Market Weekly Review 31/03/2008

SENSEX DAILY CHART

As per expectation and last week review market made some sharp gain and has nearly hit the target of 5000. I feel that this is only a pull back and and there are very rare chances that this is a start of a new bull run. The market will move up to 17000 and 17500. Further upside is possible only if market can sustain above 17500 levels otherwise probability of a down move is very high.

Gold:- Bull or Bear

Gold Daily Chart

Gold made a high of 13397 and broken off the channel it was moving since last December. My second target on Gold had been nearly achieved and the short term correction had started. According to my counts this is the fourth corrective wave of a larger degree fifth wave. Therefore the last leg of the bull run on gold will start which will take this metal to new highs.

Gold Weekly Chart

From the weekly chart we can observe that Support exists around 12000, 11350 and 10850 leve. The support at 11350 will be crucial as it coincides with the support of trend line. I don't expect gold to go beyond 10800 levels in near term. Therefore Long term Investors can go long on Gold at around 11350 with a stop loss of 10450 and target around 13500 and 15000.

Nifty Weekly Review 23/03/2008

NIFTY DAILY CAHRT

Nifty closed the week at around 4573 level and as observed form the above chart it is trading at the lower end of the downward sliding channel. Many momentum indicators have started showing positive divergences in hourly charts. I expect that market will witness a pull back form the current levels which will go upto at least 4800 levels and 5000 levels. A selling pressure is expected to emerge form there.

DOWJONES DAILY CAHRT

The only positive things for equity markets is that Dowjones has refused to close below 12000 levels for three consecutive weeks which was necessary for a decisive break down of that level. More over Dowjones made a low above its previous low of 11600 levels. Although this may not be a very vital sign of strength but surely it may result into a minor pull back form here will give temporary relief to market. Major resistances for Dow are at 12400 and 12800 levels. Major supports exist at around 12000 and 11600 levels.

Mayhem!!!!! Mayhem!!!!!

NIFTY MONTHLY CHARTBull market has been observed to last for four years. Nifty had also completed four years of bull cycle which started form 2003 to 2007. As I mentioned in my last weeks review that this is the first major correction we are witnessing since the start of this bull market in 2003 and now this correction has turned into a intermediate term bear market.

NIFTY MONTHLY CHART (January 2003)

The first question arises is How long will this bear market last? Since the underlying fundamentals of our economy are very bullish, I expect that this bear market will get over in 8-13 months. I would have expected a shorter period but due to adverse global factors it seems that our market will be in a bear phase longer than warranted.

The second question is how deep will it go? Here if we observe the corrections which occurred since the start of this bull market we will find a trend in the intensity of correction.

First Correction begin in October 2005 the markets fell from high of 8821 to low of 7656 which is 10.25% form the high of 8821.

Second correction begin in May 2006 the markets fell from high of 12671 to low of 8799 which is 30.50% from the high of 12671. Here we may notice that the intensity increases wich every subsequent correction.

This is the third correction and it may go even beyond 30.50%. I expect this correction may go upto 50% i.e. upto 12055.

It’s not that the markets can’t go below 12055. It may go beyond this, but that will completely depend on state of our economy. To the best of my knowledge the underlying fundamentals of our economy are extremely sound and positive for next 3-5 year period. Therefore I expect that this correction will not go beyond 12055 and even if this level is broken it won’t stay below this level for long period of time.

DowJones OR Down Jones

DOWJONES MONTHLY CHART

Its no seceret that Dowjones had borken the four year uptrend which started in 2003. It is a historical observation Bull markets generally last for four years and the Bear market for on an average of one and half year. This cycle largely depends on the underlying macro fundamentals. That is if the underlying economy is more bullish than the uptrend cycle will be longer while down trend cycle will be shorter. US markets they have just ended four years of up cycle and subsequent down cycle which has started may last for one and half year or more depending on the state of underlying economy. Now if we analyze US markets in this light, we may be witnessing the apex of sub prime crisis or we are just few months away form the top (of subprime crisis). I feel that the ongoing sub prime crisis will take at least another eight to ten months to sort out. Looking at charts it is more than certain that Dow Jones will break the support of 11600 and will head further down to 10800 and 10000 levels. This means that there is still a lot more bad news to come form abroad.

Nifty Weekly Review 9/3/2008 - The Onslaught Continues

NIFTY MONTHLY CHART
NIFTY QUARTERLY CHART

The worst fears have come true and the market had decisively broken the 17000 support and is now heading towards 14500 -14000 levels. This is 38.2% retracement of the entire rise form 2939 to 21200. As the rise was meteoric the fall will also be colossal. From the monthly chart it becomes very clear that the market had broken the channel it was in since start of this market rally. The most pessimistic target form here is in the range of 11500 – 12000. Looking at fundamentals of our economy even if market falls to those levels, I don’t expect market to sustain there for long time period.

This is a first major correction since the start of bull market since 2003. There is huge difference between correction of January 2008 and May 2006. Global economy was on much more sound footing during May 2006 and sub prime ghost was not hunting the market. Right now the global scenario is much grimmer rather worse than it was in 2001 or back in 1997. This is a major systematic failure of market in pricing the risk (It resembles to what it was during the systematic failure of 1987) and eventually we all have to pay for it because of integration of financial markets. Sorting out of this mess will take time and therefore, I do not expect the market to resume its northward journey anytime soon. It may take six months or a year before market will be able to cure itself and start moving on fundamentals. But right now markets are moving on sentiments rather than fundamentals and sentiments can take market to any levels. Just as at 21000 our markets were overvalued but still we were trading at that level just two months back similarly, 14000 or 11000 may be an unjustified price for our markets but we may see that level.

Silver lining amidst falling markets

Silver made a high of Inr 26300 and closed at Inr 24890 on Tuesday. This more than double of my expected target of Inr 23000 when I gave a call on silver on 14th January 2008. Silver has moved up by more than 20% form Inr 20500 to Inr 26300. This supports my view of a multi year rally in precious commodities and a gradual decline in Dollar. Just like gold Silver is also looking weak perhaps much weaker and will correct to 23000. Again I will advise investor to buy these commodities at dips with 3 to 5 years time horizon.

Gold :- Prophecy Fulfilled

Barley I have expected before two months when I wrote an article on January 3rd “Gold Way to Safe Future” that gold will hit my price target in two months instead of a year. I have given a buy recommendation on gold at INR 10500 with a target of INR 12500 and INR 13500. Few days back Gold made an all time high of INR 12700. Current chart patterns suggest some weakness in Gold and may correct up to 12000 from here and if the trend line which gives support at 12000 is broken gold may correct significantly in the intermediate term. But, According to me commodities like Gold and crude oil are on multi year rally and they will keep on making significant new highs. But intermediate corrections are inevitable and a trader can use these corrections for his benefits. Any fall form here will be definite buy for a long term investor with 3 to 5 year time horizon.

A Risk Worth Taking

IT seems that 4800 is proving to be very strong support for Nifty. It is the last frontier and if fallen will lead to another carnage in the market. But According to me this moment markets is presenting with a good but a risky opportunity. Tomorrow the market will make a low at around 4800 and one can go long on nifty at these levels with a very strict stop loss of 4750 and a target of 5200 in two to three weeks.

Nifty Weekly Review 03/03/2008

SENSEX WEEKLY CHART

Dowjones was down by 2.5% on Friday closing. Hence it is implied that there will be gap down opening in our markets on Monday. I am pasting the weekly chart of Sensex. We can observe that Sensex is having a strong support at around 17000 levels. Its very important for the market that Sensex do not break this support other wise we will witness another round of sell off in the equities market.

SENSEX DAILY CHART

If we have a close look at Sensex daily chart we can observe the formation of a symmetrical triangle on charts. Sensex is hovering dangerously close to the support levels which exist at around 17300. If there will be a decisive break out form this pattern the only support which exists is at around 17000. Dowjones is looking very weak at this juncture and it seems that there will be another round of selling in the US markets which will in turn trigger another round of sell of in Global markets. If there this proves to be true there will be significant corrections in Indian Markets. The next major support exist at around 14500 levels. The probability of a negative break down can not be ruled out at this juncture so its better to keep your portfolio tilted towards cash allocation. I will also advise traders to keep strict stop loss in all their derivatives position.

Turbulent Time Lies Ahead

On Friday evening the US markets took very ugly turn and it corrected by 2.5%. From the above chart we can clearly see that DJ Index found resistance at 12770 levels which is exactly at the resistance line. From the second chart can also observe that 12770 was a very important resistance and it was at this level market made its temporary top during the month of 20th February 2007. We can also observe that the market found support at this same level around 26th November 2007. Failure to cross this level will have a very vital implications for global equity market. The only major support below 12000 is at 11600 and if these supports are broken, we will see the second round of correction in the global equity market.