weekly markets analysis for week ending 01 october 09
being an extremely truncated week of 3 trading days only, it is highly possible that the nifty range will be confined within the range of last week with a +ve bias. A decisive breach of 4929 followed by 4900 on any day can shift weekly lows towards important fibonacci support around 4880 followed by 4860 from where solid buying support is likely to emerge. On the higher side, a decisive breach of 5025 can take nifty to shoot past last weeks highs of 5035 to move up towards 5066.there is no change to most of the paragraphs of last week given below and they are left mostly unchanged with slight additions & deletions here & there.
It was cleary mentioned last month that in bull markets like we are now, the month of september has always either made a new high compared to august or closed higher than august highs. Well, the magic level of 5000 was tested by nifty which was not celebrated by many, as they still think the present up move to be a bear market rally. Sensex & nifty had fallen from the jan 08 highs of 21207 & 6357 to october 08 lows of 7697 & 2252. One after the other, each of the critical fibonacci levels of 38.2% at 12858 & 3820, 50% at 14452 & 4305 & finally 61.8% at 16046 & 4788 have been decisively breached by the indices & still many have doubts in their minds as to whether this is real bull market or a bear market rally. Similar feelings were also there during the previous bull market that started in april 2003 and had got strengthened after the 17th may 04 election result day fall. Surprisingly markets continued with the bull market cycle with the rally for next 4 years till early january 2008.
Traders & investors should be absolutely sure in their minds that, this bearish sentiment will continue to remain in the minds of many, even till the last bull market highs of 21207 & 6357 are breached by sensex & nifty & even then also, they will think that perhaps a double head formation is likely, only to find sensex & nifty slowly but surely rise to the next 1.618 fibonacci levels of 29555 & 8894 in coming months around feb 2011. Market cycles are unique in itself & generally all strong bull market rallies thrive on such contra sentiments of bearishness. Well, the corrections will be there as these corrections are part & parcel of every bull market but the present cycle since 6th march 09 is definitely a fresh bull market cycle and every correction should be fully used by long term investors to go long only, although short term & intraday traders may trade on both sides to take advantage of short term or intraday swings. As long as both sensex & nifty continue to trade above 19th august lows of 14684 & 4353 there should be absolutely no fear in the minds of long term & even medium term investors.
The way markets overcame the fears of world economic melt down, bird flu, fears of scanty rain fall, drought, china factor ( both chinese stock market & over exaggerated story of incursions) & more importantly the rhythmic bearish inducement by some financial news channels, clearly shows that the markets in for a mega bullish phase and after each of such bearish wind, the markets become more & more stronger. Having successfully protected the supports at sensex & nifty levels of 13220 & 3919,14684 & 4353,15357 & 4580, last week both the indices formed a new support around 16120 & 4783 to which swing traders may use as a new swing low to remain long till 5200+ levels. For the coming week a day or two of close below sensex & nifty closing levels of 16216 & 4959 may perhaps be the early indication of a mild routine correction after such a big up move during september.