Watch 11230…

Dow Jones (11370): Intermediate trend: Sideways It was said “balance of power has tilted in favor of the bulls; expect corrective rally towards 11890-11900 if closed above 11544”. The Dow rallied, as anticipated & achieved 11698, overlapping Mar 08 low of 11691, before sliding back to 11.4k levels. In the near term index will be under pressure as long as trading below the 11.5k levels. On the downside expect a swift down move, but not beyond 11230-11160 area. In short, expect consolidation between 11.1-11.5k ranges before making another attempt towards 11.8-11.9k region, keeping overall macro level bearish structure intact.

Long term weakness...

Brazil Bovespa (57199): Intermediate trend: Bearish Anticipated structural weakness at 65017(ref review dated 1st July). As against initial target of 61k region it dipped below 57k before settling at 57.2k on Friday. The month witnessed consistent selling on every bounce. In the process, it had breached the upward parallel channel on the monthly chart. The repercussions will be a sever downtrend lasting several months. In the extreme near term, expect a technical bounce back towards 60.5-61k (maximum), provided index closes above 57.8k levels. Else, steady down move towards 52-53k in the next few weeks.

Corrective rally is due…

Dow Jones Commodity Index ($203) Intermediate trend: Bearish Said “the index will weaken further if trades below $223-$220 area. Happened. Since then lost another 8.94%. Now $238 will be a absolute top for the medium term. Expect trading bounce towards $210-$213 region if got supported near $202-$197 in the next few trading sessions.

Uncertain time…

Delayed post

Sensex (13635): Intermediate trend: Sideways: Since 1st week of July we anticipated a corrective rally in the markets, provided the Sensex doesn’t break 12.8-12.6k on the downside. On the upside the targets were placed at 14.5k or even 15.3k for the pull back rally, refer to review dated 1July 08, while explaining “Head and Shoulder” bearish pattern. As anticipated, the Sensex rallied from 12575 to 15130 within flat 6 days and touched 15130; but almost kissed the neckline of the Head and Shoulder pattern before turning ‘red’ once again (See Weekly Chart). ‘Smart money’ bought stocks near 12.8-13k levels; while “street” bought the same almost at 14.6k & above, albeit in euphoria; on 23rd July, the mood on the street was as if there is no tomorrow to buy the stocks. The subsequent fall was obvious after such ‘emotional’ buying by the “weaker hands”. Technically, the rally halted exactly at 50% retracement level (15127) of the entire fall from 17735-12575. Further, the bulls were caught in a bad situation with formation of a potently “island” reversal bearish pattern (See daily chart). The sharp rebound from 12.6k levels indicates a waning interest of the bears, at least in the medium term; but this island reversal pattern that too at 50% correction levels (typical bear market phenomena) has once again raised serious doubt about sustainability of the rally. Expect fierce battle between bulls (strong defense at 13-13.5k) & bears (gap area of island reversal i.e.14608-14484) in the next few days or even in weeks. Position your trades accordingly.

Positive Bias...

Dow Jones (11496) Intermediate trend: Sideways (stop 11049)

It was said “Watch 11230 for recovery; if done, then expect a corrective rally upto 11434-11556; else down move towards medium term target of 10660”. The Dow achieved 10827 as against our long standing target of 10.7-10.6k; On Wednesday it closed at 11239, i.e. just above our “threshold” reversal level, resulting a massive counter attack by the bulls, & pushed the index to the weeks high of 11510, almost exactly within our upside target levels. With this wild up move the ‘balance of power’ has tilted in favor of the bulls, at least for the medium term. However in the extreme near term the Index is vulnerable for bearish attack if failed to protect 11544 on close basis. In short, huge volatile swings are expected in the trading range of 11.5k to 11k before start of corrective rally in the region of 11890-11900.

13150-13185 crucial…

Nikkei (12803): Intermediate trend: Bearish In the previous review we said” a close above 13139-150 is must, to start a corrective up move; if the bulls succeed then expect corrective rally towards 13508 or maximum 13605; else, a slow and steady down move towards target objective of 12754-12550”. On the very next day (14th July), the index jumped to 13185 but failed to post close above our proprietary levels of 13139-13150; subsequently fallen to 12671 i.e. well within the target area. The structure is still bearish, despite of last 2 days trading outside the falling parallel. A close above 13070 will give much required strength to the bulls to surpass the ‘key reversal’ points at 13150-13185; if done then (only) expect a corrective rally towards 13.5/13.6k levels. Else expect 12590-12430 in the near term.

Recovery attempts..

SSEC (Shanghai) (2778): Intermediate trend: Sideways (Stop 2566) In the previous review we said “Expect continuation of the corrective uptrend, if able closed above 2955, towards 3200 area; else, range trading in 2850-2700”.

Index failed to surpass the ‘crucial’ level of 2955 and subsequently dipped to 2658 levels, but equally, averted falling below the ‘absolute’ low of 2566(3rd July), before mild recovery in the last trading session. I am continued to hold my “pending rally” view on the index, as mentioned earlier. The level of 2955 is still important for key reversal, oce surpassed; target is 3200-3215 in the near term.

Buy on sharp cuts for corrective rally…

Delayed Post

Sensex (13635): Intermediate trend: Sideways: Stop: 12835(cl) Last Week’s Highlights Our Comments: The trend is bearish & the Sensex is heading towards 12.8 to 12.4k levels. Intermediate trend of the Dow is bearish and likely to continue till 10660; but if closed above 11230 then expect a corrective rally upto 11434/11556. The Nikkei is heading towards target objective of 12754-12550. For the SSEC, close above 2955 is must for recovery, else range trading between 2850-2700. Actual Movements: The Sensex, indeed, fallen sharply to a new low (2008) of 12514 which was almost near to the target. The Dow tested 10827 i.e. close to the target area and bounced back above 11230 confirming corrective rally. The Nikkei tested 12671 thereby achieving our initial target of 12754. SSEC failed to surpass 2955 and continued its sideways trading. Current Week Previewed Highlight: The down trend is halted in case of Sensex/Dow/SSEC. Expect corrective rallies towards 14197/11890 & 3200 in the near future. At the same time volatile and sharp cuts are not ruled out in the extreme near term, but such downswings could be an opportunity to form longs rather than short positions. The Nikkei has to trade above 13150-13185 for a corrective rally. Detail analysis: The Sensex had bounced back from near to our target area of 12.4k. The sharp recovery (that to) from the technically important area could be an indication of the revival of the trend, at least in the medium term. The recent fall from 17735 had consumed 10 weeks. Being corrective rally to that fall, the current rally could last more than 10 weeks As such the recovery could be “slow” & “complex” affair rather than a straight upward rally. See chart for earlier corrective phases, the corrective rallies were consumed more time than the time taken for the corresponding down moves. As such buying on sharp cuts rather than sharp rallies would be a more profitable strategy in the near future. In the immediate short term close above 13750 is must to continue the bullish momentum of the last 2 trading sessions. If failed to surpass 13750(close), immediately, expect a retest of 13k levels once again & that could be an idle opportunity for the bulls to form long positions. On the upside, the Sensex has to clear previous hurdle (Gap down) area of 14127-14197 and then 14520 for sustainable rally in the near future. In short, after taking hit of over 29% since May 08(17735), the Sensex has stabilized near 12.5-12.8k area. Our proprietary tools suggest continuation of the fall from current level is unlikely & market is ripe for corrective rally. We have already witnessed bullish action, as a part of corrective structure, in the last 2 trading sessions. Position your trades accordingly.

“Technical analysis….its not ‘science’; it’s an ‘art

Commodity Bulls are in Trouble..???

Dow Jones Commodity Index: ($224.21)

Two weeks back, the rally halted near $238 area with "hangman" bearish pattern. Thus far, the index lost $14 i.e. over 5% & fallen to $224. Is it bulls market is wanning in commodities? It is premature to say so. Trading below $223-$220 levels will weaken the structure further, at least in near term. On the upside $232-$234 is the 'lifeline' for the bulls.

Failed to surpass 14197…

(Delayed post)

Sensex (13469): Intermediate trend: Bearish Last Week’s Highlights: Our Comments: For the Sensex, “trend” is bearish and is heading towards our next target of 12316(advised on 17th June); on the upside 14127-14197 is a new hurdle area; (only) a close above this will lead to “pullback” rally upto 15.3k (maximum). Intermediate trend of the Dow is bearish and likely to continue till 11125-11050 seen. The Brazil Bovespa is likely to fall into bearish trend as weakening structure has emerged; immediate target is placed at 60900. For the FTSE, possibility of retesting of Jan 08 low of 5338 is bright. Actual Movements: After hitting 12.8k, the Sensex made efforts to bounce back (ref:-alert buy at 13094) but could achieve only 14066 as against threshold level of 14127-14197, thereby, maintaining weak structure. The Dow has achieved our target of 11050 almost exactly. The Bovespa index crashed to 57945 as against the target of 60900. As expected, the FTSE slipped below Jan 08 low of 5338. Current Week Previewed Highlight: The trend (Sensex/Dow/Nikkei/SSEC) is bearish. If supported near 12.8-13k or managed to close above 13690, expect a corrective up move. On the downside, retest of recent low of 12820 is the immediate objectives of the bears. The Dow is likely to continue its downtrend unless seen close above 11230. The Nikkei has to trade above 13139-150 for a corrective rally. Shanghai SSEC index is attempting a recovery but ‘close’ above 2955 is prerequisite. In the alert note (4th July -13094) I said” the huge volatility and sharp swings indicates a short term reversal is on the cards.” Consequently, we witnessed a swift move towards 14066 i.e. rally of almost 1000 points when (due to negative “news flow) the ‘street’ expectations were otherwise. Interestingly the corrective uptrend exhausted near to the “technical” hurdle levels of 14127-14197. Friday’s sharp reversal from technically important territory has once again reaffirmed the prevailing structural weakness in the market. The same is likely to continue or even aggravated once the Sensex dips below 12820-12600 area. In the last 48 trading sessions, the Sensex had lost over 4900 points i.e. 27.7% (from 17735 to 12822). The initial leg of the bearish trend, i.e. 21206 to 15332 (Jan 08), was also exactly 27.7%. However, after this initial fall(in Jan 08), the bulls made several attempts to regain the control and the Sensex witnessed corrective rally towards 18k+ levels(Feb 08), before resuming fresh down trend. Now, once again the Sensex had shaved off exactly 27.7%, is it a time for corrective rally? May be! But for this the bulls need to accomplish difficult conditions such as a) Not to fall much below 12.8k levels; & b) Close above 13670-690 area. If succeeds, then expect a “time” consuming up move towards initial hurdle of 14127-14197, then 14520-14645. Else, the continuation of a swift down move towards 12.8 to 12.4k in the next few trading sessions. Position your trades accordingly.

Shanghai...making recovery attempts..

SSEC (Shanghai) (2856): In recovery mode… Intermediate trend: Bearish

In the previous review (24 June: Value 2831) I said” the reversal in the bearish trend is unlikely; for the extreme short term trend a close above 2945-2955 is must(difficult), if done, expect trading bounce towards 3200 region”. Since then, the SSEC index had dipped to 2566 and in recovery efforts seen thereafter, on 10th July, it achieved a high of 2952 i.e. barely 3 points away from our resistance level of 2955. The index has seen some positive efforts in the last 6 trading sessions and also recovered from the lower “equidistance” parallel channel. Expect continuation of the corrective uptrend, if able closed above 2955, towards 3200 area. Else, range trading in 2850-2700.

Nikkei...Down move intact...

Nikkei (13039): Down move intact… Intermediate trend: Bearish

In the previous review (24 June: Value 13857) I said” the bulls are loosing control over the market after a sharp rally of over 23% since March 08 lows. On the downside expect a fall upto 128 Index achieved 12918 in the last trading session, i.e. just short of our target. In the extreme short term, a close above 13139-150 is must, to start a corrective up move, i.e. break about the falling parallel channel. If the bulls succeed then expect corrective rally towards 13508 or maximum 13605. Else, a slow and steady down move towards target objective of 12754-12550.

Dow..watch 11230 for recovery....

Dow Jones (11100): Watch 11230…for recovery Intermediate trend: Bearish

It was said “A new, steeper, falling channel (marked in blue) indicates continuation in directional downtrend unless 11125-11050 seen On the upside, a close above 11556 could 'halt' the downtrend; as far as intermediate trend is concerned, retest of July 2006 low i.e. 10660 looks imminent”. The Dow achieved 10977 as against 11050, without making any efforts to capture 11556. The recovery seen from the low of 10977 could turned out be an “emotional” recovery from psychological level of 11k, if failed to post close above 11230 (value of the upper trend line of the channel, for Monday).If done, expect a corrective, “time” consuming rally upto 11434-11556. Failure will lead to continuation of the downtrend towards our medium term target objective of 10660.

Alert....12.8k is a support! (delayed post)

Sensex: 13094

Our Last Comments: The trend remains bearish. The Sensex is heading towards our next price target of 12316(advised on 17th June).On the upside 14127-14197 will be a new hurdle area; if closed above 14197 then (only) expect a ‘pullback’ rally, towards 15.3k region (maximum).

Mid-Alert: The Sensex made furious movements in the last 2 trading sessions, amidst huge volatility and sharp swings. Technically, such environment is always witnessed near "crucial" turns. Further, the day when Sensex rebounded with 700+ points (on Wednesday), the days volume (BSE) was "highest" since the near trading history (at least from year 2006 onwards). Ideally, the ending point (bullish / bearish) of the trend (minor/major) is invariably associated with heighten volatility, wild moves & bloodiest battles for control (over the markets, by strong hands).

In short, this ‘unusual" action indicates a pending reversal in the trend, at least minor trend (for short term) in the near future. Expect benign up move if 12820-12600 remains protected (on closing basis).

Weakness Emerging....

Brazil Bovespa (65017) Intermediate trend: Bearish

Before moving towards an all time high of 73920, the index had witnessed a strong resistance near 66800-65800 region; which ideally should have been acted as a strong support zone in subsequent corrective down moves. However, the index has broken this crucial area, downward, thereby weakening overall bullish structure. At present its making efforts to regain control, however, a close above 66800-67000 is must. If failed, then slow and steady downtrend will open towards 60900-61000 region.

Fear Factor...

Sensex:(13461) Intermediate trend: Bearish

Last Week’s Highlights July 01, 2008  Our Comments: Intermediate trend is down; break below 15.3k is a major shift in Indian equities & will act as a major "hurdle" for the bulls; in the near term if closed above 14510 then (only) expect trading bounce; on the downside target objective remains same i.e.13770(advised on 17th June). Intermediate trend of Dow/Nikkei & SSE is bearish; 11550 (Dow), 13620 & then 12858 (Nikkei) & 2250 (Shanghai) are the near term price objectives.  Actual Movements: The Sensex made efforts to take 14510, but failed & could achieve only 14449.8 on the day of expiry. However, it achieved the target of 13770 and continued to slide further. The Dow achieved & surpassed 11550. The Nikkei had broken the crucial level of 13620, & now heading for second target; The SSE remained weak and inching towards target of 2250. Current Week Previewed  Highlight: The trend remains bearish. The Sensex is heading towards our next price target of 12316(advised on 17th June).On the upside 14127-14197 will be a new hurdle area; if closed above 14197 then (only) expect a ‘pullback’ rally, towards 15.3k region (maximum). The Dow is likely to continue its downtrend unless 11125-11050 seen; for corrective rally close above ‘11556’ is must. Brazil (Bovespa) index - Weakening structure is emerging. UK FTSE- 5694-5715 is the hurdle area for bulls. Last week, on the daily charts, the Sensex made few positive attempts to recover, near the lower end of the parallel channel, but failed to achieve 14510 for sustained recovery. Adding insult to the injury, yesterday's price action has breached the parallel channel downwards, which could aggravate the "fear" factor, further. On 27th June (Friday) the Sensex created, yet another, "falling gap" near 14197-14127 area, thereby creating a new 'hurdle' area in the near term. If managed to fill up this gap completely (close above 14197), then (only) expect a corrective rally. On the Weekly charts, suspected Head & Shoulder bearish reversal pattern, is now became reality. On the downside expect 12316. After an initial break, throwback action (pullback) is expected. However 14197, as discussed earlier, is the key point for such corrective rally. If happened, then expect 14519 or even retest of 15.3k in the medium term, within the overall bearish structure. See yearly chart. The Sensex is trading below the 'open' of the year 2007, i.e. completely eroding last year’s gains. Baring the fall in the year 1995, where the Sensex had completely wiped out the gains made in the year 1994, the Sensex had never fallen with similar magnitude. The bad news is not ended here; after 1995 fall, the Sensex witnessed prolong sideways movements before attempting a new high. If the current situation unfolds (we are just half way in the year 2008) in a somewhat similar (to the previous one) fashion, then the dream of a new high for the Sensex will be a time consuming affair (large trading swings).

FTSE...retest of Jan low....?

FTSE (5625) Intermediate trend: Bearish FTSE has ended the corrective up move at 6377 and started a fresh downtrend. However, after achieving 5470 it has witnessed a sharp rebound at current level. I suspect this recovery is a part of overall bearish structure and not a fresh up move. The rise beyond 5690-5710 area looks doubtful. If failed to surpass these levels, possibility of retesting of Jan 08 low of 5338 is bright.

Dow....heading for 10.6K (Delayed post)

Dow Jones (11350) Intermediate trend: Bearish It was said” the Dow has retraced the previous leg (11700-13200) in faster time, confirming (2nd stage) the larger degree weakness; near term target is placed at 11640 & 11550.

The Dow surpassed the target while breaching previous low of 11508(Jan08). The falling parallel channel (dotted line), drawn from recent high (May08) has broken downward. A new, steeper, falling channel (marked in blue) indicates continuation in directional downtrend unless 11125-11050 seen. On the upside, a close above 11556 could 'halt' the downtrend; and will lead to consolidation with corrective up moves towards 11660(minimum)-11928(maximum) region. As far as intermediate trend is concerned, the situation has been aggravated, further, with this new low. Retest of July 2006 low i.e. 10660 looks imminent.