Update for 31 Mar 09

Okay guys (and gals ofcourse) I have some very important job to do tomorrow – that I have not done so far ever. Wify being out of the town – I have to go and pick my results of my kidoos from the school. To be on the safer side – I have prepared myself well. I have taken time to ask my kids the class and section so that I reach the right place and ask the results from the right teachers. Already having jitters and I know that the night will turn out to be as awful. I am sure no one will recognise me as their father as this is the first time. How I miss my wify. Okay here goes another round of practice to pick up results of my kidoos – straight face, don’t look bewildered, try to remain calm, the hand that shakes the most should remain in the pocket and ask for the class… walk confidently, smile at the teacher and don’t look at the report card in front of the teacher lest I do or say some thing stupid or act smart.

Well here I am – ready to give you another dose of technicals’.  The day today was like that should have been accepted after a virtually nonstop rally of the markets for 11 straight days of rally. The force down was a kind of anticipated and everyone seems to have rushed for taking home the profits. Typical – of what was expected when the run down was expected to start. No one really knows for sure whether this will turn out to be a “Sucker's rally” – so no one is really taking a chance. Please do digest it that we have fallen on seemingly a lower volume. I mean today the volumes have been 117% of the last 50 day average. We have been clocking almost 150% last few days. Frankly even if we just set aside these and see the global cues we will get another good observation. We have fallen exactly in line with the global cues we got from the Asia. Over the week end I had already written that the US closed weak. The Asia also too the cues and opened weak – that became a stampede for the profits to be taken home rally and closed the Asian Indices 4% lower. Nikkei ended 4.53% in red, Hang Seng was down 4.7% and Strait Times down 4.15%. We closed 4.2% down on nifty and that is in line with the Asian Markets. The Europe is still open and presently in red. Past the mid session we see them around 3% down with no chance so far to move into red. FTSE is down 2.35%, Dax is down 3.5% and CAC is down 3.07%. US too has opened and has started the day firmly in red. Dow down 2.73%, Nasdaq down 2.77% in red and S&P down 2.76% in red. Too long a period for US to remain open so I will not try to predict where it will close but closing red is a fair bet especially with the news flow coming regarding the GM and blah blah…

Coming to our candles, we see a tall black candle that has really had the audacity of eating away 2 days of gains in a go. The Bollinger bands too have widened quite a bit. I will say again at the cost or repetition that We are still in the Narrow trading range and there has been no break out. The 5 EMA is trying to go below the 100 EMA and that would signal end of the road up for the short term. 20 EMA had just about crossed over the 50 EMA two days back and is still above it. The volumes are lower as I mentioned earlier. ADX trying to look down. MACD is still bullish but the divergence has reduced. The RSI has moved down from the overbought position and looks down – some would actually use this indication to sell and hold shorts. Slow Stochastic red line has come below the 80 line but the %D line is still in the overbought zone. Once again some would use this condition to sell and wait with the shorts. TRIX is still looking up and is around the highest we have seen in this bear markets so expect it to retract down taking the markets alongwith.

Let us see the Pivot data before I pack up and call it a day…

R3 3258 against 3191 yesterday
R2 3164
R1 3071
Pivot 3016 against 3095 yesterday
S1 2923
S2 2868
S3 2775 against 2999 yesterday
Projected High Range 3044 to 3118
Projected Low Range 3102 to 3028
Fib Projected High 3150
Fib Projected Low 2921

Next inevitable question is where do we go from here. I will lay it all bare for you to pick and choose.

1. 38.2% Fibonacci retracement is at 2903 and 50% Fibonacci retracement is at 2840. So in the coming week we should see the markets touching atleast these points.
2. The middle of Bollinger band is around the 2725. That can be the next place where we stop.
3. Going purely by the trading range – 2611 should be the lowest point if we do not make fresh lows.

So very frankly looks like we are going down for some time. Best of luck to all who have been short – and I think you will have some more time before you should square off your positions.