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.
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.
