Monday, August 3, 2009

Update for 03 Aug 09…

image Too fast too far may be a way to describe it but then we have had this too fast too too far up and too fast too down before also. The markets are harbinger of things to come and is is only that we do not see it that way. I am – or let my put it this way – was certain that this time the recession was here to stay for a lot longer than even the great depression. I may not have had too many reasons supporting it but that is the way I felt it. but over the last few months the markets are trying to project a different story all together. The markets are saying that we – at this rate may be out of the woods sooner than later. At the end of the day the markets might be right and I may be wrong, but I still have that thing nagging in the back of my mind – how. I still walk around and see that construction activities in most of the housing projects in half a dozen cities I have been is grinding down to a halt. Then I walk around and make a conscious effort to see the lights at night in the newly constructed apartments, I see 50% not occupied. I see aviation on their knees including my wife’s favourite – Vijay Mallya. Then I see reliance fresh locking out half the floor of the shop to reduce their rental burden. I see the shops in the best and biggest malls yet to be out on rent/lease and realise that the India story will be okay but as of now all is not as well as the markets are telling me. All the same as the markets may have discounted my observations already I may be wrong and they may be right. The markets are mockingly bullish to all ‘us’ Bears at the moment atleast.

image The Global cues? let us see. The Asian markets ended the week on bullish note. Nikkei was up on Friday by 1.89%, Hang Seng up 1.68% and Strait Times up 0.87%. Europe had started the day fairly well but started fluctuating and then ended the day with red signs. FTSE was down 0.50%, Dax down 0.53% and CAC down 0.27%. The pulls and push in the US continued and they too had a highly volatile session with Down ending 0.19% green, Nasdaq down 0.29% and S&P up 0.07%. All in all – a consolidating move after a fair upswing. Today morning the Asia opened flat and trading mixed. Nikkei is up 0.01% and Strait Times down 0.65%.

The candle on the charts made a fair attempt to reach the upper edge of the Bollinger charts as I had suspected but for some reason was not able to reach there. All the same the Bollinger bands are expanding and 3EMA and 15 EMA lines continue looking up. The volumes were slightly lower on Nifty – 85% of 50 day average. The ADX is bullish with +DI remaining above –DI but the ADX per se does not give strength to this upswing remaining firmly at 17. Below 20 is markets are generally trendless and weak. The real trend to follow would be the one in vogue when ADX line crosses 20. MACD remains bullish with same divergence as day before on Thursday. RSI is rocking and bullish. Slow Stochastic are poised with %K and %D line literally overlapping at 75.4 and 75.25. The indicator is just below the overbought line – it can swing either way. The TRIX is looking up.

I would not use the options data because it has not built up to the level that it dictates the markets as of now - so I will summarise the likely hood today without it. The global cues have turned flat and should give some reason for the bears to cheer. They may try to hammer the bulls who have started basking in their own glory. The Technicals are bullish to say the least and that will give some support as we go down to lower levels. I see us moving to middle of Bollinger bands before going further up. The mid point is at 4339. If it for any reason breaks this level then the lower Bollinger band is at 3911. The support is trailing along at 4462. The markets on  Wednesday took support from this 15 EMA level before bouncing back with vigour.

  • For those in positional trade It would be ideal to hold long with a stoploss of 4489.
  • Those sticking with shorts should keep 4609 as stoploss.
  • For day trading go long above 4583 on nifty and short below this level.

Best of luck to everyone and may the markets do what you want them to do.



TSR said...
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