Tuesday, July 1, 2008

Nikkei green............ for all its worth

Its good to see green - even if it is Nikkei. After all there is where our spirits rise from every morning. One thing for sure - there is hope today seeing Nikkei green. Strait times too getting a que perhaps has started the day green. Only reds yesterday were DAX down .06% and Nasdaq down .98%. Asia does have relief and and atleast looking at the charts will not stress our eyes as much as last few days -- you see -- green is good for health of eyes ;-)

That apart there is no good news from any front that should actually make the markets go up - every thing remains the same as before. Political uncertainty, Hike in the bank rates, slowdown in economy and down forecasts of revenue earnings. It is just a matter of time that big big names in reality, banking and auto in india say so. Everyone is busy revising the targets for Nifty and Sensex downwards. Infact the news now is that the selloff now is not speculative in Options segment but led by the nose by selloff in the cash segment. Nifty, said on 30th that this is happening because a greater downside is expected by the masses. The cash volumes are four times the average.

I will work on three likely scenarios today and start with gauging their probabilities. The most unlikely scenario today is that we open above the half body of yesterday's black candle and make it the lowest point of the day and continue upwards. This would mean opening above 4100 levels. Though this is the most unlikely scenario -- it would spell a brief relief for a lot people and give hope -- however momentary.

The second scenario would be that we open green below 4155 - touch an intraday high and then drop to another low - below yesterday's candle. That might be the next probable on candles and will spell doom as this would be the third crow of the dreaded three crow pattern - that we are seeing a little too often for everybody's liking.

The last - probably the most likely is that we open flat, green or just red and close above 4055. Well this would make white candle that pierces the yesterday candle - this would give a weaker reversal signal than the option one, but would be better than nothing.

In army we are often told that if you plan an operation and think of five possibilities then the enemy will surely surprise you with a sixth option. The markets are behaving like a good enemy. That aside - I do expect a white candle today. I am basing my assumptions not only on a odd oversold indication of nifty but oversold indication in the frontrunner index heavy stocks. As far as the candles are concerned TRIX is facing down and being a leading indicator - gives no relief in short/medium term. RSI is over sold but not giving a buy signal. MACD is bad with the red - blue divergence on the increase. Stochastics (Slow) the red is below the blue line and none in the oversold territory. Like I said a few days back the StochRSI was overbought when all else seemed to be near oversold. Now the StochRSI is approaching 50 marker and the divergence and the conflict between indicators should finish. Then we may atleast have some worthwhile trends on technicals - till then the confusion will continue.

Well people on an average I am having 35-45 visitors everyday on this blog and it is unfortunate that expect Uma and Jaggu and perhaps rajandran there is no contribution by the way of a meaningful exchange of ideas. Could you please post comments so that I get some encouragement and we use this forum to learn and teach? Pen down your thoughts whatever they might be. I am sure that no one can be a worse writer than I am.

Psst.... Jaggu still sleeping so I am not sure of the TRIN - but I expect it to remain around yesterday's levels only. Cheers