Update for 29 May 09

Unlike what was expected in this time of the year, the weather has so far been good here in Chandigarh. The mornings are pleasant enough to sit outside and enjoy the city beautiful. Many a times when I was small I used to wonder why all our cities cannot be like this – not that I have found out the answer till now. We, as a nation are built up fighting and living a crisis to crisis – and do not plan ahead as it should ideally be done, that is why perhaps number of planned cities in our country can be counted on the fingers of left hand of a person who has only three of them ;-):- Coming to the markets – the markets showed strength yesterday inspite of the likelyhood of the anticipated long unwinding that could / should have taken place yesterday. That strength stood the test of negative opening of markets in Europe. I would not be able to comment on whether we are disconnected with the world markets as of now or not but to a layman (like me) it seems so as we are often forging our own paths.

Like I mentioned above the European markets closed with negative bias of around a percentage point. FTSE was down 0.65%, DAX down 1.36% and CAC was down 0.95%. The US markets opened flat and spent better part of the trading day seeking direction – often visiting red territories and bouncing back along the flat line. After the midsession – the markets firmed up and ended almost at the best levels for the day. DOW was up 1.25%, Nasdaq up 1.2% and S&P up 1.54%. This rally or upswing has been attributed to the smooth auction of the 7 year Treasury note.  The question of GM’s likely bankruptcy still haunts the investors there. The mortgage crisis seems to be spreading as reported there where in the stage has been reached – the borrowers with good credit ratings have started defaulting on the cards because of job losses and pay cuts.

On the technicals side we had a small white candle like I mentioned earlier against the expected cooling off of long build up during the month. That may happen today. We are on the upper edge of the Bollinger Band and all lower EMAs are comfortably trailing above the larger ones. This indicates a continuation of the uptrend. Day before 2 EMA had crossed below the 4 EMA and might have signalled a beginning of downtrend but this was corrected the next day when the made a 100 point plus candle. The volumes have been good, infact very good considering our past few months. MACD is bullish. RSI is back into the overbought zone. ADX is interesting. As of past few days the – DI had crossed above the +DI but it has reversed again giving positive undertones to ADX. Only trouble is that the ADX is at 22.97 and that shows that the trend is very weak – so I would expect either a trend reversal of settling down in a range bound market for some time. Slow Stochastic has turned bullish once again. TRIX is looking up. So here are all the indicators I follow.

FIIs bought a net of 1859 Cr worth yesterday and the DIIs sold 451 Cr worth. The Pivot data for all those interested.

R3 4454
R2 4415
R1 4376
Pivot 4315
S1 4276
S2 4215
S3 4176
Projected High Range 4345 to 4395
Projected Low Range 4312 to 4262

Fib Projected high 4318

Fib Projected low 4226

I will end here – I am not inserting the Options charts as the Options oracle is not playing up. This weekend I intend discussing how all the indications generated by ADX and its strengths and weaknesses.