Friday, September 4, 2009

Update for 04 Sep 09…

imageimageWe must say hats off to the Indian markets resilience.   Under the same circumstances some time back we may have fallen like there has been no tomorrow. The Global markets are not really playing up but still we are holding on to levels that cannot be called bad really. There has been other things one has to keep in mind like the markets have not broken above 4700 levels really and that its future depends upon convincingly breaking above and sustaining that level. You can take it 4725 – 4750 level or so – it depends how you read the charts and what methodology is used. If we somehow manage to see through these two months – Sep and Oct then I feel there is some good times in store for us. Actually there was a lot of enthusiasm in some quarters that was already seeing markets at 5000 levels. There has been infact so much Put writing happening – just the signal that the markets are optimistic and that may be the soft underbelly. More on it after a moment.

The Global cues are mixed – doing the tango as I say usually. Asia had Nikkei down 0.64%, Hang Seng up 1.23% and Strait Times up 1.11%. Europe ended in red inspite of keeping flat for the majority of the session. FTSE ended down 0.43%, Dax was down 0.35% and CAC ended 0.55% in red. Europe fell on US concerns and US that has had four days of slide found some hope and pushed its way up. The US markets – past the mid session now are crawling to a little higher levels. Dow at the moment is at 0.32% in green, Nasdaq 0.47% in green and S&P 0.42% in green. The US markets too are fighting for foothold around very important support and resistance level. Nasdaq at 2000, S&P at 1000 levels. The chances are bright that the US markets will end up green – max about a percent or so.

daily 03 Sep 09 As far as the technicals are concerned – today has been the fourth red tick we have seen in the past as many days. The technicals have slowly and steadily turned bearish but some key spots are yet to be conquered by the bears – though they do seem to be in a winning streak. We are in the middle of the Bollinger bands and the 15 EMA still is 5 points below the 3 EMA – meaning that classically the sell signal has till not been generated.  MACD is just about to generate a negative divergence – but bullish still. Slow Stochastic the markets are bearish and fast moving to the oversold zone. %K is already in oversold zone and %D line will soon follow it there. TRIX is neutral – or seems like so. RSI still is bullish and has not generated the 50 crossover from top to bottom sell signal. The ADX has dropped even further down to 11 now.

Option Pain 03 Sep 09 As far as the Options data is concerned – whatever support that we are finding is due to the put writing at every 100 points in Nifty. But what is happening is that now the call writing has also started in the same earnest so the Put call ratio is 1.23. My sense is that If we go further down then the call writing will gather more  strength of momentum and eventually our recovering will become difficult. Ofcourse I am assuming that call writing will start at a faster rate it is being done now. The open interest at the various levels is 46.8 lacs put 4600, 44.85 lacs at call 4700, 41 lacs at put 4500, 38 and 36 lacs at calls 4900 and 4800 respectively. If we go below the 4500 mark then the next resistance to fall will come at 4300 nifty levels.. Just for info the call writing in Reliance is 24 lacs plus calls and just 7 lacs something puts and you think that reliance will recover?

Put call 03 Sep 09 So to sum it up – Global cues are positive a bit – the Asian markets will definitely open green and then where they go is anybody’s guess. Mine is that they go red. FIIs continuous selling will keep our markets under pressure for the time being. Charts are either bearish or turning bearish so they will oppose bulls even if they do not support bears. Option data is as of now resisting the markets to fall but may resist the markets recovering if the call build up happens as we creep lower. So a massive selloff or buy out is not likely – we might be expected to move in a range with a closing either side of the flat line.