Friday, December 12, 2008

Time to wait…. Time to watch….

The link to visual guide is Somehow the jpg is just not behaving.

So our expecting that the run up will  take a breather was not a bad call. It had to and the way actually we have closed is not encouraging. I had expected the market’s to go a little bit further up before closing. In all the probability then it will go lower tomorrow. There are actions taken and news flowing on daily basis – that is exactly what was expected – close to the elections the govt will keep the momentum of news flow to continue and that would have ideally let the markets and the economy in a fairly buoyant state. Now the problem is that the govt is declaring the SOPs but the industry is not really towing the line. Take for example the rate cuts – so many promises and the banking sector is still defiant really – they have refused reduction in rates for one reason or another. Finally I believe that the consensus has been reached and some thing floating on the idiot box – 7% rate of interest for loans upto 5 Lacs and 8 or 8.5% from 5-20 Lacs. I am sure that the govt would have done its homework and the idiot box too was saying that 85% of home loans fall in these categories – what I am worried about is = will this amount to subsidy? what part will be financed by the govt and how. And at the end of the day will the real estate sector really benefit from this? Yesterday I came across this visual guide to the financial crisis in US. take a look at it – just as we are doing – there was just no acceptance of the fact that the problem is at hand till the time it was too big to handle really – see the phase of ignorance we are going through? We too are just not ready to accept that real estate is extremely vulnerable at the moment and you cannot expect closing the eyes to wish the problem away. I am sure that we as general public would not be knowing the real inside to the under currents  in this sector – but I am sure the right people would be knowing it exactly how big the problem is and in which direction we are heading. Meanwhile in US there has been no respite at all to the bad news – increase in unemployment data and further job cuts. Bank of America has indicated to cut upto 35,000 jobs over the next three year. Let us assume that at some point of time the job cutting will stop – but will that mean that new jobs are created for the next generation? Uh! food for thought. The package to the Auto sector is encountering resistance at the senate and the low sales is already giving sleepless nights to the auto makers there.

Asia was mixed – the entire global indexes are taking a breather – good for everyone – baby steps up are anyway better to giant leaps. Nikkei closed in green 0.70%, Hang Seng up 0.23% and Strait Times down 1.51%. All had dipped lower before closing at fairly higher levels – like us. Europe continued with this uncertain trend FTSE closing 0.49% up in green and Dax and CAC ending 0.78% and 0.43% in red. It is finally the US that has thrown in the towel to this upswing and markets closed in red – Dow down 2.24%, Nasdaq down 3.68% and S&P down 2.85%. Asia has opened red as expected – Nikkei about 2.5% down and Strait Times down 1.25%.

On the charts it was a Doji – a reversal signal. It is a candle that shows that the bulls and bears had a good fight and the result was indecisive. In any case it has the power to put to end – what ever trend that was stronger at that moment of time. Upswing – was our pace – wasn’t it? So do we spend a little bit of more time here? maybe. So brace yourself for the halt at this station for some time. The Bollinger bands have constricted further giving a hint that the market may remain range bound for some time and then viciously breakout. The 5EMA line continues to trail above the 20 EMA line and the Volumes were good. Take it as a fierce battle between bulls and bears. The MACD divergence has increased further. RSi is still  looking good the red (%K) line has reached overbought zone and the blue line is following closely. TRIX is still looking up. All in all this halt at this level should ideally be temporary with we continuing upwards – mind you that is ideally – and the markets are not ideal most of the times.

Pivot data…
R3 3029 against 3095 yesterday
R2 2992
R1 2956
Pivot 2908 against 2884 yesterday
S1 2872
S2 2824
S3 2788 against 2673 yesterday
Projected High Range 2932 to 2974
Projected Low Range 2915 to 2873
Fib Projected High 2967
Fib Projected Low 2838

If you have been following the pivot charts then you will realise that the range is becoming narrower by the day. Another news is the crude inching up – it is important to see where we stabilise eventually.



Natasha said...

Dear Mr. Cheema,
Couldn't see a thing of "Visual Guide to...". Pls paste somewhere it cannot be enlarged either and blurs too!!
Warm Regards,