Calm before the storm

Karthik
Nice observation about volume ...

but I'm not sure how much relevance intraday sentiment swings on a particular day will have in predicting the direction of the market over the next few months

Perhaps you will explain

AGILENT

From today's chart (attached), it seems that the uncertainty over RSI divergence has been resolved. Today's move is now giving a clear bullish signal from 1) the trend; 2) Trix - signal crossover; and 3) RSI confirming uptrend by showing higher lows (lower tops eliminated today). ADX, though, is still weak. On the upside, major resistance zones would be 3570, 3630, and 3700.

Attached Images

NSE NIFTY 060921.GIF (17.0 KB, 21 views)

Hi Agilent,

Good question and of course the intraday swings has hardly any relevance in predicting(?) the movements for the next few months.


But IMHO for looking at the immediate course of the market these out of ordinary intraday swings do have some value and that was what I was trying to look at. We were looking at whether we were really out of the woods. When the market remains dull and suddenly in closing hour the market moves drastically it could tell a lot of things, it could be news or it could be some game plan of the sharks. For example in an up trend you have a wide range bar with the closing near the low coupled with big volume is a very clear sign that the smart money is moving out. I feel that you should look at this more closely without skepticism and you will find it quite interesting.

Today’s move with increased volume and good A/D ratio has more credibility.

Warm regards

Karthik

Hi Kuldeep.

Market is poised at the point of inflection from where it could scale greater highs or breakdown further. If it scales the previous peak convincingly then certainly it would move into different trajectory altogether..Given the economic conditions it will attempt to croos the peaks..We have still two years to go before any thought of election is affecting market movement. Till such time , Indian economy may not be pausing.Sorry for not using technicals here, but I am sure the TA will be exhibiting bullish signals.

Pankaj

Hi Pankajji,
Nice to see you back again. Looking forward to many more valuable posts from us.

Thanks,
Jude

Thanks judeemit. Will try to post as much as possible.
Pankaj

Thanks Pankaj, its good to have you back again where you belong (a la Hello Dolly!)

You are right about the point of inflection ... I think that ADX is signalling that and that was confirmed by today's movement which looked a lot like a tug of war between the longs & the shorts. Notice how Nifty Sept Future kept oscillating between premium & discount. The momentum is up as at the end of the day, the longs won. From the charts it seems that the move to 3620 will take place next week (hope I'm right).

And as you said that the economic signals are all positive ... so for a short while the move up will continue. But, read today in the WSJ that US slowdown is looming ahead signalled by 1) falling crude prices even though production levels are the same; and 2) housing market slowdown. These 2 factors would affect us and all other economies as we all depend a lot on the US economy. Maybe Ben sahib may now go in for lending rate reductions!

Regards
Kuldeep

Karthik

(Re yr comment in red)

True... but there are exceptions ... see what happened on Tues 19th
click on the 5 day chart in link http://finance.*****.com/charts#char...le=off;source=

Smart money moved out in the last half hr that day, but only to come back with a vengeance. Only illustrates the volatility of the markets
AGILENT

Hi Kuldeep

I am quite sure that sensex will factor those points in to it.Falling crude prices will do us more good than the slowing American economy. Surprisingly , when crude was hovering around $70 and above, everybody was saying how bad it was for World economy in general and ,India in perticular. I suppose opposite will also hold good. Anyway at least perople have stopped paddling companies with alternative energy sources.

Regarding slowdown in real estate market in USA, I was striken by the fact that real estate is booming in India and may now continue to do so for quite some time. Even though Banks have tightened exposure to such loans and interest rates have risen. FOMC chairman, Mr Ben was raising the Rates in the hope that inflation will be contained when economy slows down.He is likely to pause but unlikely to reduce the rates because economy is slowing down. He will be happy to say that since economy is slowing down fed rates would not be raised but the danger of inflation has not yet gone away and there is a possibility of rate hike.With that hint in the background, rates are unlikely to go down for some more time.

Lastly, yes we are dependent on America and other countries for trade and commerce. The situation is not as drastic since Indian growth rate is steady at 8-9 % . If we slow down then we have a cause for worry. Say in one year's time America will start reducing rates and their economy would be booming againg, then we should be in a position to take advantage of it. But our own requirements and growth investments are such that we may attract more investment because of USA slowing down. Among Emerging Markets surely India will have prime place.

For growing at 8-9% we need massive investment in Power sector, capital goods, infrastructure, commercial reality,services sector . If these materialises then FMCG will be benefitted.

This will depend on how our agriculture /monsoon would perform.

Well that is the broad Idea. Coming to the point of inflection, it will surely depend on both the factors that you mentioned.Afterall, shareholder's confidence is also reflected in price movement. If India falters on any of the above aspects, slows reforms then slows pace of growth, surely market would go down. Otherwise we would se a temporary blips in upward movement and sight is set on 15000-18000 for next year. Another major blip will appear only next year , other conditions being equal.

See the sensex movement, since Jun 2006 lows it has not looked back though we were always cautious. For a volatile market , may be we need to adopt contrarian strategy.

Pankaj

Hi kuldeep,

We understand that Aftek is in down trend. But because the fundamentals

are so positive, I shall buy .

Now can you help me and others, at what level, should I enter-so that the risk is minimum.

If you do, please inform the level in two stages for eg. 1st entry level_____ and the 2nd entry level_____.

Thanks in Advance.