Weakness Persistant

Major Indices : Sensex : 16275 : Nifty : 4859 Intermediate Trend: Bearish – Stop 17413 Key Technical Levels: 16626- on the upside: 15848- on the downside In the previous review I said " bulls failed to strengthen their position after 3000 points rally; this lack of commitments at crucial points indicates a larger degree falls in the next couple of weeks; this argument will loose value only if the Sensex sustains above 17413; On the downside, the last hope (for the bulls) is at 16400-16452 levels”. In the retaliation move, the Sensex achieved 17434 (as against 17413) but lost almost 1200 points for there, proving the anticipated weakness. As of now, the bears are in control of the markets. The bulls are just “hoping” for the best, but failing (repeatedly) to head higher. In this week, the Sensex has created a new resistance level with a falling “Gap” created on Monday, i.e. 16626-16498. The importance of such “Gaps” is immense as far as deciding medium term trend of the market. Look at the earlier falling “Gap” scenarios on the chart (since the top of 21k); these gaps remained “unfilled” and so the persistent weakness. Today it has made an attempt to “fill” the gap, but failed. As long as the Sensex trades below this recent falling gap area of 16626 (highest point of the gap), the recovery or even short term bounce is ruled out. If the bulls succeed, then expect a rally (corrective) up to 17200+ which is nothing but an upper end of the new falling parallel channel (marked in blue dotted lines), where expect a renewed selling pressure. On the downside fall up to 15850-15300, in the next couple of weeks, looks imminent. Trade accordingly.

Pause...?

Nikkei 225 (13953)

In the last review (16th April) when the Nikkei was trading at 12990, I was stated “after a 15% rise since the recent bottom of 11691, the Nikkei is in a consolidation zone; once the recent high of 13485 surpassed we may expect a continuation of the bullish trend; stop is placed at 12430 for the longs”. As expected, after a brief consolidation, the Nikkei had rose to 4 months high at 14208 (7th May), gaining over 21% since March low. The stop of 12430 remains untouched. In the last week the Index has lost 4% from the week’s high of 14208, but recovered smartly in the previous 2 trading sessions, from the low of 13540. However, this recovery may turn out to be a short lived if the trend doesn’t sustain above 14050. If it does, then expect a continuation of the uptrend towards a target area of 14220 - 14390, else the Index may fall into a sideways trading zone of 13620-14050 for the next couple of trading sessions, before deciding future course of action. Revise stop from 12430 to 13620.

Trend exhaustion…?

Dow Jones (12876)

It was said (in the review dated 28th April- value 12891) “the Dow is trading near sensitive area of 11900, if sustain we can see a continuation of the rally towards a target of 13200, else watch 12604 for negative clues”. In reality, after 5 trading session from the review date, the Dow has touched 13191, as against target of 13200, and now once again fallen back in a important trading range of 12700-13100. So far, the bulls gained 14% from the recent trough of 11508 (Jan 08, when the overall sentiments were sharply negative). Now the question is “is it an end of the corrective rally within the overall bear market? Or the Dow has discounted the bad news and likely to continue its upward march?” The answer lies in breaking the resistance zone of 13190-13320, i.e. a 0.618% retracement level of the entire fall from the recent high (14279). Failure to post a weekly close above 13320 will increase the possibility of bearish scenario. On the downside 12648 is the stop for the bulls, if broken, a fall towards 12200-12050 region looks certain.

Stop broken...Bears sets in...

Major Indices :: Sensex : 16737 : Nifty : 4982 Intermediate Trend: Bearish Key Technical Levels: 17413- on the upside, 16452-16400- on the downside

In the last review I said "the Sensex is resting exactly on the upper end of the parallel channel; technically this is a good opportunity for the bears, if they are in mood to fight back,otherwise it will be free walk for the bulls;trading below 17240, will be a setback for the bulls (may be temporary resting period) and in that case expect a dip up to 16900". In reality, the bulls made an attempt to break this upward channel on a very first trading day of the week, but failed miserably to do so. This failure to sustain above the critical levels had provided fantastic opportunity for the bears to dominate. Subsequently, the stoploss at 17240 was broken, resultant we had witnessed a downswing which went below our target of 16900. This sharp fall has altered the equations for the bulls, both at macro as well as micro levels. After a rally of almost 3000 points (from low of 14677-18th March), bulls failed to strengthen their position. One last hope(for the bulls) is at 16400-16452 level. If failed to protect, the Sensex will be in vulnerable situation. On the upside, trading above 17413 is critical for the bulls, but seems to be a difficult task, as of now. Conclusion: After a 3000 points rally, the bulls failed to strengthen their position. This lack of commitments on the part of the bulls pointing towards a possibility of larger degree fall in the next couple of weeks. This argument will loose some value (not all) if the Sensex surpasses and trades above 17413 in the near term.

Bulls strengthen the grip....

Major Indices :: Sensex : 17600 : Nifty : 5228 Intermediate Trend: Bullish Key Technical Levels: 17810- on the upside, 17240- on the downside After giving a bullish call, exactly at the recent trough (14800), we became little bit skeptical, in the last week, about the continuation of the bullish trend.. We said (in the last review -16739), "bulls achieved our target of 17225 with 17% rise, failure to post monthly close above 16800 could turned out to be a 'Trojan horse' in the bulls camp; Sensex like to hit a roadblock near the upper end of the parallel channel drawn on daily charts; any close below 16781 will trigger the bearish dominance.....(see http://sagetrader.blogspot.com/search/label/Sensex%20Analysis to read all comments the Sensex since 14677). In reality, the Sensex seldom touched our stop loss of 16781 and went above 17k, comfortably, thereby strengthening the positions further. The upside target of 17660 was almost achieved with a high of 17621 in the last trading session. Further, it has also posted a monthly close well above the level of 16800. Considering the "delicate" situation near 17k, we had labeled the intermediate trend as "sideways" from earlier "bullish"; now the trend is re-labeled as "Bullish"; Stop 16585/4950. Interestingly, the week ended with the Sensex resting exactly on the upper end of the parallel channel. Now, technically this is a good opportunity for the bears, if they are in mood to fight back. Otherwise, it will be free walk for the bulls. Near term target 17810-18137. On the downside, trading below 17240, will be a setback for the bulls (may be temporary resting period) and in that case expect a dip up to 16900.