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Bearish Life

June 10, 2008

Indian benchmark stock exchange, BSE-30, Sensitivity Index [Sensex] has shown quite a lot of bad dreams to investors off late.

With the absolute breadth ratio extremely negative and most of the IPOs performing lower than their listing price, investors are busy taking in huge pains. In a stock market, where PE rises have seen as dramatic a growth as this, it is hard t o stomach in the falls. After showing a brief recovery in April, apparently the markets plummeted on a volatile last Thursday of May , which is also the future contract settlement day for Indian markets.

Going forward in to technicals, the markets are in a huge bear hug mode. With markets firmly on this bearish phase, technicals either confirm or are just predicting more ‘blood’. With Sensex trading

lower than 25 DMA, which is an effective trademark of short term bearish phase has just now turned down into a long term DMA.

Sensex is trading visibly lower that 200DMA.

With present Sensex PE ratio hovering around 21 levels, from the highs of 28 in Jan 2008, there may be some more corrections left.

For a more informed insight, turning to Fibonacci levels too, also gives a lot of help. Testing the old September levels again, the tables have turned a whole 100%. With a Fibonacci retracement, it just reaffirms a lot of weakness in the system.
TRIX falling

It is all the more disappointing to see, TRIX levels never really recovering and sufferring from whipsaws and false positives. The trend is downwards in the mid term and in the short term doesnt look good, with TRIX indicator still below zero and facing southwards.

MACD levels have just breached the 9 tick EMI of MACD, showing increasingly falling divergence.

Added to that, a whole lot of selling is taking place. If NIFTY breaches levels of 4500, then some more downside is predicted.

But in this bloodbath, one apparent positive upside, is that industries of real value has shown quite a lot of appreciation.Technology stocks like telecommunication, softwares has shown a quite appreciation.

DISCLAIMER: The usual disclaimer holds, and this is not an investment advice.
The charts shown here were upto the last weekend that is 5th June 2008. With the present fall on Monday, the charts will change, but the interpretations will not, for the trend is confirmed and not reversed.

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