Monday, January 12, 2009

Loosing hope? Don’t -- this is going just as predicted…

0823hrs: Hurray - we have ticks of green in Asia. HangSeng and Strait Times are green.

The times to improve are surely coming around the corner. The light at the end of the tunnel can be seen if you look carefully enough. Hey by no way I mean that the uptrend is about to start – there are no indicators pointing towards that other than my heart. The day was not nice today, and incidentally we were also the worst performers at the market. Whereas Nikkei closed just 0.45% down, Hang Seng 2.83% in red and straits times 1.65% in red, we ended up 3.15% down on BSE and 3.48% down on nifty. And mind you, these are not the worst levels for the day. The Satyam story overshadowed everything else that came or is to come. And this announcing that global firms are scared by the revelations of almost USD1 billion accounting fraud of a company that was also listed on the New York Stock Exchange. The breadth of the market was negative today. All the sectoral indices also closed in red with BSE metal index dropping by 5%. Out of the 2520 scripts traded on BSE, over 1610 had declined. Tata steel, reliance infrastructure, lost almost 7% each. Reliance, Ranbaxy, DLF, BHEL, SBI and ICICI bank -- all repeated the same story with reliance losing over 4%. The nifty January futures have moved to a discount of 23 points. In this onslaught, the good news gets hidden in the blanket of negativity that floats around. The IIP Data that came out was a welcome relief. The drop in inflation also got swallowed by the bad news last week. The oil has again started steadily declining. I think it is time that we leave the Satyam story behind and move on with our lives.

On the12 jan 09 global front, as I write this article, the Europe is also ending red. FTSE is down by 0.76%, DAX is down by 1.46%, and CAC is down by 1.45%. US two has not started the day on too good wicket. As of now Dow is down by .85%, NASDAQ down by 1.17% and S&P 500 down by 1.4%. And all this is happening, ahead of the earnings report expected this week.

On the candles the story could not have been any worse. Today is the third black candle that we have had. The candles can taken to be three black crows and it indicates we have further  downside from this point onwards. That is substantiated by the third candle that is violating the lower Bollinger band. The Bollinger bands have widened and may give this trend the strength it needs. The five EMA is definitely and comfortably below the 20 EMA. The ADX however, is not lending support to this downtrend and that is good, though, as such the ADX is giving a bearish outlook. The MACD is bearish with the negative divergences increasing. RSI is not good and looking bearish. Slow Stochastic is bearish the only relief being that the red line has gone to the oversold territory. However before the recovery comes the blue line too shall join in the red line in the oversold territory. The TRIX has started looking down and bearish. Provisionally, the FII's sold 563.57 crore and the DII bought 217.83 crore worth in our markets.

See the markets behaviour today? Started out definitely below the  pivot lineand went on to drop piercing through support 1, the support thereafter proved resistance for the markets to recover.The markets played the rest of the day between the support 1 and support 2. The increasing volatility will lead to play out in such large ranges.

Pivot data for tomorrow is as under: -

R3 2990 against 3048 on Friday
R2 2917
R1 2845
Pivot 2796 against 2870 on Friday
S1 2724
S2 2675
S3 2603 against 2693 on Friday
Projected High Range 2821 to 2881 12 Jan 09
Projected Low Range 2856 to 2796
Fib Projected High 2901
Fib Projected Low 2715.

 WoW that is a lot of data for everyone to chew. The technical s indicate continuation of the fall – but I say that we may recover.



Uma said...

good post! Reliance might see over 1300 as long as it holds over 1066 (bollinger band play). I picked up just ten cash shares today at 1100 with 1066 as SL. I've also picked up CA1290 calls. As for tata steel....once it breaks 205 it's technically headed for 187 but it usually mirrors Nifty it had remained in the 250-200 band for a while.
The goal of bulls would be to get Reliance back over 1167 (below 1167 it remains in downtrend) while keeping tata steel over 187. So the main area of damage control is Reliance as they still have some leeway in tata steel.
Market still clinging to your project fibo level. They're just fantastic lately - there are times when a certain indicator works fabulously....and then it becomes less accurate and another indicator starts making a lot more sense.
enough bakwaas for your comment form....lets see how it goes lol.

S S Cheema said...

Good to see you here Uma - I agree with you - I am watching tisco closely - it has definitely made life quite painful for the bears.

Uma said...

man, it's the bulls in pain right now lol....but the retracement from recent low of 2250 is bigger than normal (900 points) so I think there's money to be made by going long. Only time will tell. Today I sold off even those 10 reliance shares and decided to stick with my call.
I think tata steel can crack below 190 if Reliance breaks 1066.

S S Cheema said...

We closed bad today too. But all said and done - 2600 or perhaps 2500 should be the max downside - nothing more - but then market did not take my advise before going down to present levels.
I realised when I did the Unitech tango - there is money to be made in range but requires so much control on oneself.

Uma said...

yea fact one can just sit tight, observe the range, and then buy tickets only for the second round ;D

S S Cheema said...

that's a nice one - second round - LOL