The Stock Market Pain… How long? Update for 18Feb 09

For a long time to come – would be the right answer I guess. The real sucker’s rally the past few days to this fall turned out to be. Frankly I read this rally wrong by exactly two days. Ofcourse had I been reading it right then I would be just making money and not getting kicks by writing about the markets. There is nothing at all to talk about. I heard a commentator say there there is no negative stimulus for the markets to seek lower levels. Really wish he had seen the US markets in the present state.

The global cues are nothing to talk home about. Asia’s fall pales in comparison with what the US is undergoing at present. Nikkei ended a descent 1.35% down, Hang Seng 3.79% and Strait Times down 2.55%. Europe opened red as expected but kept a steady trend downwards with help of US futures data to close very near to their lowest levels. FTSE was down 2.43%, DAX down 3.44% and CAC down 2.94%. US opened red and almost immediately dropped lower – now just past its mid session – trading – Dow down 3.61%, Nasdaq down 4.08% and S&P down 4.28%. I really wonder where the US will close and how the markets here would open. Red seems to be the favourite colour. The S&P is below 800.

Okay here I go to the candles sticks and I will try to be as truthful to the candles as I see. Today was second day of a huge black candle facing downwards that have in two days eaten what the markets gained since end of last month. THe 5 EMA not only could not cross the 50 EMA – that was my feeling earlier – it is infact now ready to drop below the 20 EMA. The candles have sliced below the mid of bollinger bands and that is bad. The volumes were low. The ADX has turned bearish with the +DI crossing below the –DI. now the point that I would still like to put forward is that the strength of the downward momentum is not what it was for – when the markets were going up. MACD is just about to show the negative divergence. RSI is looking down and bad. The  Slwo Stochastics are heading towards the oversold zone – but have another day or two before reaching there. The TRIX is still looking up – and that does not surprise me – I would still say that the drop – for whatever worth it is – is not with substance. But since the Two black candles are giving the direction and the fact that global cues are as bad as they can be – another day or two of black candles will continue.

Let us see how the markets traded during the day. They opened below the S1 levels and then continued to fall with the markets briefly breaching the S2 levels but then stabilising and closing above the S2 levels.

 

 

 

 

 

The pivot levels for 18th is as given below: -

R3 2951 as against 3067 yesterday
R2 2890
R1 2830
Pivot 2793 as against 2888 yesterday
S1 2733
S2 2696
S3 2636 as against 2693 yesterday
Projected High Range 2812 to 2860
Projected Low Range 2847 to 2799
Fib Projected High 2880
Fib Projected Low 2730

We held on to an important support of 2750 and tomorrow it will be interesting to see if we can hold on to the 2700 levels – the S2 being 2696. Best of luck for tomorrow.