Tuesday, April 21, 2009

200 DMA won by the bears?.. Update for 21 Apr 09

So it did turn out to be a day of fight between the bulls and bears. The volatility coupled with somewhat predictability of the topsy turvy day with negative bias may have been a great opportunity for those who wanted to take sides. Ofcourse no one saw so many things coming straight at their face. The TCS results, Bonus announcement and Axis bank results. Well even if we were to continue with the recession – still all said and done the country is showing resilience to the happenings in US and Europe. We may (may) come out of this somewhat less bruised than that has been expected. Good for the economy – good for the country. Well we have the rest of the results also to come up till we make up our mind on that and ofcourse the elections – with time approaching near the results the volatility might increase. Two another events – RBI has lowered the growth earnings and we may have a word on the rate cuts. However in face of the global picture we may not have too much to do. So let us begin --

The global cues till we were trading and the end of Asia was well cautious. It was after the Europe opened and more importantly perhaps when the US gave the direction that the Europe too stumbled. FTSE closed down 2.49%, DAX down 4.07% and CAC down 3.96%. In US the financials were dumped like hot bricks and that led to the fall – Dow finally closed down 3.56%, Nasdaq down 3.88% and S&P down 4.28%. Ofcourse with such a performance the Asia was supposed to open down but unfortunately there is not even an iota of an attempt to recover by any of the indices open at this time – Nikkei is down 3.35%, Hang Seng down 3.67% and Strait Times down 3.06%. So our streak of six weeks of winnings is taking a breather??Daily 20 Apr 09

Coming down to the charts the tapering off the high that we saw is now a reality and the fight for the 200 DMA atleast for the time being seems to be won by the bears. Bulls could make the markets close above the 200 EMA only on 15 Apr – so shall we say that the bear market continues and we get once again into a range bound markets? Well we will have to wait and watch. Like i said earlier there are indicators saying that we will reach the mid of the Bollinger bands during this fall and thereafter we would be able to take a call whether there is any other downside to it or no. The volumes were lower than the average we have been having for the past few days and it stood at just 139% of the 50 day average instead of almost 20% volumes we were running. As far as the ADX is concerned after al fairly long time the –DI line is trying to look up and +DI is looking as if it wants to break below the 20 mark line. MACD divergence has further reduced but technically it is still in bullish territory. RSI has still not moved much trailing the overbought territory or a few points here or there and that is not good news. Slow Stochastic are bearish and almost at the 50 point marker. They should ideally reach 20 or around that figure before the upswing starts again. TRIX too seems to be tapering off the upward stance it had taken for some time now.

Okay here is what I feel – we should go to minimum 38.2% retracement that is at 3135 in the days to come. However the kind of hype built up of buy on dips will make the markets make half hearted attempts to recover. How successful they will be will depend upon the FII and DII money flow as the retail seems to have sold yesterday – as the FII and DII data seems to be showing cash inflow only. They bought a shade less than 500 Cr (both FIIs and DIIs).

Let us see the Pivot data for today:

R3 3543 against 3619
R2 3487 against 3540
R1 3432 against 3462
Pivot 3385 against 3410
S1 3330 against 3332
S2 3283 against 3280
S3 3228 against 3202
Projected High Range 3409 to 3460
Projected Low Range 3422 to 3371
Fib Projected High 3468
Fib Projected Low 3311

So let’s rock? Oh wait the options data …

pain 20 Apr put call 20 Apr