Thursday, January 29, 2009

How long will this last? Update for 29th Jan

Yes I mean it – if we say that it is a bear market then we have to at some stage take the upswing with a pinch of salt and decide where do we go from here? and perhaps when do we go – wherever it is. Firstly I am glad that out of the two scenarios listed out the markets have recovered for whatever reasons and we have not really broken the support to fall down in a spiral for far lower levels. What will affect the markets today? Firstly, fuel price slash – petrol down Rs 5/-, Diesel down Rs 2/- and LPG down by Rs 25/-. It will bring cheer as this directly affects the retail, inflation and morale.The second is the global cues that remain positive. Then there is the matter of expiry and rollover – that at the moment seems healthy. Fourthly there is the corporate results that are mixed and finally there is this problem of job layoffs. There is another stimulus that we actually missed out – the govt not reducing the interest rates of any kind – but why so? It was aptly put across by one of the commentator on the idiot box – a man went to the doctor and the doctor said there there is nothing wrong with you at the moment so no medicine is required. So inspite of the man (we) thinking that a rate cut (medicine) is required – the doctor (govt) does not think so – atleast till it sees the effect of the measures already taken. That was what had begun this rally. I will try now to give levels to this so that if we have to be cautious then we know where are the potential hurdles. The first major hurdle is just around the corner at 2936 and the second hurdle is at 3150. SO if you have to take the negative views with puts or sell futures – then these are the two levels that you have to watch out for – then we will again start with the debate of how much down we go.


If you see the chart of yesterday we see that inspite of opening positive there was no real direction for the markets till mid session. It was then that the 14 EMA (that I use) was clearly left below the 3 min line and it climbed. It hovered around the R1 levels to move up with momentum and break the R2 and end between the R2 and R3 levels. Both the pivot and the R3 are out of the chart you see. Today is the expiry – if we open gap up like we are likely too – except some selling pressure – especially if we open between R2 and R3 levels. If below R1 or pivot –then the climb may be through the entire session.

As far as the global cues are concerned – Europe ended well and at almost the highest levels of the day. FTSE up 2.4%. DAX up 4.52% and CAC up 4.11%. It was US that seemed very jubilant Dow up 2.46%, Nasdaq up 3.55% and S&P up 3.36%. This can be a month after a long time that – on monthly basis US closes positive (Can – as of now it is still negative by a small percentage point)

As far as the candles go - We have two good white candles and wee are confidently away from the lower edge of the Bollinger band this time over. On ADX the DI+ is above the DI- and that is good – but unfortunately the ADX does not lend too much strength to the upmove. daily 28 jan 09MACD still is with negative divergence and like I have been saying that though it is still negative – this time over the divergence was really fairly low. RSI seems good today. Slow Stochastic is out of the oversold territory – but will signal reversal only after it reaches the overbought territory. TRIX is not looking down with the same vengeance it was some time back – so it too may give us a breather. Bottom line – if you were long – remain long.

Okay too the Pivot data now…

R3 2945 against 2869 yesterday
R2 2913
R1 2881
Pivot 2823 against 2744 yesterday
S1 2791
S2 2733
S3 2701 against 2619 on yesterday
Projected High Range 2852 to 2897
Projected Low Range 2813 to 2768
Fib Projected High 2879
Fib Projected Low 2740

See the Pivot move up by a good jump? Just for your info. On Nifty advances were 725, declines 440 and unchanged 62 with AD ratio 1.647727. FIIs were still selling in our markets worth 217.32 Cr but DIIs bought 601 Cr worth. So here you are – ready for the day? China and Taiwan markets are closed today.

Watch this space after the market opens for some advise on Options…



Uma said...

wow....FIIs running outa money?

Uma said...

might mean speculative bounce coming up!

S S Cheema said...

Hi Uma: Nice to see you here -cannot say that I am seeing you after a long time but surely miss you on the blogs.
Actually it is worthless speculating - the markets are directionless to say the least. Hope there is some sanity in comming time.

Uma said...

yea, cheema...Id say only reliance is trending up.

Uma said...

I think we might see 2950. Success of bears to contain nifty below those levels shows the trend (upside) might be weak in short term

Uma said...

I'm learning a bit of candlestick charting by the way! :) Lots of great videos on the net that have helped.

S S Cheema said...

Uma: ADX was going weak - this way there will be more trouble on our way

technology said...