Sorry for the late upadte…

I actually had a bad case of indigestion after I saw “Chandni Chowk to China” – so much so that it can be directly blamed for the indigestion >> leading to a bad taste in my mouth >> hence the update at mid night on 18th. This is not the forum to discuss movies but for GOD’s own sake try not to waste a brokerage worth on buying tickets to this movie.

We are at curious crossroads – and some how I have got into a habit of discovering one everyday – we have two stalwarts who supposedly make money on the markets – the FIIs and DIIs. If my reasoning is correct then both should be making money – because I (read the retail) is not. If that be so then to remain on the winning side either both should be buying or both should be selling – well on most of the occasions one buys and the other sells. Take for example on Friday the FIIs sold 585.41 Cr worth and DIIs bought 400.73 Cr worth in the markets. Why are both of them on opposite sides? This is my first observation – second observation is that the selling is more (585 Cr) than buying (400 Cr). Then why did the markets go up and ended in positive? was it that the pivotal heavy weights could not be beaten down by the FIIs? Is it that these pivotal are now in short supply with the FIIs and they do not want to short without having some sort of holding? Now if that is true then are we going up inspite of the FIIs selling because the HNIs and the retail too are buying in the markets? Does that mean that We (DIIs, HNIs, and retails) are bullish at these levels and they are bearish (FIIs)? If we are at such levels then we should slowly change our mindsets to bullish inspite of being trapped in this narrow range of trading because the FIIs do not have the kind of holding to kill us further and we are convinced that we are at the lowest levels possible?

I cannot take this to the kind of conclusion I want because I do not have time and there are too many questions that I want answered before I say for sure what is in store for us. The purpose of this is to perhaps throw these questions – set some thinking by everyone of us in motion so that we can refine the theory. So before I go to the next stage of this blog I would request everyone to contribute to this in whatever way you can.

There was a fair run up in the in the markets – starting with Asia – Nikkei ended 2.58% up, Hang Seng up 0.09% and Strait Times 1.55% up. Europe too was  not bad but they did not end the day at the highest levels. All the same it was not a bad day. FTSE was up 0.63%, DAX up 0.68% and CAC up 0.7%. US opened positive – dived nose down in red during the mid session and then again recovered by the closing in green. DOW closed up 0.84%, Nasdaq up 1.16% and S&P up 0.76%. The bad news is now getting soaked up and does not seem to trouble as much as it used to some time back.

What do the charts say? not too much I am afraid. Look carefully – we had a white candle, a black next day and white candle the next day.what indecisiveness in the markets. The body of all these three candles are of approximately the same width. The confusion persists but we still hug the lower of extremes of the Bollinger bands and 20 EMA is lower than 50, 5 EMA less than 20 so what is says that the run is bearish. Look at ADX notice that when the markets were falling down the trend was strong, then the markets tried to raise but the ADX showed weak trend. – after a while we again started recovering and this time the ADX showed strength. Now when the markets have dropped – it does not show strength at all. So I take it that when the markets will recover there will be strength in the markets. Well we may be in some good swing up in that case. MACD still shows negative divergence – RSI is showing strength – rather let me put it across – is positive. Slow stochastic is recovering as was expected as it was in oversold territory. the red line too is above the blue line and that is good. The TRIX however looks band and only bad as it is looking down. The volumes were a bit on the lesser side – and that will remain to be my concern.

R3 2946 against 2963 on Friday

R2 2906
R1 2867
Pivot 2795 against 2756 on Friday
S1 2756
S2 2684
S3 2645 against 2549 on Friday
Projected High Range 2831 to 2887
Projected Low Range 2783 to 2727
Fib Projected High 2865
Fib Projected Low 2693.

I am sorry it is very late and I have not been able to work out the second chart I post with resistances and supports – however I am posting it without the levels.

and sorry no time to proof read it either – will see it in the morning and yes I feel the markets will remain positive till hitting the upper portion of the Bollinger bands that is around 3200 levels… best of luck