Nifty Price Analysis 28th April 2010
Finally, the market's made a significant move in some direction and as expected the move was on the downside. What is more significant is that the last two sessions have occurred on rising volumes whereas previous 5 green sessions were on falling volumes. We can now roughly estimate the downward channel that is beginning to form as seen on the charts. The lower line of the channel is yet to be confirmed, but the upper channel stands confirmed as two significant tops seem to confirm it. I am not paying too much emphasis on 5160 level as market's may (may not) reverse from there. As you might have noticed, I have been short on the market ever since 5400 was touched and hence I have short positions built up at 5357. I believe in shorting at market high's especially where resistance is there as such trades present one with excellent risk to reward opportunity and a certain price level to manage risks.
Going forward the market's may indeed bounce or consolidate. But there is no denying the fact that there is weakness lurking in the system. Derivative data today suggests significant call writing at 5300 level which does suggest as 5300 being a strong resistance now. Furthermore, almost all global markets (Dow, FTSE,DAX,Shanghai and Hang seng) have formed reversal patterns and are acting accordingly. Such uniform sell signals across all the major indices should be noticed with extreme caution. Yesterday, major global indices fell on high volumes and volatility spikes. Such scenarios are not trade mark of on going bull market's but are often implication of weakness underneath.
Views on AW10 and Nimish's discussion:
The problems associated with global market's is not going to die down so easily. Historically, if you analyze how the such things span out, the Asian crisis of the late 80's and 90's form as a perfect model as far as cascading effect is concerned. Thus, we might hear some positive news to boost up sentiments, but the whole problem related to the PIGS countries is far from over. Not long back we had the sub prime crisis where investors expected the markets to discount the fall of Lehman bank in Mid September - October by correcting 10-12%. No one at that moment knew what lied ahead. When such crisis happen, you can just never quantify what lies in the near future. What I mean is that, we can never say how much debt or how much problem actually lurks underneath. And since we can never say this, we can never anticipate what percentage of problem has the market discounted currently. These guys are smart enough to not let out all the information at once. And hence, we can never be in a position to judge what lies towards the right side of the chart. This is one reason I have never believed in the news which comes out. I believe in price analysis and inter market analysis and both at the moment suggest Caution.
Again these are my views and I may be wrong. I respect what AW10 and Nimish had written earlier regarding this.
Finally, the market's made a significant move in some direction and as expected the move was on the downside. What is more significant is that the last two sessions have occurred on rising volumes whereas previous 5 green sessions were on falling volumes. We can now roughly estimate the downward channel that is beginning to form as seen on the charts. The lower line of the channel is yet to be confirmed, but the upper channel stands confirmed as two significant tops seem to confirm it. I am not paying too much emphasis on 5160 level as market's may (may not) reverse from there. As you might have noticed, I have been short on the market ever since 5400 was touched and hence I have short positions built up at 5357. I believe in shorting at market high's especially where resistance is there as such trades present one with excellent risk to reward opportunity and a certain price level to manage risks.
Going forward the market's may indeed bounce or consolidate. But there is no denying the fact that there is weakness lurking in the system. Derivative data today suggests significant call writing at 5300 level which does suggest as 5300 being a strong resistance now. Furthermore, almost all global markets (Dow, FTSE,DAX,Shanghai and Hang seng) have formed reversal patterns and are acting accordingly. Such uniform sell signals across all the major indices should be noticed with extreme caution. Yesterday, major global indices fell on high volumes and volatility spikes. Such scenarios are not trade mark of on going bull market's but are often implication of weakness underneath.
Views on AW10 and Nimish's discussion:
The problems associated with global market's is not going to die down so easily. Historically, if you analyze how the such things span out, the Asian crisis of the late 80's and 90's form as a perfect model as far as cascading effect is concerned. Thus, we might hear some positive news to boost up sentiments, but the whole problem related to the PIGS countries is far from over. Not long back we had the sub prime crisis where investors expected the markets to discount the fall of Lehman bank in Mid September - October by correcting 10-12%. No one at that moment knew what lied ahead. When such crisis happen, you can just never quantify what lies in the near future. What I mean is that, we can never say how much debt or how much problem actually lurks underneath. And since we can never say this, we can never anticipate what percentage of problem has the market discounted currently. These guys are smart enough to not let out all the information at once. And hence, we can never be in a position to judge what lies towards the right side of the chart. This is one reason I have never believed in the news which comes out. I believe in price analysis and inter market analysis and both at the moment suggest Caution.
Again these are my views and I may be wrong. I respect what AW10 and Nimish had written earlier regarding this.
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