations coming into play today, it may again be a volatile day. Although technically the markets look extremely strong to go further up from here, expiry considerations and influence of asian markets may delay the up move to either post expiry or may be towards early september. So one can expect a volatile but range bound market within the range of 4600 to 4700 till expiry.

Traders are advised to accumulate long positions in september series on every decline of nifty towards 4600 or lower levels as there are every indication of nifty moving up towards 5000 levels in september.

Markets for 26 aug 09

On tuesday the markets behaved as if it was the expiry day. Nifty after a bout of volatility with expiry type volume within the expected band of 4582 on the lower side and 4673 on the higher side closed nearly flat at 4659 compared to mondays close of 4643.what was interesting to note was, every fall invited heavy buying interest & shorts were covered. The pin bar formed in the last hourly candle of monday played its role of bringing down nifty with a gap down open followed by the slide towards 200 hourly ema where it found solid buying support & continuously move up to breach mondays high of 4656 to reach up to 5673.

Tuesdays low around 4582 is likely to be a strong support this week. Although us markets had a pause by closing flat on monday, the china factor continued to threaten asian markets which closed in the red. With us markets having had their quota of pause on tuesday night & all set to bounce with vigor on wednesday night, one has to wait & see how asian markets behave on wednesday morning.

If one has a closer look at the hourly chart above, one will notice that nifty is confined within a upward moving channel a breach of lower band of the channel can bring it down to find support around 4600 or till tuesdays lows of 4582 levels. On the upper side it faces resistance around 4688 levels a breach of which can easily take it past 4700 levels. With the important indicator slow stochastic showing signs of weakness, unless there are solid rear guard action by the bulls early on wednesday, there is every possibility of nifty first falling towards 4600 levels to be followed up by up move as was seen on tuesday. However strong asian markets if freed from the chinese effect, can easily boost nifty to initially move up to nullify this negative indications by taking stochastic into the upper zone again.

WITH BOTH AN INSIDE & OUT SIDE RED NRB FORMED ON EITHER SIDE OF THE GREEN WRB IN THE LAST 3 HOURLY CANDLES IN THE CHART ABOVE, A BREACH OF 4673 THE HIGH OF THE WRB CAN SEE A SHARP UP MOVE & SIMILARLY A DOWN SIDE BREACH OF THE WRB AT 4633 CAN SURELY BRING NIFTY DOWN TOWARDS 4600 OR LOWER LEVELS. SINCE, ASIAN MARKETS HAD CORRECTED ON TUESDAY & INDIAN MARKETS HAD CLOSED IN THE +VE, WEDNESDAY MAY SEE A REVERSE ACTION WHEN ASIAN MARKETS MAY RISE & INDIAN MARKETS MAY REMAIN FLAT OR CLOSE WEAKER BY END OF THE DAY. IF THAT HAPPENS, THEN EXPECT NIFTY TO RETEST 4600 OR EVEN 4580 LEVELS. HOWEVER, IF ONE GOES AS PER PURE TECHNICALS, THEN THERE IS EVERY POSSIBILITY OF NIFTY TESTING 4700 OR EVEN HIGHER LEVELS ON WEDNESDAY.

DOW WHICH WAS MORE THAN 100 POINTS UP WHEN EUROPEAN MARKETS WERE TRADING, WILL FALL TO CLOSE MILDLY +VE BY END OF THE DAY AS THIS WOULD BE THE 5TH CONSECUTIVE DAY OF RISE IN DOW IF YOU COUNT WEDNESDAYS 3 POINT +VE CLOSE AS A RISE.

Chart for 26th August 2009