Friday, August 29, 2008

Seesaw way...... a new session of sep futures

What a week we had! All expectations of recovery and continuation of the uptrend were dashed against one wall then another. But all said and done - bears could beat one odd indications to their bearish terms but could not get all indicators to their side. Except for yesterday when the drop was with little more than past few days average (maybe only because of expiry) the volumes remained low. So in a sense the fall was because the bulls did not participate - not because bears were fighting against a great challenge. The inflation figures yesterday were a reason for cheers. That coupled by the global indications may alone be a reason for better days ahead. Another thing that one should keep in the mind is that the support set by the tweezers on 29 and 30 jul of 4191 was not broken. The low yesterday remained 4202 and finally closing at 4214. If you recollect this was the support level laid down in past one of the writeups - as a strong resistance. Either we survive at this level and bounce back or go down to 3823 levels. The chances of our surviving are great now - let us however see the reasons for and against....

Europe after opening flat to red did a turnaround and closed well into green FTSE at 1.32% up, DAX at 1.57% up and CAC 2.02% up. Basically on the US shoulders. Dow was up 1.85%, Nasdaq up 1.22% and S&P 500 1.48%. All this was on better than expected GDP and jobs data. Asia too has taken it well - Nikkei opening and trading 2.19% up, Hang Seng 1.77% green and Strait Times 1.01% green. It is actually crude only that can spoil the party in a relatively tension free mood.

As said earlier on last few days the Mass index has still not given a reversal of the uptrend that started mid jul. besides that the charts are basically negative. MACD is bearish with the red line still trailing below the blue - the divergence having increased yesterday. RSI is looking down. Slow Stochastic's red line has crossed below the blue and faces down after giving a buy signal beginning this week. We are continuing to hug the lower end of the Bollinger band and bands neither contracting nor widening. TRIX - a leading indicator is still looking down. StochRSI is in oversold zone a last few days and is trailing zero.

Now here is the dichotomy - as of now all indicators are negative without exception - but all the global indications are positive. Where will be going from here? One must take the technical indicators in the following manner: -
Firstly most are the indicators that indicate the trend on basis of what has happened in past.
Secondly there are very few true leading indicators and they too require that they are supported by trend indicators.
Trends change only after some indicators change based on daily indications.

So for the time being is - Mass index is showing continuation of the uptrend but all other indicators are bearish. If we have a good run up for a few days this mass index may be supported and we may then start our journey up again. The falling inflation, sorting out of our neighbours problem, good monsoons and recovering US will definitely give us the fundamentals to recover. Remember the billions about to be pumped in the economy due to pay commission. And this last quarter is in any case good for our economy. Let us see if we start our uptrend today!





Uma said...

whats the mass index, how is it calculated?