Sunday, February 8, 2009

Will this trend continue?... update for 9th Feb

Firstly let me apologise for not updating the blog on for Friday - was just caught up in work. Actually during the night flying phase I remain so busy as there is complete lack of sleep and to top it all - my broadband is down and  BSNL says that their network will remain down for another two days. Now I am on my life saving Tata Indicom data card and it is just too slow for normal day to day functioning. Like every time I have to pull up a chart it takes one hour and thirteen minutes (Oh forget it! - that thirteen minute part is my exaggeration). By the time the chart and the rest of the data is downloaded for the Friday's markets it is already Sunday.  I will tell you something interesting - I came across the market summary as given in Yahoo Finance - this is what it had to say

"Valentine's Day lies ahead, but the coming week should feel more like Christmas because the government is on track (we presume) to deliver some new recovery packages for the financial sector and the U.S. economy.

Just as any child has a feel-good vibe for Santa Claus, the market appeared to have a feel-good vibe for the impending packages as evidenced by a 6% gain in the financial sector and a 5.2% gain for the broader market this week. It was an interesting response given the absence of confirmed specifics on the structure of these recovery packages, which are separate but likely to be at least equal in their high cost.

The Treasury market seemed to appreciate that last, fine point as it got weighed down by concerns over the supply of government debt that will be forthcoming to finance the growing deficit. The stock market, in its inimitable way, focused on the rosier side of things, which is the notion that new recovery plans by a new administration will be the stuff a long-awaited rally is made of as confidence in the government's ability to steer us out of this crisis is restored. That belief overshadowed generally disappointing earnings news and/or guidance from some major companies, including Disney (DIS), Kraft (KFT), Costco (COST), Ryder (R) and Cisco (CSCO).

The economic news was a mixed bag. Both the manufacturing and services surveys completed by the ISM topped expectations, with notable upticks in their indexes for new orders. Pending home sales in December increased 6.3%, setting the stage presumably for an uptick in existing home sales for January"

Why I have pasted this for all to read is that simply speaking - they (read markets) are perhaps justifying what I have said for so long - we are really getting fed up of the bad news - Actually I would say that one of the two things is happening - either we are becoming indifferent to bad news or we are bottoming out and the markets is perhaps saying enough is enough. I am pretty sure in my mind that the worst is not over so bottoming out is not likely to be the option. If that be so then we will go up only to fall down. Here too I see a twist with the theory - what is the level that we will go up to before falling? The level - frankly should be where you will be convinced that the worst is behind us - and where should that level be? definitely around 3200 - 3500 level. A lot of people should at these levels get trapped with shorts at lower levels and suffer. So my advice? tread the path with caution. daily 08 Feb 09

The Global cues are good at the moment - The Asia closed green - Nikkei at 1.6% up, Hang Seng Up 3.61% and Strait Times up 0.63%. Europe too did not have too much trouble going and remaining green after the initial flat opening. FTSE was up 1.49%, DAX up 2.97% and CAC was up 1.84%. The Europe was in green around the closing bell because of the positive cues from US. The US closed Dow up 2.7%, Nasdaq up 2.94% and S&P up 2.69%. So going green should be least of our problems - the problem and the sight should be set at closing green.

Let us come to Candles - the ones that have showed me light so far. Look a the chart on to the right. Notice the following things:-

  • Bollinger bands have narrowed drastically - that is because the markets are virtually standing still.
  • We have four candles in exactly one line.
  • The volumes are low.
  • The last candle does not give any breakout sign - The breakout does not happen with one candle trailing the middle of Bollinger bands.
  • The candle may however may signify a bullish engulfing pattern.

ADX is weak but favouring bulls. MACD has a bullish divergence - however small it may be. RSI is positive and Slow Stochastic has the redline crossing over the blue line and the markets do not go either to oversold or overbought territory really. (Stochastics are as confused as we are)

All in all we may have the run up continuing for a few days if it catches momentum and a beginning has been made.

Let us see the pivot levels for Monday --

R3 2926
R2 2898
R1 2870
Pivot 2824
S1 2796
S2 2750
S3 2722
Projected High Range 2847 to 2884
Projected Low Range 2819 to 2782
Fib Projected High 2872
Fib Projected Low 2757

Hey! I am praying for the markets to improve -- are you?

One more thing - I may not be able to post regularly next week as I am accompanying my Wify for her US Visa interview on Wednesday. So pardon me on Tuesday and Wednesday. And ofcourse take care of the markets ;-)



Uma said...

Reliance 1395 paar kar gaya....pata nahi kahan tak jayega...! Maine 1315 pe exit maar diya tha.
aur Educomp mere 400 rupees nigal gaya! booohooo....

Uma said...

warning...folks, close your ICICIBank account right now. They froze 55,997 from my mum's account with no explanation and on Internet I found that they are issuing credit cards without authorization, then charging the cards for some inane insurance policy of theirs and freezing large sums from the bank account. Many such letters are online, do a search. I called someone from Ludhiana who fought for his money for 2 years and had to serve a legal notice to icicibank....I asked him if I could use his legal notice so I can customize it and send it!

S S Cheema said...

Shucks - Have been hearing these rumors for very long now - hope it survives for a little time more.
and Uma sorry no updates this week - too busy and no sleep. In any case was going out station tomorrow.
Bye and sorry...