Sunday, June 28, 2009

Update for 29 Jun 09…

The markets bounced back with vigour in the last trading session. Now we have a mega event that may no longer be mega in size but may dictate the future of our markets in time to come. Railways budget and the Budget per say. It will decide the line that the Indian Govt will take over the next year to come. Are we expecting too much from this run up and are we expecting to reach new highs? may be – isn’t it all happening too fast? I was having a chat with Capt Joetom in the evening and I agree with him – if the markets go up now in expectations of the budget – it is difficult that the budget expectations will be met… in the way desired and we can expect a correction. If however we do have a sign of stability here at or below these levels then there are bright chances that we will strike gold at new highs in the coming days.

As far as the Global cues are concerned, we were the best of the markets in terms of performance on Friday. In Asia Nikkei finished green and almost the highest for the day – 0.83%, Hang Seng up 1.78% and Strait Times up 0.67%. Europe did not have a particularly good day. They started green and ended the session red at the lowest levels for the day – mainly on the US cues. FTSE was down 0.27%, DAX down 0.5% and CAC down 1.05%. The US started red, went deeper red and then tried to recover ending not good – DOA down 0.4% and S&P down 0.15% and Nasdaq up in green 0.47%. How we see the session in the Aisa opening we will see. So overall the Global cues are not too good and Asia opening has to be seen in this context.

As far as the technicals are concerned there are two other things to consider before making a choice of trades… Firstly is the Head and shoulder pattern being made.


If this turns out to be true then we may see levels very near to the 4500 on nifty before a pullback. The second is that though the 3 EMA has not crossed above 15 EMA so far – it may do so in this coming week before the budget and may give a positional long signal. So I would remain cautious around this zone of confusion and will wait for a clear signal. Daily 26 Jun 09 Also if the shoulder gets completed and it turns out to be what I am thinking – then one can expect a sharp retracement from those levels also. I do not however see the markets running up to 5000 as many are speculating the markets to do. We are trying desprately to move away from the  bottom of the Bollinger Bands and the first target may be the middle of the bands at 4446. The 3 EMA is trailing below the 15 EMA – 3 EMA at 4318 and 15 EMA at 4349. The volumes were not particularly impressive – just 76% of the last 50 Day average. Here comes another shocker for the bears – ADX is bearish but chances are extremely bright that we will have a bullish indicator. MACD remains faithfully in the bear camp but shows signs of switching sides as the divergence is decreasing with every passing day. The Slow Stochastic is bullish and so is the RSI. So here is all the indicators I follow laid out in front of you. As of now – the bulls may be calling the shorts so bears beware.Put Call ratio 29 Jun 09

Now we come to the Pivot data…

R3 4523
R2 4473
R1 4424
Pivot 4333
S1 4284
S2 4193
S3 4144
Projected High Range 4379 to 4449
Projected Low Range 4317 to 4247
Fib Projected High 4421
Fib Projected Low 4204

The options data seems to be inconclusive but all the same see the options pain and the Put/Call ratio charts. The greatest volumes for the Jul calls is at 4500 levels and that for puts is at 4400 levels so let us see where we are off too.Options Pain 29 Apr 09