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July 18, 2010
January 15, 2009
STI: Bulls failed to clear major hurdle!
Strait Times(1704) Near Term Trend:Negative I 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.
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.
January 12, 2009
Dow: 13 Weeks consolidation is likely to end!
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.
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: Negative
In 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: strong resistance at 4.7k!
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.
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 is flat! Literally
World Index(321) (In house-based on 44 active indices of the world) Near Term Trend: Down
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.
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.
January 8, 2009
Who sold off Satyam Computers??
Satyam Computers (Rs.39.95)
Weekly 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
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.
::·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.
January 7, 2009
Cleared resistance of 8700! Tough task to clear 9.6k!
Nikkei 225(9239) Near Term Trend: Positive > 8.7k In 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).
Corrective rally! Will clear 3740?
All Ordinaries Index(3728) Near Term Trend: Positive > 3.6k I 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.
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.
December 17, 2008
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.
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.
December 16, 2008
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).
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.
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.
December 10, 2008
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'.
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'.
December 9, 2008
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.
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
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. 
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.
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'.
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'.
December 4, 2008
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.
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.
December 2, 2008
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.
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.
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.
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