Tech Musings

The current week is shaping out to be very tumultuous. In my post on 21^st October 2012 I wrote that “The first chart I have presented is 240 mints chart of S&P500. From this chart we can see S&P500 failed to break above the channel resistance thrice and the weekly close was below the trend line. The uptrend which started in first week of June now seems to be broken. The most likely retracement form here should be towards 1360 levels.  However if we look at the monthly candle stick pattern, the probability that that S&P500 will make a grave stone doji pattern is very high. With this in context I think the next week of trading will be choppy with market closing around the 1420 – 1430. Correction may start from next month.”

Markets behaved exactly as expected. S&P500 never went above 1460 levels (the upper resistance line) and finally broke below the support of 1420. Since the current fall happened yesterday and market reacted on macro news, I feel we need to give some time to market before concluding that market has finally broken the trend.  Readers may also be aware that S&P500 have long term trend line support at 1360 -1380 levels.  If market convincingly breaks below this trend, next major support on S&P500 is at around 1250 levels and below that around 1100. It is quite possible that we will see these levels once S&P closes below 1350 levels on weekly basis. 

 The first chart I am pasting is of BSE Real Estate index. As we can see from the chart that Real estate has broken out of long term down trend. Real Estate stocks have been in long term down trend and prices for most of the stocks are 1/10^th of their previous peak. Due to extremely high inflation in real estate in last few years the value of land bank and other assets these companies are holdings has gone up many times. 

I think real estate stocks are about to break out from their long term down trend and they will be multi bagger from here. Below I have pasted charts of few real estate stocks and almost all of them are looking ripe for breakouts

 

BSE Real Estate Index

Bombay Dyeing Monthly chart

DB Real Estate

DLF

Godrej Properties

HDIL

India Bulls Real Estate

Mahindra Life Space

Omaxe

Peninsula Land

Sobha Developers

Unitech

Anant Raj industries

Readers are cautioned that Real Estate stocks are highly volatile and most of the companies have questionable corporate governance standard. Most of these stocks have moved up significantly and some stocks are up 100% from their bottom. There can be and will be meaning full correction in these stocks and it up move won’t be smooth. Investors should pick the best stocks and stick with them.