Tech View - 24.03.2008 - Read this
Following Tuesday's outsized rally and Wednesday's massive sell-off, it was unclear where the Dow was heading for ahead of the Easter weekend. But thanks to strong earnings from Nike and and a milder-than-expected decline in the Philadelphia manufacturing index,and a pullback in crude below the century mark, retailers and financial stocks blazed higher with the Dow wrapping up the week with a gain of 261 points The Dow added 3.4% for the week and closed atop its 10-week moving average for the first time in 2008. The S&P 500 gained 31 points and 3.2% for the week.to close at the 1,330 level. Finally, the Nasdaq surged 48 points higher, bringing its week-to-date gain up to 2%. . The VIX is now at 25
The U.S.$ INDEX rose 1.5 % this week to 72.71.from a record low of 70.698 on March 17.The dollar's rally accelerated after the Jefferies CRB Index of 19 commodities tumbled 8.3 % this week, the most since at least 1956.Commodities sold off across the board as investors rushed back into the $ as anticipated even as the CCIB's play to lift the dollar back commenced. The second phase of Central Bank intervention is also showing up in the Chinese yuan which rose to its highest in a decade vs the $ with a 0.5 % uptick for the week after Premier Wen Jiabao this week vowed to take ``forceful'' measures to damp inflation. The Norwegian krone, Australian dollar, and Swedish krona were the three worst-performing currencies vs. the US$ . These currencies sold off as the price of commodities dropped dramatically as a result of traders selling speculative positions as they continue to reduce leverage.
The base metals were all mired in the red on Thursday. Crude shed 70 cents to finish at $101.84 per barrel after hitting a low as $98.65. Now that $100 has been broken, the odds have risen for a much deepercorrection ahead. Gold also fell victim to the dollar's strength and gave up $25.30, or 2.7%, to finish at $920 an ounce. The drop comes on the heels of Tuesdays $59 plunge . For the week, gold has lost 8.3%. Silver had another day of massive hemorrhage, triggering our trailing stop at 18$ and falling through the $17 mark, to close at $16.71, down $1.69. For the week, silver coughed up a mind-boggling 24%.in 5 sessions.
Fed Cuts and the U.S. Dollar Gains?!The $'s rebound, if you have been reading the pink papers was "not supposed "to happen and media blitz is still talking of a technical bounce.Do note that no one is commenting on why and how precious metals have sold off big time , especially considering that gold/ silver/ crude have now turned on thier head. If you were watching this space you would have expected exactly this i.e the opposite of what was "supposed" to happen. - investors are spooked and want inflation hedges ( yawn!).
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYDLefq0rUns&refer=home QED-
Given the confluence of domestic (inflation, growth moderation) and international factors (oil prices, US "recession", capital flows), RBI policy making at month end may well see some tightrope walking, while providing critically needed direction to markets over the near term.Consensus estimates put earnings growth for the Sensex companies in FY09 at 20%, implying a P/E multiple of 14x at current index levels. Even as the debate rages on the outlook for the US and thus, its key trade partners, the growth outlook for India remains largely intact. Inflation swung up this week as the hike in steel and iron ore prices impacted but should moderate going forward as the base effect kicks in. All eyes are glued on the Q4 and yearly results that will follow in three weeks from now. anything better will ensure the arrest of the market fall. If the Advance tax figures are anything to go by, results should surprise on the upside.
Taiwan is on a roar this morning following the win by the opposition the Kuomintang ( KMT) even as the new President Ma pledges to ease a ban on Taiwan companies investing more than 40 percent of their assets in China.The Taiex has been the best performer in Asia since Jan. 12, climbing 6.2 % .The yen is at 99.87 and the rest of Asia is mildly green.
Once the strongest case imaginable has been made for where a market "should" go, that's the time to think like a contrarian.
Dark Horse Banks / Bank Nifty
The week ahead 24th to 28th March 2008
Support 14930/4550 Pivot 15135/4600 Resistance 15465/4720
PCR 0.82
10 DMA 4720 20 DMA 4935
Weak below / strong above 4600 Nifty spot
Wednesdays movement on the Nifty was a revisit to its January lows of 4,450 before bouncing back. The low was 4,469, high of 4,718 and eventually ended at 4,573. This pattern is a higher bottom and lower top formation typical of a bullish Harami and signals that a short term reversal is on the cards. 4600 still remains the pivot and will determine the strength of the bulls or whether the bears may have lost control for the coming week.
Year end NAV management, FNO expiry related short covering even as the Sensex is now down 6,211.94 points or 29.29% from its all time high of 21,206.77 hit on 10 January 2008.
Tata Motors- JLR closing the deal on Wed/Short selling from Apr 21/margin on FII trades from Apr 1/ BSE lower circuit limits on B-group shares revised down from 10% to 5%
Regards,
Wellwisher
