Tuesday, October 21, 2008

Open with strength ..... Close with .... Weakness?

0600hrs 22 Oct 08: Yahoo did it - do not blame me please - they are laying off 1500 people and the profits have dropped 64%. The US markets have finally ended Dow down 2.5%, Nasdaq down 4.14% and S&P down 3.08%. Nikkei has opened red and slipped deeper - presently at 2.62%. Welcome to Russian Roulette.

21 Oct 08: Okay - slowly and steadily we have the indicators coming back showing consolidation/reversal. One must keep in mind that every attempt to recover will be met with resistance. There is bear talk and everyone and anyone who gets a pie in the market will take it out and wait for entering again. Personally I would prefer a slow and steady recovery - rather than a runaway increase in markets and a fall the next day. This would be interspersed with periods of uncertainty still - but in the end we are somewhere in the bottom of wishing well and all we can do is to inch up and out of it. There are people saying 2800 or 2500 on Nifty. I cannot take positions or neither would I like to comment on these. 50% chances will remain that they will be right and 50% that they will turn out to be wrong. 3200 had turned out to be a good support level and so was 3000 level. Beyond this I do not know.

Okay we did have a run and like I said earlier - it is the best that we move up steadily rather than rushing into trouble. Nikkei opened green and closed up 3.34%, Hang Seng too opened green but could not sustain it ending 1.84% in red and so did Strait TImes ending 0.95% down. Europe too could not hold out on to the gains and lost ending in red. FTSE was down 1.58%, Dax down 1.51% and CAC was half a tick up at 0.62% in green. SO seeing this do we already have a case to give up the gains of last two days? Well the US opened red and made a attempt at the recovery and have fallen down once again - Dow down 1.37%, Nasdaq down 1.89% and S&P down 1.62%. It is still mid session and a lot can happen towards the ending - may swing wildly as it has been doing for last so many sessions. In any case I strongly believe in TRIN and the Jaggu's TRIN has been posted as bearish. The oil should have ideally risen now that the cut in production is being thought about by OPEC - but the fact that it has fallen - proves that the crude sees the demand tapering off even more in coming days. Not good ... not good...

Our candle today too was not bad trying to get out of the envelope of the day before's black candle. The Bollinger bands have tapered a wee bit -- a begining - the 5 EMA has faced up for the first time after a long bearish phase to reduce the gap with 20 EMA. The volumes were good - or rather better than before. The MACD divergence has reduced a little bit. Mass index is looking down (forget this part) Whatever the mass index does now will just indicate the bearish phase only. TRIX is still looking down but the slope has eased off a little. The RSI has come out of the oversold zone and has tomorrow to be sold into and go back there. That's not too good - all the same the RSI will help recovery. On the slow Stochastics the blue line has joined the red line below the 20 point marker - entering the oversold zone and the red line has shown the courage to cross over the blue line. this may be good. Can help us give a break for a few days.

All in all nothing particularly positive or negative - the ongoing result season and the global cues will effect us more than anything else. If the US remains like this then it can only signal weakness and not strength. But a red opening may be followed by a recovery than deeper red - all we have to do is to wait and seeeeeeee...........



Amit said...

Good Morning,

Very uncertain market, u can't take any long positions, i am also agree with u that market should not touch new bottom. if it able to hold 3200 then we can expect decent rally upto 4000. but as per SEBI report FII are selling is high if they stop.

Everybody is expecting a decent pull back. Maximum people are looser and depress with present market condition.

With hope market will recover soon.