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).
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).
