Friday, September 5, 2008

If Global Cues are the way to go...........

If the Global cues are the way to go then we are down in dumps. Oils is stable at lower levels but the retail and unemployment data was so bad that the markets could not get a hold over themselves. Europe that was fairly steady could not hold the levels and crashed miserably. FTSE was down 2.5%, Dax down 2.91% and CAC down 3.22%. US - the initiator of the bad news in the recent times - was 3% down in red on an average making it fall like - just don't want to say it. Dow in red 2.99%, Nasdaq red 3.20% and S&P 500 down 2.99%. After these figures - we cannot blame Asia to open and trade red - can we? Nikkei is down2.96% and Strait Times is down 2.24%. It is like there is a competition as to who will fall lower - ? After seeing this red bloodshed all over I started looking around for the reasons. Believe me there is nothing that can justify this kind of panic. Are they (world markets) becoming more like us?

The candles are conflicting and are not really in tune with the global indications. The black candle formed yesterday could not in real terms damage the bullish candle of the day before. It could not technically pierce the day before's 150 odd point white candle seriously enough to show that bulls have given up. It is what I would have called. Bears won the battle yesterday but not the war. The 5 EMA line continued trailing above the 20 EMA. We have slowly tried change of sides and are now approaching the upper end of Bollinger band - the width remaining steady with no contraction of divergence - does not signal any change in the trend. On MACD line the divergence between the red and blue lines is zero and in all the probability the red line could have crossed over the blue line today - it might do that even now. Like I said that the Mass Index is trying to go up and frankly it is not a good sign as the trend change levels are above the present levels. RSI looked down - but the trend still seems positive. TRIX is flat at one - gives us no clue as to the coming trend. It shows that we are at cross roads and any momentous change can take us to negative - or positive territory. Slow Stochastic - red line remains firm in overbought territory and blue line is just below 80 marker - in my experience the slow stochastic - unlike StochRSI does not remain too long in overbought or oversold territories. StochRSI is at 50. Jaggu is back and his TRIN says bearish. I am trying my best to incorporate some more technical indications in my study but just not getting enough time for that. Will try once again.

So where does all this take us? Before I come to that - our internal and external factors. I have been saying that a big news around the corner is that of the nuclear deal. It can leave us euphoric or down in the dumps. As of now the inputs are not particularly good. The crisis will snowball if NSG does not fall in line and support the deal. The political fallout in our country will be bad in short term and in long term the industry and energy crisis will worsen. So it is important that the deal now goes through. The oil prices getting stablising at 100$ actually gives it a chance to fall and stablise below 100 to 80$ levels - that would be wonderful but I am not really sure that it would happen. The floods have done immense damage in the eastern states and in Bihar. The inflation figure coming down for second week is a reason for celebration - and this is before the Govt has tinkered with the fuel price. If in future the international Oil price comes down to a level where the govt can afford a small drop - it will boost the sentiment as there is no tomorrow. So all in all a lower opening is a foregone conclusion - but technically there is a bright chance that the fall may not be as hard as perceived - and in the best case scenario we may disregard the global cues and may tick green. The week end however may play the spoil sport.

Best of luck and I too will be eager to see what happens today as it will dictate and put the trend in place for our markets to follow in short term. Also I am sorry - I am not doing proof reading and checking my english as once again there is no electricity and the laptop battery will not last long enough.



Uma said...

man, I have no clue about Nifty lately :(

S S Cheema said...

You are not the only one. I am still waiting for the outcome of the nuclear deal - that is the only thing that can save us now.