Tuesday, September 9, 2008

Neither Bulls ...... Nor Bears ..... then who rules the Roost?

0635 hrs 10 Sep 08 As expected US has closed with deep cuts. Dow down 2.43%, Nasdaq 2.64$ and S&P 3.41%. Asia taking the cues has started - Nikkei down 1.59% and Strait Times down 1.09%. So we expect a red opening. Crude is down to 102.65 dollars a barrel. That will be our savior eventually.

2115hrs, 09 Sep 08: Day before we had all the indications of a good bull run and the Bulls dashed our hopes by not crossing the crucial resistance levels. Okay - that's nothing great really - it happens.... then we expected the round to be taken over by the bears to hammer the markets out of shape and nothing like this happened either. The day that was handed over in a platter to the bears and they could not do anything... well you cannot call a - 44 point drop in Sensex a bear day... can we? If bulls don't have a capacity to win and neither do bears then where exactly are we? do we decide a winner by the relative points gained or lost? There seems to be no other way. And the way the things are - it seems bears may not get such a good chance in a hurry, but the candles tell us a different story.

Reasons - not many for the bulls - but neither so many for the bears. The crude has dropped further and at this rate it is going to break the 100$ support. If that be so then we may ignore this for whatever time we want - ultimately it will be factored in and all the idiot boxes will shout the same thing - we are in a medium to long term upswing. So as I see it now - the problem is not here - it in US data that is coming out one after the another creating panic in the air. US cannot be disregarded and set aside... Period. There can be no argument on that at the moment. So on the Global cues front we were expecting weakness and weakness was there - In Asia Nikkei opened and closed deep red. Closing was 1.77% down, Hang Seng closed 1.46% down and Strait Times was 0.88% down. Basically the gains of yesterday were not written off today. Europe opened flattish red and then came comfortably in green till short of closing - ending in red once again. FTSE was 0.46% red, Dax was 0.34% red and CAC too ended 0.92% red. US opened red made a small attempt to go green but continues falling as I write now. It is still not mid session and the markets in US are showing no signs of recovery - as of now Dow is down 0.67%, Nasdaq is down 0.60% and S&P is down 1.33%. Though it is really early to say but - there is only blood on the US markets. This drop is on the drop in seasonally adjusted index of pending sales for existing homes as it fell by 6.8%. That offset optimism as oil prices sank below $105 a barrel as Hurricane Ike appeared to be headed away from energy installations in the Gulf Coast. In addition, comments from Saudi Arabia suggested that OPEC could decide to keep crude output steady despite worries about rapidly falling prices.

On the technical side though the candle appears like a hammer - I would classify it as a hangman. This hangman generally indicates further drop in strength. So coupled with the global cues - bears still do have a chance. Bollinger bands today finally gave a small indication of contracting - a contraction leads to breakout and we are waiting for so long now. Good or bad - show us the way. 5EMA trails above the Blue line comfortably. Volumes today were lower than what we saw when the markets were up yesterday. MACD has increased the positive divergence with the red line now above blue line. Mass index almost touches the 24 marker - not good. TRIX - a leading indicator looks up - from the flattish outlook for past so many days. On slow stochastic the red line trails below the blue line but the divergences is somewhat reduced. RSI is bullish but in a half hearted manner. So all in all the indicators are mixed to slightly more bearish. Inspite of the bearish indications - I would maintain my bullish out look. We may trade red - but recover to green - if not then unless the drop is news driven - we may not fall too much in any case.

News that can effect us tomorrow is any acceptable solution to the Singur issue. Further drop in Oil to around 102$ a barrel and US passing our deal in their parliament. Forthcoming pay commission out flow will see buoyant demand this holiday season. I will try and update the US close and Asia opening tomorrow morning. Thanks to Jaggu for making an entry in Following widget, and dr. c. m., amitbhai and crick_love for leaving wonderful morale boosting comments. Have a wonderful day.



Amitbhai Shah said...

Dear Sir,

It is true that we all are expecting that market should move up in positive direction, Last 7 years was a bull phase and that is very much exciting to but when bear phase came everything looks negative and boring. This happen when market is making correction and we have to face this year 2008

When i was studying Elliot Wave Theory it said when script is making wave 5 or correction very few traders left in the market and market is dull and boring.

Time will come when Nifty will make 9000 mark and BSE will make 35,000
but it will take 3 to 4 years.

Market will remain like this until
Indice make it's correction

We are always bullish about the market. but we have to wait.

if u work on Fibnacchi Retracment then u understand that in what direction market is moving.

Crick_Love said...

SGX is down almost 60 pts and with Dow tanking and Asia looking weak, we will move towards 4400 just after opening..IMHO

S S Cheema said...

IMHO? what's that?

S S Cheema said...

If we open 100-125 points down on nifty I feel going long might not be bad with limited downside and a recovery towards closing.

geniusjaggu said...

IMHO=In My Humble Opinion, in other/jaggu's words,indirectly= take it or leave it..LOL

S S Cheema said...