Sunday, April 5, 2009

Who’s fooling whom?… Update for 06 Apr 09

image So much debate is going on about this rally that we have had for past two / three weeks or so – I do not know whether it is warranted or no – I will not be able to answer this question to anyone’s satisfaction and I am sure neither will anyone else will be. I believe that the markets are ruled by some principles that are not perfect – but still maintains in those parameters. The First is that there is some relationship to the technicals and very often so we see supports/resistances and the markets behaving themselves. If not so then the markets are moving on some fundamentals – the ones that are presently in vogue or with a degree of projected fundamentals. Once again the markets do respect fundamental and if not immediately – then over a period of time they are playing in the gambit of news that shake or break the fundamentals. The last one is when both technicals and the fundamentals breakdown and do not five any indication and the markets are like wild bulls or bears out on a rampage. This too happens and the philosophy behind such events are when there is desperation in the markets and wild manipulations. After all it is the game being played by some unseen hands – there is news that is and there is news that is created to suite the views of such manipulators. I do dare to say that this rally of past few weeks has been guided by the last of the three reasons that are there. I will not try to see why it really happened but see now the question that now springs to mind – what now? I feel that the markets are overbought from a reasonably long period of time and will sooner than later react to selling pressure. As I had said – we have broken out of the earlier range – it is reasonable that we assume a change in trading range that we have been seeing for past few months. There is a equally strong view point that is not so loud at the moment but says that this is another one of those bear rallies. Take your pick. Now if we were to correct then I have laid before you the Fabonicci levels that are likely to be touched – just one thing – I have not worked these levels on figures but by drawing them on charts so the figures may be plus minus 10/15 odd points here or there. Let us say we were to correct tomorrow then the first level to watch out for will be 38.2% retracement that stands at  2971 on nifty – the next should be 50% retracement that stands at 2893 and finally 61.8% retracement that is at 2819 on nifty. I believe the rate at which we have rallied should make us see the 50% and may be 61.8% retracements at 2893 and 2819 respectively soon. If however we continue to go up then it is anybody’s guess as the figures will change again and I will try to keep you posted.daily 02 Apr 09

The global cues seems to be positive on account of the G20 summit that is being praised by many as a step in the right direction. The problem with such summits are that many a times when we see the nations coming down to brass-tacks and implementing the same – it either takes a lot of time or never comes about. Another thing that comes to mind is that the data that is coming out of US is still not encouraging at all. All t he same the Asia was about flat with some positive cues – Nikkei closing 0.34% in green and Hang Seng closing 0.16% in green and Strait times closing 0.97% up. The markets in Asia traded otherwise in green with one odd dip to the red. Europe was apprehensive of the rally going forward so closed mixed with FTSE down 2.31%, Dax up 0.07% and CAC down 1.11%. The US started the session with a doubt and then ended finally in green doubtlessly. Dow closed up 0.5%, Nasdaq up 1.2% and S&P up 0.97%.

The candles saw another big white candle and has touched the upper Bollinger band again – it has not violated the upper Bollinger band this time however. We are way above the 100 EMA and that should now give us support on our way down – if it does not turn out to be a free fall. Volumes were 150% of last 50 day average. Both the FII and DII had bought net 691 Cr and 254 Cr worth on the markets and that would be one reason – for the volumes. The MACD is bullish and the divergence is good. The RSI is in the overbought state so even if someone tell you to buy golden stocks – tread with caution. Slow stochastic has turned bullish and has come out of the overbought zone. (iCharts and my other software are in conflict as far as the Slow Stochastic are concerned so take what I say seeing iCharts with a pinch of salt – the software says that Slow Stochastic is overbought) The ADX has turned bullish again – so here it is all for you.option pain 02 Apr

Seeing the options data there seems to be no call build up – only increase in the puts. Please do take a look at the options pain. 

Let us see the pivot data: -

R3 3395
R2 3333
R1 3272
Pivot 3166
S1 3105
S2 2999
S3 2938
Projected High Range 3219 to 3303
Projected Low Range 3153 to 3069
Fib Projected High 3273
Fib Projected Low 3015

call put ratio 02 AprI think that would be it for today – hope to see you making money on the markets. The mantra as of now by the idiot box at the moment is buy on the dips – well I would not comment on it…



Uma said...

A very apt title....I shorted at 3300 (wish fulfillment after many months!) now to see if I end up as the meat on the table or add meat to my account

S S Cheema said...

Uma - If I had not been so confident then I would have filed for insanity .
But now the situation has come that the puts build up in the system is just too much. That would mean everytime we have to drop a few points - there will be puts squared up and there will be a resistance of the markets to fall suddenly and excessively.

Uma said...

well Im praying for the best for me...