Some win some loose… Update for 23 Apr 09

The markets are slipping – one dot at a time. Call it beginning for another huge fall or consolidation or what ever else – the fact would remain that the markets are slipping. What else is happening that the indicators that were overbought are now retracing – shall we call it a smart move by the bulls to consolidate for another rally – or shall we say that the bears are savouring every moment of bull hunting? The answer to this will provide direction to which way we go here on. Another thing that has happened yesterday is that we have slipped below the 5 EMA – well to some this is indication to finally leave the long bullish positions to something more bearish perhaps. I also feel that the reliance results today are going to be a major input – albeit after the market hours to give direction to the markets. A direction is what is needed. Everything is pitched upon them. I now feel that even though this may eventually turn out to be a bear market suckers rally – there seems to be a good chance that we see 3800/4000 levels on nifty before we fall down. The kind of euphoria and the following this rally wanted does not seem to have materialised, for example my milk man is still not suggesting any stocks and neither is my ‘sabji walla’, ‘shopkeeper’ and all... The fall can come only after we have everyone bullish about us – India. In any case short term bullish scenario after we correct a bit more perhaps is the most likely course at the moment. So brace up yourself for another good upswing AFTER WE CORRECT SOME MORE.

The global cues were – let us say mixed at the best. Start with Europe – FTSE closed 1.08% in green, DAX up 2.06% and CAC 1.72%. Most of the real gains in the European markets were near the closing times. The US markets opened flat – went green and nose dived nearing close. DOW down 1.04%, S&P down 0.77% and Nasdaq – the only one in green there at +0.14%. Asia at the moment is red with Nikkei down 0.68% and Strait Times down 0.24%. Well we have to wait for our opening too.

The candles have left the upper Bollinger band and now trailing below the 200 and 5 EMA. Mind you there was an attempt to go and breach the 200 EMA yesterday too. The 200 EMA is now at 3394 – a point worth of drop. Next important level – if we do go lower will be around 20 EMA to 3206 perhaps. The volumes are dropping slowly with every fall – does this indicate that participation during the rise was good and now as we go down the build up of long in stock and futures is less and there is a general consensus for markets to be lower for picking season to start? The ADX is still bullish for whatever it is worth but with bears sneaking on to the bulls. MACD divergence – though still bullish – seems to be the last of this session if we close red or flat. The red line is very likely to cross over lower for a bearish beginning. RSI looks down. Slow stochastic do not show that we have still reached the oversold zone – so as per them we can still go down for some time before we decide upon recovering.

Okay I will take a little more time explaining options data. See the first put/call ratio chart? We are reaching from put call ratio of about 2.2+ to the present 1.64. What that effectively means that the resistance for the markets to go down to the lower levels is becoming weaker with each passing day and if this continues then we may see a more powerful fall in coming days. See the second chart? the Options pain – as per the present options pain chart the markets should end this month close to 3200 mark. Okay I will put in a word of clarification here. These charts do move with them markets and they project the investor mood. But also understand that no one thing can give you right solutions. Technicals alone is worthless. Options data alone is worthless and so would be some other standalone system. So it is a culmination of so many things some of which are subjective and others objective – so after reading all this I would prefer you to form your own opinion as to where we are going.

Let us see the pivot data now – has been a long writeup already.

R3 3506 against 3519
R2 3447 against 3467
R1 3388 against 3416
Pivot 3342 against 3362
S1 3283 against 3311
S2 3237 against 3257
S3 3178 against 3206
Projected High Range 3365 to 3418
Projected Low Range 3384 to 3331
Fib Projected High 3429
Fib Projected Low 3267

  Okay – fairly often I am asked as to how the resistances and supports matter – well no one can really tell you – there are so many ways to calculate these levels that any sane person will get crazy seeing the calculations and the data part – but all the same they do have meaning and earlier I used to post the last days relative trading on 3 min line chart with the resistance and the supports plotted. Well I am doing so again so please see – observe and learn – the entire idea of my blog is not to spoon feed but to learn and teach with so much data in platter before you. The decisions are yours after you go through it.

Before I end. I am on to a new dream – and will post on it one of the days next week perhaps. Only that before I thought it out I never imagined what colossal work it will turn out to be. But the challenge is mine and do not miss it – I intend the effort I am putting in to be worthwhile.

Cheers!