Sunday, July 6, 2008

Ride the Rally for all its worth..... but which way?

We are in a Bear Market - that is for sure and no one should have any doubt about.... rally or no rally. The moot question is - as put across by Morgan Stanley is "How long will this bear market last?" Eighteen months is one estimate and it is absolutely probable. The report goes on to say that for the market to bottom out, retail investors have to panic, and there has to be a wave of earnings downgrades. This is about the worst performance in more than a decade on a year-on-year basis. However, domestic households still seem convinced that equities have to be bought and not sold. Another interesting fact listed by the report was - “Eventually, long bond yields need to stop rising, or put to put it another way, the market has to get confidence that the medium-term inflation rate is under control. On our residual income model, if the 10-year bond yields rise to 9.5% the Sensex fair value drops to 11380 (13% lower from here) signifying the importance of this indicator of macro fundamentals,”

I was talking to my uncle who has just started investing in equities - he wanted me to tell him when to buy again - crazy - he is sitting on tons of losses - as much as 50% erosion and he wants to buy again. This goes to show that the retail still have faith and will start investing in any rally we have taking it as a bottom. That might get another round of selling - the crude still has upside to it even though in short term there may be a dip down.

Okay to candles now - What I would wish is that 5 EMA crosses over 200 EMA - but the distance is so so high up that it seems impossible as of now. On a shorter target -- 20 EMA being crossed over by 5 EMA - That too is some time away.

As of now the MACD red Line has turned upwards and with a good session or sessions will crossover the blue line making it bullish. RSI and SlowStochastic is looking good. The only problem I see is that the TRIX is still facing down. StochRSI has given its divergence from the general trend and that too may be good. TRIN is what I am missing for an otherwise perfect green opening.

The politics will continue to rule the roost and whichever way the market goes on Monday - I expect the volatility to be very high. If you do feel like ideally you should have very very strict stoplosses lest the market does the unexpected.

I will end with some personal mesages - I will be extremely busy next week and may be off and on the blog. I have tried to put up a RSS feed on the site for whatever it is worth.

Best of luck for the week (hey this does not mean I will be unavailable)


allvoices

8 comments:

geniusjaggu said...

cheemaji,
RSS feeds???how do u do it?
wat does it do?
i know i sound silly here....
but tried before(did some copycating before)..but dint turn out wat i wanted... :(

thanx in advance...

S S Cheema said...

Jaggu: It works something like this - if you use the firefox then see the place you write the site address - on to the right side you will see a yellow box that donates the RSS is active for the site. If you are not using firefox then it gives you the option of using other readers. That too will work in the same sense. Just click this and the site will be added to your list of sites you get notified about whenever they are updated.
It will just ask you in between that you want to subscribe to live feeds using which program.
Try it once - you will find it a fairly good experience.
For putting the same on your site (blogspot) it is already built in like the adsense you have put on your page.
How's the adsense doing - by the way?

geniusjaggu said...

thanx cheemaji for info on RSS :)
adsense is doing ok...since they are installed by my brother(now he is in Latin america)...i do not much abt them except i will get money...when there is atleast $100 in it(tat will take this bear mkt to end i think)..LOL..

will try to install rss on my blog ;)

geniusjaggu said...

regarding 365 pts up to become bear...its just reference tat bear mkt rallies can go tat much higher..LOL...

Uma said...

I think reliance is doomed, tho I'd watch for 1956 level. I don't see further downside in stocks such as Siemens & ACC

S S Cheema said...

Thanks Uma: tomorrow I switch over from Infy short to Reliance.

Uma said...

The reliance stop loss is 2140. Remember that before shorting.

S S Cheema said...

Thanks Uma