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The market these days

March 31, 2009

People following my twitter feed [@sohamdas] would have noticed my continous skepticism when NIFTY was marching towards 3100. They might have noticed a slight and stoic acceptance, 😀 when NIFTY breached 3100 , substantially lacking the usual flair (which I show) when the market is in a “sell day”.[In fact, I openly sounded cautious of NIFTY breaching 3150 levels on Friday and was skeptical about it on Monday]

So today, when the NIFTY tanked 100 points, it became all the more clear that sub 3150 levels, is something NIFTY has once again rejected[the last high was 3153, pre Satyam scandal].

Lets move across our sight to some global markets and lean in to find whats happening across the borders.

For the starters, lets lean into $NDX [NASDAQ 100 index]

NASDAQ100 over a period of 1 year

Quite a fall over a period of 1 year and bears might take heart from the fact bulls were not able to breach the previous high of 1280 levels. Zooming might help in understanding the entire scenario a bit better

NDX for the last 4 months

There is a distinct double top at and around 1280, confirmed by the volumes. During the first top, the ‘up’ volumes dried considerably and the next ‘down’ day showed very huge volume rise. Going to the next bottom, the red bar near the bottom again attracts high  volume, higher than what the next bar to follow. Which just gives rise to a huge rally rising to 1280 again, with higher volumes on every ‘up’ day. Today $NDX has moved considerably down today, but the volumes will confirm the entire stance of this rally. In my view, a top has formed.And I would short it.

S&P500 Large Cap Index

Today ,as of 12.25 AM IST, markets have moved below 806 and is just a sitting ducks for bears right now. Bears will pull it down and pull it down enough to trap the bottom calling bulls.Yet, the volumes of the movement will only decide the final stance. But S&P moving below 806, trading at 787[at the time of posting] is ominous enough. Even 1-2hours of trading below this level will attract traders to go short on the index.

Which brings me to my last chart of the day. The last chart, the Indian Markets today:

The NIFTY's move today and in the coming days

Although, today’s fall attracted lower volumes than the previous ‘up’ days, yet  a snowballing of this can’t be ruled out. Why? scroll up to the second chart. See any similarity? Both have put in a double top. But the sharp ferociousness of the correction can be a dampener  and it might be possible that this move is not by a hammerring of bears but by a siding away of bulls from the other side. The result, fewer bulls, sharper fall on lower volumes. Bulls ‘might’ just decide to move in and cash in before bears trap them for the last phase of the bear rally. A lot of it hinges on how the volumes play out in the following days.

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