We anticipated a weakness at $224 (recent top is $238.5). As against target of $180-$174 (ref review dated 11th Aug) the index achieved $185.
Last week, we had seen some positive efforts, after breaking above the falling parallel channel, with a sharp trading bounce from $187-$185 area. However as anticipated, the rally fizzed out exactly near $198.
After a sever damage, the index is likely to stabilise, here, within the $180-$185 range. So we could expect a range trading, in the near term, within the tight band, before making serious “recovery” attempts, once again, above $198-$200 area (critical area).
August 25, 2008
Expect base formation near $180-$185
Dow AIG (Commodity) $192.86 Negative <>
We anticipated a weakness at $224 (recent top is $238.5). As against target of $180-$174 (ref review dated 11th Aug) the index achieved $185.
Last week, we had seen some positive efforts, after breaking above the falling parallel channel, with a sharp trading bounce from $187-$185 area. However as anticipated, the rally fizzed out exactly near $198.
After a sever damage, the index is likely to stabilise, here, within the $180-$185 range. So we could expect a range trading, in the near term, within the tight band, before making serious “recovery” attempts, once again, above $198-$200 area (critical area).
We anticipated a weakness at $224 (recent top is $238.5). As against target of $180-$174 (ref review dated 11th Aug) the index achieved $185.
Last week, we had seen some positive efforts, after breaking above the falling parallel channel, with a sharp trading bounce from $187-$185 area. However as anticipated, the rally fizzed out exactly near $198.
After a sever damage, the index is likely to stabilise, here, within the $180-$185 range. So we could expect a range trading, in the near term, within the tight band, before making serious “recovery” attempts, once again, above $198-$200 area (critical area).
Base formation & moderate recovery is on cards...
Brazil Bovespa 55850 Positive > 52k(Corrective)
The index lost over 29% since May 08. In the last review dated 27th July (57199) we stated ‘expect steady down move towards 52-53k in the next few weeks’. As against this, it created a low of 52345, exactly within the anticipated range, before recovery towards 56k.
After shedding over 29% in short span, the index is likely to stabilise, here, near 52-53k, even though the macro level picture remains bearish.
In the immediate near term, expect base building (consolidation) within 52-55k range, before attempting a more meaningful recovery (corrective rally) towards 60-62k in the next few weeks/month.
The index lost over 29% since May 08. In the last review dated 27th July (57199) we stated ‘expect steady down move towards 52-53k in the next few weeks’. As against this, it created a low of 52345, exactly within the anticipated range, before recovery towards 56k.
After shedding over 29% in short span, the index is likely to stabilise, here, near 52-53k, even though the macro level picture remains bearish.
In the immediate near term, expect base building (consolidation) within 52-55k range, before attempting a more meaningful recovery (corrective rally) towards 60-62k in the next few weeks/month.
August 18, 2008
Bears in total control...
Hang Seng 21160
Negative < 21992, Stop 22253
Since Jan 08 lost over 35, however, no respite for the bulls, yet.
See the inlaid weekly chart. Last few weeks, the index is moving in a tight range of 21k-23k. Now, the long term support line is being violated on the downside. We would therefore still expect the continuation of the down trend.
Immediately a move below 21k & then 20.6k would seal the fate of the Index for the medium term. On the upside, firm close above 22k is what required, for the bulls, to regain control over the market, at least for the medium term.
Since Jan 08 lost over 35, however, no respite for the bulls, yet.
See the inlaid weekly chart. Last few weeks, the index is moving in a tight range of 21k-23k. Now, the long term support line is being violated on the downside. We would therefore still expect the continuation of the down trend.
Immediately a move below 21k & then 20.6k would seal the fate of the Index for the medium term. On the upside, firm close above 22k is what required, for the bulls, to regain control over the market, at least for the medium term.
Slipping into bears hand...?
Nikkei 12991
Negative < 13.3K.Stop 13.6K (cl)
It was said (4th Aug) “expect a range trading in 12.8k-13.6k, before heading higher; stop 12.7k”.
Since then, Nikkei remained stuck in the range of 12893-13468. In the meanwhile, lack of follow-through buying near 13.4-13.5k created weakening structure.
The signs of some fatigue are however visible and we could see few days of battle within the ‘same’ rage before the decisive breakout in the either direction, mostly downward.
It was said (4th Aug) “expect a range trading in 12.8k-13.6k, before heading higher; stop 12.7k”.
Since then, Nikkei remained stuck in the range of 12893-13468. In the meanwhile, lack of follow-through buying near 13.4-13.5k created weakening structure.
The signs of some fatigue are however visible and we could see few days of battle within the ‘same’ rage before the decisive breakout in the either direction, mostly downward.
Target achieved....
Dow Jones Industrial Average 11659
Negative < 11840.Stop 11980(cl)
In the last week’s analysis, we had pointed out that the Dow was likely to head towards target objective of 11810-11980 if able to post close >11759, otherwise expect a range trading.
On the very first day (of the week) it achieved our long standing target objective, with a high of 11867. The subsequent moves were confined to rage between stop loss & target area. Stop of 11490 remained protected, though it kissed 11450 but closed above the stop.
Last week, after achieving the target area, Dow hesitated to move up, further. Now immediately under an 11.5k close, expect more weakness. In short, 11.5k-11.8k is a new pressure zone, expect ‘trending’ move on breakout in either side, mostly downward.
August 17, 2008
Sensex ...in the hands of bears...
Bse Sensex 14724
Negative < 15307, Stop 15.5k (cl)
Last week we had contended that even though Sensex is positive (trades >15280) likely to come under severe pressure near 15.6k-15.7k zone due to suspected H&S pattern’s neckline & .618% Fibonacci resistance.
We saw that happen, last week. After hitting a high of 15579, the Sensex buckled under waves of selling; eventually dipped below 15280; & also broken the stop of 14.8, confirming short term “top” at 15.5k.
The failure in the week under the H&S formation (neckline) is testimony to the persistence of the “negative sentiment”. The weak trend will prevail as long as Sensex trades below 15.3-15.4k; on the downside, slide upto 14150-14350 looks for sure.
Last week we had contended that even though Sensex is positive (trades >15280) likely to come under severe pressure near 15.6k-15.7k zone due to suspected H&S pattern’s neckline & .618% Fibonacci resistance.
We saw that happen, last week. After hitting a high of 15579, the Sensex buckled under waves of selling; eventually dipped below 15280; & also broken the stop of 14.8, confirming short term “top” at 15.5k.
The failure in the week under the H&S formation (neckline) is testimony to the persistence of the “negative sentiment”. The weak trend will prevail as long as Sensex trades below 15.3-15.4k; on the downside, slide upto 14150-14350 looks for sure.
August 11, 2008
Negative < $198...
DOW AIG (Commodity Index) $189.3
Anticipated weakness near $224 (15th July). Since then fallen over 15% in just 18 trading sessions.
See the inlaid daily chart. The current down move is within perfect falling parallel channel from the absolute top at $238.5. As long as confined to this channel move, it may fall to $180-$174, or even below in the next few trading sessions.
On the upside, to break the channel upward & halt the downtrend, at least for the time being, it needs a close > $198, a difficult task, as of now.
Anticipated weakness near $224 (15th July). Since then fallen over 15% in just 18 trading sessions.
See the inlaid daily chart. The current down move is within perfect falling parallel channel from the absolute top at $238.5. As long as confined to this channel move, it may fall to $180-$174, or even below in the next few trading sessions.
On the upside, to break the channel upward & halt the downtrend, at least for the time being, it needs a close > $198, a difficult task, as of now.
Negative < 2800.Stop 2875(cl)...
SSEC (Shanghai) 2605
SSEC once again failed to clear the major hurdle at 2955 (ref review dated 24th June) & got punished with a sever bear hammering in the last week.
The inlaid weekly chart clearly suggests a continuation in the down trend, till the falling parallel channel breaks upward; this week’s value of the upper trend line is near 2.8k.On the downside fall towards at least 2566, i.e. recent low looks imminent.
SSEC once again failed to clear the major hurdle at 2955 (ref review dated 24th June) & got punished with a sever bear hammering in the last week.
The inlaid weekly chart clearly suggests a continuation in the down trend, till the falling parallel channel breaks upward; this week’s value of the upper trend line is near 2.8k.On the downside fall towards at least 2566, i.e. recent low looks imminent.
Positive > 11520.Stop 11490(cl)..
Dow Jones Industrial Average 11734
Anticipated near term move towards 11810-11980, but so far achieved 11759.
Failure to post immediate “close” above 11759, i.e. last week’s high, will halt the rally & we may witness a sideways trading (with positive bias) before taking a next directional view, else a move towards target objective.
On the downside, only a close below 11430 will weaken the structure further & in that case it can retest of 11.2k.
In short, if failed to head higher (>11759) expect a range trading between 11.7k-11,2k within the overall corrective structure (uptrend).
Anticipated near term move towards 11810-11980, but so far achieved 11759.
Failure to post immediate “close” above 11759, i.e. last week’s high, will halt the rally & we may witness a sideways trading (with positive bias) before taking a next directional view, else a move towards target objective.
On the downside, only a close below 11430 will weaken the structure further & in that case it can retest of 11.2k.
In short, if failed to head higher (>11759) expect a range trading between 11.7k-11,2k within the overall corrective structure (uptrend).
Positive > 15280, Stop(r) 14.8k (cl)
Bse Sensex 15167
In the last week’s analysis, we had pointed out that the Sensex was likely to head higher after failure of “Island” reversal pattern. This we have seen happening with bounce towards 15.4k as against target objective of 15259-15390.
However, we need to mention here that, it is likely to come under severe pressure near the 15.6-15.7k zone, due to “neckline” resistance (see inlaid weekly chart –published on 1st July 08) on possible H&S reversal marked on weekly chart; & .618% Fib resistance near 15748.
Breaking below the rising trend line (daily chart) will be the first sign of waning interest of the bulls & the anticipated down move will be confirmed only with a move below 14.8k, revised stop. In short, expect “deceptive” trading environment even while upward targets placed near to 15.7k or even 16k.
In the last week’s analysis, we had pointed out that the Sensex was likely to head higher after failure of “Island” reversal pattern. This we have seen happening with bounce towards 15.4k as against target objective of 15259-15390.
However, we need to mention here that, it is likely to come under severe pressure near the 15.6-15.7k zone, due to “neckline” resistance (see inlaid weekly chart –published on 1st July 08) on possible H&S reversal marked on weekly chart; & .618% Fib resistance near 15748.
Breaking below the rising trend line (daily chart) will be the first sign of waning interest of the bulls & the anticipated down move will be confirmed only with a move below 14.8k, revised stop. In short, expect “deceptive” trading environment even while upward targets placed near to 15.7k or even 16k.
August 4, 2008
Positive > 12.8k.Stop 12.7k (cl)
Nikkei 13094
It was said “Nikkei may consolidate in the range of 13.2k to 13.6k before moving up”. During the week, it indeed moved in a narrow range of 13468-13018, slightly moved below lower range.
Even so, the medium term bullish outlook remains intact above 12.7k, the level from Nikkei bounced to 13.6k (16th -24th July).
In the near term, expect a range trading in 12.8k- 13.6k, before heading higher. Strict stop at 12.7k (cl).
It was said “Nikkei may consolidate in the range of 13.2k to 13.6k before moving up”. During the week, it indeed moved in a narrow range of 13468-13018, slightly moved below lower range.
Even so, the medium term bullish outlook remains intact above 12.7k, the level from Nikkei bounced to 13.6k (16th -24th July).
In the near term, expect a range trading in 12.8k- 13.6k, before heading higher. Strict stop at 12.7k (cl).
Positive > 11125.Stop 11.1k (cl)
Dow Jones Industrial Average 11326
Anticipated range trading between 11.1k-11.5k. Actual price move for the past week was almost the same.
Past 2 weeks volatile range of 11698-11125, prima facie, is nothing but a ‘shakeout’ process to keep “weaker” hands out.
The bulls are likely to defend 11.1k, in the near to medium term. Before that, 11250-11300 is a strong base for the bulls to push the index higher.
Expect a steady up move towards 11810 & then .50% fib level of 11980 in the next few trading sessions
Anticipated range trading between 11.1k-11.5k. Actual price move for the past week was almost the same.
Past 2 weeks volatile range of 11698-11125, prima facie, is nothing but a ‘shakeout’ process to keep “weaker” hands out.
The bulls are likely to defend 11.1k, in the near to medium term. Before that, 11250-11300 is a strong base for the bulls to push the index higher.
Expect a steady up move towards 11810 & then .50% fib level of 11980 in the next few trading sessions
Positive > 14025. Stop 13.9k (cl)
Bse Sensex 14656
Anticipated (at 12.8k) corrective rally is (still) in force. The recent down move was halted at 13.7k, as against perceived support at 13.5k-13.8k. And the subsequent rise, past “island” gap area of 14484-14608, has negated the bearish implication of “Island” reversal, all together.
Expect a continuation in the uptrend, unless seen a dip below 14150(cl), towards near term price (min) objective of 15259-15390 i.e. previous ‘unfilled’ gap down area.
Being a corrective (to a fall from 17735-12514), the rally will be a complex affair rather than straight up move. Strategies based on individual stocks will be more rewarding rather than “wholesale” index based approach.
Long ABB & IDFC
ABB BSE Rs.802
Positive>Rs.770.Stop Rs.745(cl)
Shed over 36% since April 08 (recent past consolidation) & over 54% since Jan 08.
Subsequent to steep fall, in July 08, stock has witnessed good consolidated in Rs.750-Rs.940 range.
We are near to the lower range, once again. Continuation of the bearish trend, immediately, looks less likely- due to sharp cut of over 50% in barely 6 months & consolidation in the last 22 trading sessions.
Trade long, on a decline, for a range, with stop at Rs.745 (cl).
IDFC BSE Rs.97.5
Positive>Rs.87.Stop Rs.84 (cl)
From a high of Rs.235 (Jan 08) stock has dipped to a recent low of Rs.87.85 (16th July), over 62% cut.
Since then consolidated in range & now ready for a bounce, provided trades above recent low of Rs.88.
Once can Trade long with an initial range of Rs.90 to Rs.115/117. Stop few ticks below the recent low. More positive (only) if trades above Rs.115.
Shed over 36% since April 08 (recent past consolidation) & over 54% since Jan 08.
Subsequent to steep fall, in July 08, stock has witnessed good consolidated in Rs.750-Rs.940 range.
We are near to the lower range, once again. Continuation of the bearish trend, immediately, looks less likely- due to sharp cut of over 50% in barely 6 months & consolidation in the last 22 trading sessions.
Trade long, on a decline, for a range, with stop at Rs.745 (cl).
IDFC BSE Rs.97.5
Positive>Rs.87.Stop Rs.84 (cl)
From a high of Rs.235 (Jan 08) stock has dipped to a recent low of Rs.87.85 (16th July), over 62% cut.
Since then consolidated in range & now ready for a bounce, provided trades above recent low of Rs.88.
Once can Trade long with an initial range of Rs.90 to Rs.115/117. Stop few ticks below the recent low. More positive (only) if trades above Rs.115.
July 27, 2008
Watch 11230…
Dow Jones (11370):
Intermediate trend: Sideways
It was said “balance of power has tilted in favor of the bulls; expect corrective rally towards 11890-11900 if closed above 11544”.
The Dow rallied, as anticipated & achieved 11698, overlapping Mar 08 low of 11691, before sliding back to 11.4k levels. In the near term index will be under pressure as long as trading below the 11.5k levels. On the downside expect a swift down move, but not beyond 11230-11160 area.
In short, expect consolidation between 11.1-11.5k ranges before making another attempt towards 11.8-11.9k region, keeping overall macro level bearish structure intact.
It was said “balance of power has tilted in favor of the bulls; expect corrective rally towards 11890-11900 if closed above 11544”.
The Dow rallied, as anticipated & achieved 11698, overlapping Mar 08 low of 11691, before sliding back to 11.4k levels. In the near term index will be under pressure as long as trading below the 11.5k levels. On the downside expect a swift down move, but not beyond 11230-11160 area.
In short, expect consolidation between 11.1-11.5k ranges before making another attempt towards 11.8-11.9k region, keeping overall macro level bearish structure intact.
Long term weakness...
Brazil Bovespa (57199):
Intermediate trend: Bearish
Anticipated structural weakness at 65017(ref review dated 1st July). As against initial target of 61k region it dipped below 57k before settling at 57.2k on Friday.
The month witnessed consistent selling on every bounce. In the process, it had breached the upward parallel channel on the monthly chart. The repercussions will be a sever downtrend lasting several months.
In the extreme near term, expect a technical bounce back towards 60.5-61k (maximum), provided index closes above 57.8k levels. Else, steady down move towards 52-53k in the next few weeks.
Anticipated structural weakness at 65017(ref review dated 1st July). As against initial target of 61k region it dipped below 57k before settling at 57.2k on Friday.
The month witnessed consistent selling on every bounce. In the process, it had breached the upward parallel channel on the monthly chart. The repercussions will be a sever downtrend lasting several months.
In the extreme near term, expect a technical bounce back towards 60.5-61k (maximum), provided index closes above 57.8k levels. Else, steady down move towards 52-53k in the next few weeks.
Corrective rally is due…
Dow Jones Commodity Index ($203)
Intermediate trend: Bearish
Said “the index will weaken further if trades below $223-$220 area. Happened. Since then lost another 8.94%. Now $238 will be a absolute top for the medium term.
Expect trading bounce towards $210-$213 region if got supported near $202-$197 in the next few trading sessions.
Uncertain time…
Delayed post
Sensex (13635):
Intermediate trend: Sideways:
Since 1st week of July we anticipated a corrective rally in the markets, provided the Sensex doesn’t break 12.8-12.6k on the downside. On the upside the targets were placed at 14.5k or even 15.3k for the pull back rally, refer to review dated 1July 08, while explaining “Head and Shoulder” bearish pattern.
As anticipated, the Sensex rallied from 12575 to 15130 within flat 6 days and touched 15130; but almost kissed the neckline of the Head and Shoulder pattern before turning ‘red’ once again (See Weekly Chart). ‘Smart money’ bought stocks near 12.8-13k levels; while “street” bought the same almost at 14.6k & above, albeit in euphoria; on 23rd July, the mood on the street was as if there is no tomorrow to buy the stocks. The subsequent fall was obvious after such ‘emotional’ buying by the “weaker hands”. Technically, the rally halted exactly at 50% retracement level (15127) of the entire fall from 17735-12575. Further, the bulls were caught in a bad situation with formation of a potently “island” reversal bearish pattern (See daily chart).
The sharp rebound from 12.6k levels indicates a waning interest of the bears, at least in the medium term; but this island reversal pattern that too at 50% correction levels (typical bear market phenomena) has once again raised serious doubt about sustainability of the rally. Expect fierce battle between bulls (strong defense at 13-13.5k) & bears (gap area of island reversal i.e.14608-14484) in the next few days or even in weeks. Position your trades accordingly.
July 21, 2008
Positive Bias...
Dow Jones (11496)
Intermediate trend: Sideways (stop 11049)
It was said “Watch 11230 for recovery; if done, then expect a corrective rally upto 11434-11556; else down move towards medium term target of 10660”.
The Dow achieved 10827 as against our long standing target of 10.7-10.6k; On Wednesday it closed at 11239, i.e. just above our “threshold” reversal level, resulting a massive counter attack by the bulls, & pushed the index to the weeks high of 11510, almost exactly within our upside target levels.
With this wild up move the ‘balance of power’ has tilted in favor of the bulls, at least for the medium term. However in the extreme near term the Index is vulnerable for bearish attack if failed to protect 11544 on close basis. In short, huge volatile swings are expected in the trading range of 11.5k to 11k before start of corrective rally in the region of 11890-11900.
The Dow achieved 10827 as against our long standing target of 10.7-10.6k; On Wednesday it closed at 11239, i.e. just above our “threshold” reversal level, resulting a massive counter attack by the bulls, & pushed the index to the weeks high of 11510, almost exactly within our upside target levels.
With this wild up move the ‘balance of power’ has tilted in favor of the bulls, at least for the medium term. However in the extreme near term the Index is vulnerable for bearish attack if failed to protect 11544 on close basis. In short, huge volatile swings are expected in the trading range of 11.5k to 11k before start of corrective rally in the region of 11890-11900.
13150-13185 crucial…
Nikkei (12803): Intermediate trend: Bearish
In the previous review we said” a close above 13139-150 is must, to start a corrective up move; if the bulls succeed then expect corrective rally towards 13508 or maximum 13605; else, a slow and steady down move towards target objective of 12754-12550”.
On the very next day (14th July), the index jumped to 13185 but failed to post close above our proprietary levels of 13139-13150; subsequently fallen to 12671 i.e. well within the target area.
The structure is still bearish, despite of last 2 days trading outside the falling parallel. A close above 13070 will give much required strength to the bulls to surpass the ‘key reversal’ points at 13150-13185; if done then (only) expect a corrective rally towards 13.5/13.6k levels. Else expect 12590-12430 in the near term.
On the very next day (14th July), the index jumped to 13185 but failed to post close above our proprietary levels of 13139-13150; subsequently fallen to 12671 i.e. well within the target area.
The structure is still bearish, despite of last 2 days trading outside the falling parallel. A close above 13070 will give much required strength to the bulls to surpass the ‘key reversal’ points at 13150-13185; if done then (only) expect a corrective rally towards 13.5/13.6k levels. Else expect 12590-12430 in the near term.
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