Sunday, August 31, 2008

New week...... to do the balance tests of your nerves....

The indications are as crazy as ever with the technicals and fundamentals flying flying left, right and centre. What ended as a wonderful session for the US gave impetus for a good beginning for Asia. We too had a good session with a big white candle and then the problem started, Europe open flat and traded around the flat line -- but ended in green FTSE 0.60% green, Dax 0.03% green and CAC 0.47% green. it was the US opening that turned the tables with the opening in red and ending down deeper red 1.47 per cent, NASDAQ went the same way starting red -- ending deeper red at 1.83%. S&P 500 ended 1.37 per cent red.

That has already laid down the groundwork for red opening -- or may I say that Asia's red opening. Where we go from there is part technical and part fundamental. Both come with mixed signals in them and can justify an upswing or a downswing. On the fundamental side the inflation has taken a breather, but may have already been taken into account. On the other hand this inflation is not acceptable by Finance Minister and may continue taking steps that he deems necessary to control it. This may come in form of some more fiscal tightening. The GDP grew by 7.9% in the first quarter - slow definitely but healthy growth nevertheless. The rupee continues to depreciate with respect to the dollar. Oil is stable so far but it can move up on the Gustav heading for the oil fields. Do not forget the OPEC meeting scheduled on Sep 9th. Just another small storm building up - the US elections - one candidate favouring a protectionist stand - looks poorly for tech and outsourcing firms and the other trying to send signals that he would be the best deal with the Russians and the Europe issue. Classic case of well on one side and ravine on the other.

As far as the candles are concerned - like I said earlier it was a good day and there was a good tall white candle. The markets opened green and never looked back climbing and ending almost at the highest levels for the day. The volumes were only slightly less than the average volumes. With this one candle the 5 EMA that was below the 20 EMA has suddenly looked up and reduced the difference between the both. Mass Index continues to show the positive trend that started mid jul. MACD looks bearish but the divergence has somewhat reduced. RSI is looking up, SlowStochastic has the red line crossing above the blue line and seems set for another offtake. The TRIX is one indication that refuses to look up. Ofcourse we continue to trail the lower end of Bollinger band with the bandwidth neither increasing nor reducing.

Asia has just opened and as expected it is red - all three main indexes - Nikkei, HangSeng and Strait Times 1.50% or more in red. That is surely likely to make sure that we open red and thereafter - maybe climb up towards closing. The period continues to be indecisive so keep holding to your horses and wait for some clear indication before taking sides on day to day basis. For the horizon of probably a year or more - this is the golden opportunity to start collecting gems available at such wonderful discounts.