Thursday, June 18, 2009

Update for 18 Jun 09…

So the inevitable that was being brushed under the carpet for so long has happened. The selling pressure just outweighed the buying – which ofcourse I hardly believe was there to begin with. And the action has been repeated in most of the world markets – a huge theatre for the people playing the GOD men. Had this move come a couple of weeks earlier – it would have been perhaps seen in an absolute different light – could and would have been taken as a healthy correction. The markets could have then recovered, composed themselves quickly and marched ahead with vigour. Unfortunately it has come at a time and with the ferocity that might now indicate or terminate the run up that we have been seeing till now. The gravity – for whatever it was worth was hardly realised by the Asian markets and they closed nominally down and then the worst came. Europe that tried to go green suddenly found it hard to breathe finally ending – FTSE down 1.16%, DAX down 1.86% and CAC down 1.64%. Daily 17 Jun 09Though the US did open with a negative not – it tried and did go on to the green only to give up most of the gains eventually and close red except for Nasdaq. The banks did most of the damage so as to say. The US closed – Dow down 0.09%, Nasdaq up 0.66% and S&P down 0.14%. In Asia just Nikkei has opened that is already trading 1.56% down.

On the charts the much awaited event that happens once a while has happened today. For those who follow 315 – the 3EMA has moved below the 15 EMA and gives a sell signal – so ideally one should be in a positional short now. At the most today’s candle can be seen – but chances are bright that the markets will continue in this direction only and do a budget rally – so the bears should ideally dance for the next coming week too. We are past the middle of the Bollinger bands to the lower side. Like I already said the 3 EMA has crossed down below the 15 EMA and gave a sell – to be confirmed with a candle today. Volumes were one tick below the last 50 day average. Advance decline ratio for Nifty was 0.177 – grossly in favour of the bears. ADX has turned bearish and the ADX line will show strength in coming few days – if it turns upwards and looks up. Put call ratio 17 JunMACD is bearish like past so many days and the divergence has increased. RSI is at 53 and those who saw my “trading with RSI” will notice that on of the sell signals generated by RSI is when it crosses below the 50 points. So if we have a bad day then RSI too would generate the second sell signal. Slow stochastic is Bearish but still nowhere near over sold so we do have a run down left (so as to say…). 

Let us see the Pivot data now: -

R3 4702 against 4669 yesterday
R2 4586
R1 4471
Pivot 4401 against 4468 yesterday
S1 4286
S2 4216
S3 4101 against 4303 yesterday
Projected High Range 4436 to 4529
Projected Low Range 4505 to 4412
Fib Projected High 4567
Fib Projected Low 4281

If you notice the pivot is down 67 points and also the range has widened. The Fib projected low too has gone to 4281 – below the 4300 level. Option pain 17 Jun 09

See the Option Pain and how the Put Call ratio has over a day changed in favour of calls. IF and IF there is a recovery that would be quite a painful type. Best of luck to everyone for today’s trades.