Trading near sensitive area!

China HangSeng(15460) Near Term Trend:Turning Negative!

I said "Watch 14.7k, a break below (on close basis) will lead to shallow down move, may be towards 14.2k -13.5k in the next few trading sessions,On the upside 15.3k is a next hurdle". Since then we had seen index moving in a choppy range of 14.7k to 15.7k; although it has surpassed the important hurdle of 15.3k, I am skeptical about sustainable up move, from here onward. In fact, I am maintaining my original view of "sell" on break of 14.7k, intact. Here is why.The current up move (from 11814) is a "corrective" rally rather than "impulsive" move (lack of faster retracement of previous fall is the main reason). The rise is well supported by the rising trendline (blue), however a downward break can lead to serious setback for the bulls. Value of the trendline for the next 2 days is 15287 & 15469; in short before 14.7k these two values should be treated as protection for the longs, if any.See the inlaid daily -close- chart. In the recent past, the bulls & bears had encountered many furious battles for the control of 14750 (few odd points here & there). Therefore now a move/close below 14750, say 14.7k, will lead to shift in the control of the markets, once again, into bears hand. If one could assume the scenario of breaking 14.7k, immediately, then the H&S reversal pattern will emerge, with a potential of sharp downward correction. Normally, such a small / hidden H&S pattern always cause serious destruction for the bulls. However, if the rally continues , from here onwards, then we could see 17k in the immediate near term. Lets see how the things unfolds.

3740 remain untouched...! Weakness persist!

All Ordinaries Index(3499) Near Term Trend: Sideways

I said "The daily/monthly & quarterly charts indicating towards possible "shift" in the control, provided 3400 is defended by the bulls; & on the upside a close above 3740 will be the first sign of the strength". Last week, the index failed to achieve anything, i.e. neither a close above 3740 nor a break below 3400.On the daily charts, I was expecting bullish reversal if the index breaks (upward) the falling parallel channel (blue) and post a close above 3672(on a safer side preferably 3740). Interestingly, the index is indeed trading above the upper end of the parallel channel in the initial part of this week, however will it be able to sustain & close above the channel? It seems doubtful, for the two reasons, first, the break from the important price zones/clusters normally associated with flurry of hectic activities with increase in trading interest (read volume), which is lacking as of now. Second see the following daily chart, the price movements are with the range (of falling channel) & as long as it remains intact, one higher degree (read from weekly parallel channel) break out is always questionable. In short, I will go with sideways option for the near term trading (within the overall bear market) till the things improves a lot (first break from recent channel on the daily charts and then possibly close above 3740).

Failed to clear the hurdle(8700)!

Nikkei 225(8568) Near Term Trend: Sideways

In the previous review I said "Last 4 weeks the index is moving in a tight range of 7.6k to 8.6k, keeping possibility of "double bottom" scenario, alive. It seems that the downside is now fairly protected at 7.6k, but what we need is a quick up move beyond this trading range and then the close above 9.6k for the confirmation of the reversal". However, the bulls failed to take advantage of the situation i.e. absence of fresh bear attack & push the index higher. Further, despite of repetitive attempts (in the last 3 trading sessions) the Nikkei failed to surpass 0.618% fib retracement (of a move from 9521 to 7406) level of 8.7k as evident on the inlaid daily chart.See the inlaid weekly close chart; the Nikkei could never muster the strength to surpass the 8.7k mark on closing basis(even though in intra-week it had rallied to 9.1k-9.3k levels). As such I would persist with an range trading (8.7k-7.6k) view on the Index, within the overall structural bear market, till the bulls shows commitments > 8.7k.

STI showing arresting tendency!

Strait Times(1754) Near Term Trend:Turning Positive

In the previous review I said "weakness is persistent on the STI, unless and until seen a move above 1780-1785; the best case scenario is range trading between 1470-1785". Since then we had seen a down move towards 1638 and then a strong rebound almost there near to the upper end of the range.

Now what we required (for trend reversal) is a continuation of the up move above 1754 i,e, yesterday's high, towards the upper end of the range(1780-1785); if failed to hold 1754 then expect shallow down move towards 1650 (max), as the bulls have shown fairly good commitment in the recent past, near 1600 levels. On the monthly close charts, the STI is still holding the long term crucial support (trend) lines indicating a seriousness of the support (as far as long term scenario is concern). Overall, the index is showing arresting tendency on every down move, i.e. reduction in the bearish power, which is a sign of strength for the long term bulls, as well as subsiding the 'fear' of fresh impulsive down move, read 'crash'.

Watch 14.7k!

China HangSeng(14753) Near Term Trend:Positive

I said"although the index has seen a positive movement (since 11.8k) as per expectations, the anticipated 'ending' triangle could turned out to be a 'expanding' triangle, thereby keeping the possibility of retesting of Oct lows open; on the upside a weekly close above 14.3k will lead to change in the opinion".

We have seen Index moving upwards (>14.3k) in the initial trading sessions of the current week. The bulls had, indeed, made an strong comeback & avoided unfolding of the expanding triangle scenario. However, in the extreme short term, watch 14.7k, a break below (on close basis) will lead to shallow down move, may be towards 14.2k -13.5k in the next few trading sessions, a good buying opportunity for the medium term. On the upside 15.3k is a next hurdle (on close basis).See the inlaid weekly close chart, the index had formed classic double bottom reversal pattern near 12.6k mark (12618 for the week ending 24th Oct and 12659 for the week ending 21st Nov- tolerance of less than 0.5%). If able to protect this double bottom, the index can lead to significant recovery as far as medium to long term trend is concerned. Remember that 12.6k is slightly below the quarterly threshold level (explained elsewhere) and the bulls need a strong comeback above 13.9k by the quarter end i.e. Dec 2008. In that sense the positioning of this 'reversal' pattern is such that it can provide a much required 'firepower' for the bulls to sustain/stay above 13.9k by the year end. Will it be able to do that? I think so...lets see who the index evolves in the next few weeks.

Final combat...(3400-3740)..?

All Ordinaries Index(3533) Near Term Trend: Turning Positive

I said "the activity now shifted to new falling parallel channel (blue), unless seen the close above this channel (last weeks value 3740) the downtrend will remain intact; on the quarterly charts 3400 is crucial, holding close above this in the current quarter (Dec 08) will be a positive development".

Last week the index failed to archive the feet, now once again making attempt to break the upper end of the channel (blue-3672) in the current week. Once seen close above 3672, on the safer side I will go far value of 3740, the reversal will be in sight. However on the downside, the strong support is emerging near 3400 mark, the key reversal point observed on monthly/quarterly chart. As long bulls defends this area, the possibility of reversal, at least short to medium term, will remain alive. See the inlaid monthly chart. Despite of the last months dip slightly below 3.4k, we have a sharp rebound in the fag end of the month, thereby restricting the months close well above the threshold. The strength, seen here in the bulls camp, is likely to be put for the severe test in the next few trading sessions before making a final attempt to surpass 3740. In short, I am expecting a fierce battle in the ranges (3400-3740) and break out thereafter, mostly upward.

On the quarterly chart the index is showing repetitive rebounds near the very curial trendline support of 3400. The end of this months trading will clear the 'fog' i.e. whether it holds the key level of 3400. Overall, the daily/monthly & quarterly charts indicating towards possible "shift" in the control, provided 3400 is defended by the bulls; on the upside a close above 3740 will be the first sign of the strength.

Holding double bottom, good times ahead...?

Nikkei 225 (8395) Near term trend: Positive I said "the index is making confused moves, I will turn bullish only if closed > 9k; on the downside if broken 7960, it may retest October low".

As anticipated the Nikkei slipped below 7960, but restricted the fall to 7406, rather than retesting Oct low of 6994. For the last 4 weeks the index is moving in a tight range of 7.6k to 8.6k, keeping possibility of "double bottom" scenario, alive. It seems that the downside is now fairly protected at 7.6k, but what we need is a quick up move beyond this trading range and then the close above 9.6k for the confirmation of "reversal" and corrective rally in the next few weeks/months towards 10.5k-10.8k mark.

Bulls are ready for the counter attack..?

World Index(311) (In house-based on 44 active indices of the world) Near Term Trend: Positive

In the last review (293) I said "a move beyond upper end of the channel (daily) will confirm end of wave 'c', thereby opening wave 'd' on the upside;on the weekly charts a move beyond 329 is required for confirmation of reversal of the trend; on the monthly charts there is a 'possibility' of double bottom provided we should not see a down move, below the October lows, from here". This we have seen happening (anticipated recovery) in the last 2 weeks. See the inlaid daily chart; the wave 'c' ended exactly there(at the last review date) & as anticipated the index broken the falling parallel channel, thereby resuming wave 'd'. Now, expect continuation in wave 'd' & then swift down move (last) "e", may be by year end.On the weekly chart (first two trading sessions of this week) the bulls swung back and attempting an upward break of the falling parallel channel (blue), i.e. indicating an reversal in the trend. Still on a safer side, we will wait till break of '329' for a confirmation. In short, as anticipated, the "world markets" are holding October cycle lows and the bulls are making 'careful' attempts to regain the control, once again, at least for the next few weeks/months. On the downside, the possibility of fresh 'slide' is low, however, retesting of October low on some of the world indices can't be ruled out, but this slide will be an opportunity to 'buy' rather than 'sell'.

Bulls gathered (much) required strength...

China SSE Composite(2001) Near Term Trend: Positive

In the last review I said "Near term trend is positive;expect a swift up move towards next crucial level of 2.2k; stop is placed at 1740-1780". Since then the index consolidated within the range of 1850-2000, without disturbing the bullish setup. See the inlaid daily chart, the index has retraced the previous down move (from 2050 to 1838) of 9 days in just "three" trading sessions (today's high is 2055). This faster retracement of the previous leg indicates a much required "strength" in the bulls camp, to head higher. On the monthly chart , as anticipated, the index has given upward break to the falling parallel channel, drawn from recent all time high(Oct07). This is an indication of change. Therefore for now, we see some support coming for the medium term. Move stop to 1840- on close basis-(from existing 1740). On the upside, as advised earlier, we maintain our near term target at 2.2/2.3k.

Weekness persist!

Strait Times(1655) Near Term Trend: Negative

In the last review I had argued that "STI is trading close to "reversal" points, however, a quick up move above 1785 is required to end the minor trend near 1565 with opening of short to medium term uptrend; Volatility SAR indicator pointing a reversal in the trend if able to close > 1820; on the monthly charts bulls need to 'push' the index above 1780 for the current month to remain in the game". The STI made an attempt to recover, but the trading remained confined below the crucial levels of 1780-1785, indicating lack of strength. See the inlaid weekly chart, failure to sustain above 1780-1785 can lead to retesting (breaking?) the recent low of 1473 and then lower end of the equi-distance parallel channel(1360). On the monthly chart, the month of November ended below the threshold. Now its trading below the long term trendline drawn from 1998, indicating continuation of the down trend. How much it can go down from the current levels? Its very difficult to answer that question. The best case scenario will be 'lackluster' range trading in 1470-1785 area.

Required close above 3740; else...

All Ordinaries Index(3484) Near Term Trend: Negative

In the last review(3483) I had stated "the trend is down; expect short term respite if able to hold 3400(then value of the lower end of the parallel channel); on the monthly charts, again, 3400 is a critical long term support; however if failed to hold & recover we may test 3000". Since then it broke the lower end of the channel (dotted) & went below 3.4k, only to recover and zigzagged between 3.2k-3.6k. In the process the dotted channel has lost its importance and now the focus is shifted to the "blue channel". Last week & the beginning of the current week we saw a hectic activity near the upper end (3740 value for this week) of this new blue channel. Unless seen a break & "close" above 3740 the downtrend will continue, unabated. The value of the lower end of the parallel channel is between 3k to 2.8k for the next 1-2 weeks.

On the long term charts (Quarterly), the Index is retesting the trendline drawn from low of Mar 1991. The value of the trendline, for the current quarter, is 3360, say 3.4k.Will it able to hold it? Lets wait and watch, rather than pre-empt.