Monday, January 26, 2009

Light at the end of the tunnel… Update for 27th Jan 09

I am sure that so many people around the country like me are eagerly looking for some signs of revival after one drop to another in the markets. Well before I rant about the markets .. I really had a good big break off the markets for three good days. Saw the ‘SlumDog Millionaire”, had my Unit officer come over for the week end and went to Trimbakeshwar. Did not spend a moment on the TV or the computer and it did turn out to be a big break and a wonderful experience. The Slumdog turned out to be a good movie that kept me to the edge of my seats and I – Personally really liked it. A glimpse of India that we want to wish away without contributing in any right way. Ahhh! food for thought – what did you do for the country today? Threw rubbish on the road? Went to a Old age home? Or were just too busy thinking money!

Sorry for the ranting of a Fauji – Let’s start! There is definitely a disgustion of the present tidings in the markets. Bad gets worse every day, one black candle leads to another and so it goes on and on. I will try to put forward what I feel has happened over the past few days. Firstly, the markets have dropped - (as if there was someone who did not know that).


It made black candles for four continuous days. The majority of the sell off has come from the FIIs selling and the volumes have been low. The volumes on Friday on Nifty were 103% of 50 day average – but before that we were nowhere near the averages. So by my mind the sell off or the drop that we have seen for last few days has perhaps more to do because of lack of buying than the selling pressure alone. On an average day when we have FIIs sell off 400 Cr worth and DIIs buy 200 Cr worth the markets stand still – making a doji or the like. So what I mean to say that this selling or buying is really just few disinterested people perhaps trading and making bets on an otherwise dead market. If in these volumes it is easy to drop the markets a few hundred points – then it is as easy to make the markets climb a few hundred points. What exactly should the markets be waiting for now? There is hardly any event of worthwhile nature that one should look forward too – politically or something like the nation going off to war. If my reading is correct then the results are beating expectations. Or let me put it across this way that in most of the cases the companies are beating or atleast meeting expectations. So if we say that the markets discount the future then this is not too bad a scenario. Now what does the market feel will happen in the coming future. Most commentators say that the worst seems to be over – for India atleast and that we will eventually swing up – a bit slower than expected but – recover definitely as the inflation will ease further and the demand will pick up and all the efforts of the world govt would now slowly and definitely show positive results. If you look at the chart I posted above – I had posted this chart and a few days back and explained that one scenario is that we break the support the markets are getting at the moment and go up – or go down to visit the long term support/trend line at sub 2000 levels on nifty. I am now sure – seeing the market behaviour for last few days that the will to drop the markets to sub 2000 levels is missing at the moment – tomorrow if we have some other inputs then we will see them in new light but as of now we should recover to higher levels starting tomorrow perhaps. Another reasoning for this theory of mine is that we just do not have the kind of momentum taking the markets down like we has – say in oct or nov last year.

23 Jan 09 Daily

The indications on the charts continue to be bad and will take some time before there is an improvement. If you notice carefully you will observe that the candles are no longer trailing the lower Bollinger bands really – so that is a small mercy to start with. 5 EMA is below 20 EMA and that is below 50 EMA. So frankly this tells us to remain on short side only – but then they are trailing indicators. Once again observe carefully as the DI- on ADX has looked down the ADX line has raised its head above the 20 marker and may eventually support a rally for whatever it is worth. MACD is bad but once again observe that the negative divergence is really not the kind we saw earlier. It is negative nonetheless. RSI is bad and negative – goes without saying really. Slow Stochastic red line is oversold and blue is likely to join it there within a day or so if the selloff is there. TRIX ofcourse is negative.

The world markets were indecisive on Monday really as a lot of exchanges in Asia were closed – and Nikkei fell. Monday however has turned out to be good for FTSE, DAX and CAC that ended 3.86%, 3.54% and 3.73% up  respectively. The Pfizer-Wyeth acquisition and the surprise jump in sales of existing homes is the reason being quoted as the US too is trading in green (a rare sight indeed in these days). It is little past the mid session there in US but all the indices are holding on to 1% and above gains. I hope that they remain and close green.

It is late night so will update the market behaviour when I get time tomorrow – but have a look at the pivot data for tomorrow.

For tomorrow let us see the Pivot levels…

R3 2869 against 2807 on Friday
R2 2805
R1 2741
Pivot 2701 against 2712 on Friday
S1 2637
S2 2597
S3 2533 against 2618 on Friday
Projected High Range 2721 to 2773
Projected Low Range 2756 to 2704
Fib Projected High 2793
Fib Projected Low 2632

Purely looking at the Pivots – looking forward to touching R2






geniusjaggu said...

good mrng paaji,
light is off the bullet train coming at the other end..RUN PAAJI RUN... LOLA is coming...

S S Cheema said...

Bullet train - yeah - but how about a day or so of relief?

Uma said...

Cheema, great post again. short term upside might be there...and about the long term I cannot say we're not officially in recession.

S S Cheema said...

Uma: actually we have started living for the day. No chance we can take long term views - the point is that if there is no strength in upswings - so is it for the downswings also.
Anyway as long as we survive one day at a time - I think we can live long enough to see tomorrow!