Strait Times(1704)Near Term Trend:NegativeI was actively considering bullish up move- counter trend- since Oct lows. The rally did occurred but in a very fragmented manner, with more 'time' consumption rather than 'price' action.
See the inlaid daily chart, the index halted its corrective rally almost exactly on the 'middle' trendline of the equi-distance parallel channel. Since then the index came cracking with vengeance. Its resumption of bearish trend, started since cycle top of 3906. On the downside 1600-1650 is where the bulls will try to defend themselves, but it could be a temporary respite. In short, as long as STI trades <1860>
On the long term (monthly) charts, the support line has almost lost its relevance and now giving way to the bears to push the index lower, may be towards Mar 2003 lows.
Dow Jones Industrial Average (8599)Near term trend: Down
For the last 13 weeks Dow is stuck in the trading range of 8k-9k, with significant resistance near >9k. The week ended 10th October 2008 has seen a massive fall from 10322 to 7882 i.e 23.6% fall within a week(pointed by blue arrow on the chart). Interestingly, the subsequent 13 weeks(from 10th Oct) trading is perfectly within the range of this single week's trading. This proves (once again) that despite of several attempts the bulls are weak & there 'energy' is being digested/sucked by the strong enemy within the small trading range. Now after constant failure to push up the market above 9-9.4k, bulls are likely to 'surrender' . Remember that we have already consumed "13" weeks, a Fibonacci number., in a sideways (counter trend) trading. The next week, failure to trade above 8.9k will lead to reversal in the trend with initial objective to test 8k & then Oct low.
MERVAL BUENOS AIRES(1123) Near term trend: NegativeIn the last review I said "the "flip side" is that we are still trading well below the important trigger of "1216". In the near short term expect a weakening of the prices if Index failed to close above 1150 or the important 1216".
In synchronization with the global markets, Merval had also seen a corrective rally since Oct 2008, netting over 48% gains. However the index is missed our threshold of 1216 by a whisker. Remember that I had mentioned '1216' as a very crucial level way back on 21st Oct 2008. Now after 13 weeks (Fibonacci number) the index is possibly failed to surpass this point & that too with a difference of less than 1 point. This could lead to clear failure of the bulls (read downtrend) in the next few days/weeks, even a retest of Oct low is not ruled out. Stop few points above 1216.
FTSE 100 (8599)Near term trend: Down Form the Oct low (3665) the index has gained over 27% in a mostly likely 'corrective' rally within the structural bear market. Last weeks high of 4675 is almost there on 0.50% retracement level (4650)of entire fall from 5649 to 3665, i.e. last segment of the preceding fall. Historically bear markets rallies do correct 50% of the fall, in a counter trend. Is it means the corrective uptrend in FTSE is likely to terminate here? Yes, the odds are very high (for a reversal). As long as the index is trading below 4650, say 4.7k, resumption of bearish trend is likely. On the downside we need weekly close below 4.2k, as a confirmation & then expect 3.8k or even a new low within next few days/weeks. If this argument is wrong then we will see firm up move till 4980.
World Index(321)(In house-based on 44 active indices of the world) Near Term Trend: Down
In the previous review I said " on the weekly chart it can be seen that the bulls are 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.
The bulls tried very hard to shore up the markets, but failed miserably. Further the index also lost an opportunity to post close above the important threshold level of "329", at least 4 times in the last few weeks.This is outright bearish indication. Remember that since mid-October, I was actively vouching for a bullish trend (counter trend within the structural bearish trend). However what we had seen (at the best) is a sideways movements below the threshold level of 329. Expect a fresh down wave in the global equity markets, may be retesting Oct 08 lows or even lower.
Since Rs.544 (May08) the stock was falling in perfectly parallel channel. Till yesterday, the price was being supported / resisted exactly on the lower/upper end of this channel (marked by arrows).Even well before the ‘Maytas’ saga unfolded, the trend was completely bearish and on this ‘bad news’ price just went down (from middle of the channel) to lower end of the channel (Rs.114). Remember that from this channel support it went up 64%, but could not even touched the upper end of the channel (otherwise it could have been bullish implications) before resuming (final?) downtrend. In short, the bearish trend was intact (since Rs.544) & nowhere in this journey the price has actually shown any kind of strength OR even attempt to break the channel upward (after Nov 08) thereby indicating reversal in the trend.
Quarterly Chart:
At the recent top the stock had formed Head & Shoulder bearish reversal pattern on “quarterly charts” (Mar 06 to June 08), suggesting reversal in the earlier trend (from bullish to bearish). The formation was taking place since Mar 06 to June 08, and given break out signal (bearish) only in Sep 08 quarter.In just 2 quarters (Dec 08) the price was hammered down to Rs.114. And now in this quarter the price is already down below Sep 2001 level & might saw the final selling climax. Remember that this reversal pattern (H&S) was quite visible on many world indices including Sensex (see my old reports send in July/August).
Monthly Chart:
When the stock price retraces 89% value (since its recent top) normally such stock/index witnesses a prolong bearish faze lasting for several years. In 1929 the Dow Jones had fallen by 89% (popularly known as ‘.11%’ theory).Post NASDAQ meltdown, the Satyam computer had fallen by 89% at Rs.79(from Rs.723), however managed to stay afloat above this price level (even after second attempt) indicating strong underline fundamental strength of the company. Subsequently the stock price went up by whopping 575% in 5 years. Now the current price is already below Rs.79. Even if you take 89% drop from the recent market top of Rs.544, the 11% level is Rs60. Is the price is suggesting complete “loss of fundamental value”? I think you are aware of this.
Conclusions
::·Price discounts everything in advance (known & unknown things/facts).::·History repeats. Enron, Bears Stern, Lehman, Merrill Lynch, CRB Capital and every other company who went bust had invariably shown adverse stock price movements well before the things are revealed/known to the public. General Motors had created “Double top” bearish reversal pattern way back in 2000, eight years ahead of its bankruptcy.::·Fundamental analysis/Balance sheet analysis has several limitations & you can’t protect your capital/profits by looking these numbers.::·In uncertain times intermediaries like Research houses/Economist/Brokers/Mutual funds/Media is normally “too late” in saving your hard earned money. (E.g. when the stock markets tanked by more than 30-35% rating agencies make noise about downgrade etc. No one had downgraded “India” or “Real Estate Sector” when the Sensex was trading at 21k, but everyone joined the race (to take credit) when the Sensex lost more than 50% value.::·It’s a myth that Technical analysis works only for the short term or for trading views. In fact it works efficiently even for the long term/strategic investments also.::·“Smart money” has already dumped the stock well before the “fundamental” bad news came into “Public” domain. Normally it’s “too late when things are known to Public”. When the stock price is falling unabatedly (from Rs.544) do you think there were no insiders who were aware of this? Then who was selling?::·Remember that financial market is nothing but WAR. So it’s foolish to think that “innocent” stock holders have lost the money.
Nikkei 225(9239)Near Term Trend: Positive > 8.7kIn the previous review I said "Since Oct 08,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".
On the week closing 26th Dec 08, the index closed > 8700 & braked the jinx of last10 weeks. Expect continuation of the corrective rally as long as it trades above 8860(stop). In the near term, the index is likely to trade with upward bias, in the rising parallel channel, drawn on daily chart, with target objective of 9.6k, where expect renewed selling pressure. If failed to surpass this then it may slide back to the support zone of rising parallel channel.
Overall, the current rally is part of 'corrective' structure and not a fresh bull market. So caution is warranted near 9.6k ( & then near 10k if surpassed 9.6k).
All Ordinaries Index(3728)Near Term Trend: Positive > 3.6kI said "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)".
See the inlaid chart(daily), after initial hesitation, the index broke the falling parallel channel on 29th Dec 08(3554) showing first sign of strength. Today the index kissed 3740(second stage confirmation), our long standing key reversal level, but closed below it. Expect continuation of this corrective rally, provided it successfully trades/closes above 3740. In such eventuality the revised target for the bulls is placed near about 4k.On the weekly chart, the Index had given upward break from the falling parallel channel (blue) & now trading well above the same, confirming our short to medium term corrective bullish view.As anticipated, the index had taken good support in the previous consolidation area(3400) on the Monthly chart. As long as it holds, the bulls will get an opportunity to muster the strength; however anything below it will be disastrous.
Further on the quarterly chart the index has taken good support on the trendline drawn since Mar 91. Now this trendline will act as a guiding force for the bulls in the next few quarters. Value for the current quarter(Mar09) is around 3.4k, a meaningful stop for the trend following investors.In short, the bulls are in comeback mode, but the rally is corrective in nature rather than fresh bull market. Observe stop of 3.4k (for investors) & 3.6k (for traders). If able to close above 3740 then we could see 4k within next few weeks. As far as long term structural bear market is concerned, there is no confirmation (lac of consolidation pattern/faster retracement of last leg etc) to conclude the worst is over; & as such possibility of retesting the recent low is open, but may not immediately.
See the inlaid daily chart, the index halted its corrective rally almost exactly on the 'middle' trendline of the equi-distance parallel channel. Since then the index came cracking with vengeance. Its resumption of bearish trend, started since cycle top of 3906. On the downside 1600-1650 is where the bulls will try to defend themselves, but it could be a temporary respite. In short, as long as STI trades <1860>
On the long term (monthly) charts, the support line has almost lost its relevance and now giving way to the bears to push the index lower, may be towards Mar 2003 lows.
