Tech musings

Readers may remember in my previous post on 29^th May 2013 I mentioned that, “S&P 500 may move up higher, but we are witnessing a buying climax in S&P500. It will peak out between 1700 – 1900 zone and then S&P should correct to 1500 level before moving up again.”

The first chart is a 240 minutes chart of S&P500. S&P has clearly broken the trend it was in since last six months. The trend started at 1340 and made a high of 1687.

The second chart shows us retracement for S&P500.  Since the index has broken below the first retracement level of 1606 the next target for S&P500 is at 1555 (38.6% retracement) and 1515 which is 50% retracement of the entire trend.

The third chart shows the long term trend line for S&P500 which is at 1515 levels which coincide with 50% retracement target. Therefore I think this is the most logical target for the current down move.  The probability for S&P to move below 1500 – 1480 seems low at this point in time.

 

If we look at the volatility index it has also broken out of a consolidation. Volatility index may move up to 35 – 40 from there which reconfirms my bearish view on market. 

The next chart is a monthly chart of Nifty. This chart shows the long term trend line which is supporting the market since 2003. If this trend line breaks Nifty is in for a big correction.  Market has pulled back from this trend line almost thrice. I am expecting this trend line to break sooner or later. If market gives a monthly closing below 5650 for two consecutive months I think Indian markets are up for some very serious corrections.

  

 

In the second chart we can see the retracement levels for nifty. If the trend line breaks the target will be 4950 and 4200. I know that I have been mentioning these seemingly impossible targets since long time but as per experience and knowledge these are the only logical targets no matter how impossible they seem at this point in time.

I would also like to mention that if the market ever come down to these levels that will be once in a decade buying opportunity for investors and the money invested at those levels will surely quadruple in next five years.