Monday, September 8, 2008

Not convinced for a rally ....... Or something really wrong?

Okay - it is 0740 in morning and I thought I will update this article a little. The US as expected and written earlier - has ended green but that did not ensure a green opening in Asia with Nikkei and Strait Times both down by about a percent and a Half. Jaggu says that the TRIN is bearish and I do not really have a reason to disagree.

The day started with a bang as it had expected to be really. 3% up was the beginning and actually I was looking for a bigger bang. The bang really did not happen and towards the end of the session we gave some of our gains to end in green - but below expectations. Why was the moderation? I got a sms from someone that there is a lot of negative rumors doing rounds. I tried to see what those rumors were - and could not get any but obviously the market did slide towards closing. There was to be some profit booking - after all we have not set aside what happened to our longs in jan 08 - but why do I see a 124 point gain on nifty not really good enough? If this is not good enough - let me first explain what I would have considered good enough - I would have considered it good if we had closed above the psychological barrier of 4500 on Nifty and we could not maintain it. Moreover the lack of confidence was evident as in the F&O segment, large-cap stocks, particularly banking and finance, power and realty sectors, witnessed profit-booking. Among banking and finance stocks, September futures of HDFC, HDFC Bank, ICICI Bank and State Bank of India closed near their day’s low with the order books in the last hour of trade showing more outstanding sellers than buyers. Among capital goods stocks, Bhel and Larsen & Toubro each closed almost Rs 100 lower from the day’s highs, indicating profit-booking at higher levels. Reliance Industries too closed near the day’s low, indicating profit-booking. All this is worrysome. The kind of news we had and the reason to close above 4500 - we may not have the same reasons tomorrow to continue the momentum. We are living in the troubled times.

The world markets behaved well - atleast as far as Asia and Europe was concerned. Nikkei closed 3.38% green, Hang Seng 4.32% green and Strait Times 4.77% green. FTSE was 3.92% green, Dax 2.22% green and CAC 3.42% green. So far so good. Now comes US - The opening was green as expected but then in the mid session the stocks showed weakness and so much so that Nasdaq went into the red territory before recovering into green. We have time before US closing as they are in their mid session only and the swing can take them anywhere - ideally however they should close green. DOw at the moment is 1.52% up in green, Nasdaq struggling at 0.03% green and S&P 500 at 1.08% green. The reasons are there for a green closing but we will have to wait. There will be profound effect on where we go tomorrow depending upon the US closing and Asia opening tomorrow.

On the candles the volumes were shade higher than the volumes during yesterday's fall. Taken singularly as a white candle in comparison with the bodies of last two days black candles - this white candle today in within these two candle bodies and that is the bearish indicator that does not look good at all. The 5 EMA line is above the 20 EMA and that is good and bullish. MACD has a slight positive divergence (I emphasise slight). Mass Index continues to move up and now a dot short of 24. That's not good. RSI is bullish. Slow Stochastic red line is below the blue line and that again is not a good sign. On Bollinger bands the bandwidth is same as before and we are in middle - nor with the top end or the bottom - that indicates indecisiveness. TRIX is flattish with little raised head - may improve with time. ;-) TRIN - that I will get from Jaggu tomorrow. There is trouble as the indicators are not very positive and we may have a flat to weak opening if the global cues remain flattish.

There is no other news of significance except crude is inching down again.

Hey I am repeating my appeal to all of you who follow this blog. As I wrote yesterday - I appeal to all those come and read the blog - please do leave a rating - and if you do read it often then please leave your mark by telling me that you follow. It will give me immense satisfaction and encouragement if you can do so as that is all that I am writing this blog for. Believe me there is no monetary benefit involved. Wish you all luck again.



Amitbhai Shah said...

Excellent Blog with lot's of hardwork.
keep it up.

As u we know that Nifty is making H&S pattern and today it completed the right shoulder with same retracement of 62% as earlier shoulder from head.
if tomorrow market moves up and break this pattern then we can say that nifty will touch 4700 mark.
we have to wait and watch.



Anonymous said...

hi cheema bhaji,

nice friends call me can you...

difficult to get this head and shoulder thing......pretty swollen shoulder today on charts....being a doctor the only remedy can be some bandage and comfortable position can be an elevated position for the shoulder...but if left hanging ...can be pretty painful..ha..ha..ha

if taken otherwise....i mean charts wise....pretty true...what do you are master...

myself earned handsome 60k...and sold some 4700 calls ...gains were due to positions in NTPC and SUZLON...speculative...joetoms call of NSG clearance

how about tommorow ..right time to go short...????


Crick_Love said...

SS..Keep it going..I read this blog every day before market opening

S S Cheema said...

Thanks Amit bhai, cm and crick love. Really encouraging.
cm I will only be tell you after I see the days end charts for what I feel about tomorrow.
Asian markets are down as of now as expected.