Friday, August 7, 2009

Dow Jones In Sluggish Mood

Dow Jones has been cautiously inching north. It is as if it is testing the patience of the world at large. It is playing its cards close to its chest, not allowing anyone to guess its intent. But if you see the larger picture it is playing out as if it was ordained so by the forces of nature. In market you can hide your intent in the short term, but in long term there is no scope for manipulation. Laws of nature have their ways to catch up.

Now in retrospect I can admit that in my blog post dated 31 Jan 09 titled " Stock Market Bottom-Revelations" I had brazenly declared that American markets have reached their bottom. That was the time when every shade of expert on markets was desperately trying to hunt for the market bottom. Today in hindsight it appears that bottom in Dow Jones has actually been established, albeit at a level lower than I had predicted then. However, I had opined that Dow from its bottom will shoot towards 9600. And there it is , romancing the level of 9400 from its bottom of 6450, though its present sluggish attitude suggests drying up of buying interest. What remains to be seen in coming days is whether it will finally touch 9600 as per my prediction on 31 Jan 09 or not.

Level of 9600 for Dow can still be missed as of now, since it has a selling zone pressure between 9000 and 9400. This I had outlined in my post titled "Look out for selling big time" dated 07 May 09. And finally I had homed on to 9500 as the best case scenario tipping-over point for Dow in my post titled "Dow Jones-Prediction For July 2009" on 29 June 2009. Hence presently I am not too very optimistic about Dow achieving 9600 in this run up.

So where does all this leave us now? It just suggests that for Dow to go on a confirmed Bull run , one needs to catch the bull by the horns as it starts its second phase of the run. That usually happens after a meaningful corrective wave comes into play. Wait for this corrective wave to form and then ride the Bull run which can take Dow to 11400 and beyond. Happy Hunting!!

Thursday, August 6, 2009

Indian Stock Markets - What Next : Aug 2009

In my last post titled "Budget Time Blues" published on 30 Jun 09, I had predicted that till Union Budget Nifty will hold ground between 4100 and 4500 while Sensex will be range bound between 13500 and 15000. And the indices did just that. But little did I realise then that on day of Budget(06 Jun 09) , Nifty will take a roller coaster ride of the entire range just mentioned. Sample this : on 06 Jun 09 Nifty had a low of 4138 and a high of 4480. Quite unnerving, wouldn't you tend to agree? However that is one characteristic of Indian indices we have to learn to live with.

What surprised me most was the fact that even after decisively breaching 4100 level on closing basis, Nifty didn't capitulate under relentless selling for four days, triggered mainly by market perception that the budget was neither-here-nor-there affair. On the other hand, from a low of 3919 on 13 Jul 09, Nifty has smartly notched up 812 points in three weeks or so. May be I didn't take into account the fact that Dow would go towards its best case scenario tipping-over-point of 9500. This tipping-over point finds mention in my post on 29 Jun 09 titled "Dow Jones - Prediction for July 2009). Since Dow has actually marched north towards 9500, so has rest of the markets and Nifty has not disappointed either.

That brings us to the present question- What Next? Consider the following facts and take an informed decision:-
  • I am yet to believe that we are out of the woods. If this is the start of a new Bull run then the first wave has to correct at least by 38.2% (if not 50%) before the second wave can take it to newer heights. I believe we have yet to witness that correction. But in case the correction we witnessed in June-July 2009 qualifies as sufficient correction, then we could see Nifty at 5500 in next to no time.
  • Nifty should be watched closely for large volume and price declines. If we find accelerated and sharp fall in Nifty in coming week then it will rush towards its current support of 3920. In that case we may witness formation of a double/triple top pattern , which can drag Nifty to 3300.
  • For a strong durable up move, Nifty is yet to take support of 200 day SMA, which is presently hovering around 3300.

Tuesday, June 30, 2009


What is market expecting of Union Budget? Will it be a market benign budget or a damp squib? Come sixth of July we will all get an answer to that. In the meantime we can only hope for the best. But on the second day of Budget week we have witnessed a broad based sell-off in the market. The sectors which were supposed to have received sops from the Budget have participated whole hearted in this sell-off. Budget favourites like IT and steel sectors still withstood the onslaught of the sell-off, but Infrastructure did not. Are the market players simply getting Budget jitters or is there reason for real concern?

Whatever be the mind of the market , Nifty should be range bound between 4100 and 4500 till the Budget. Similarly Sensex should hold on between 13500 and 15000 range till market gets this big event out of the way. However close below 4100 in Nifty and below 13500 in Sensex will be quite disastrous for the market since it will spell out the mind of the market in no uncertain terms. Nifty will then spiral down to its pivot of 3500 and Sensex can plummet to 11500.

In my earlier post on 18 May 2009 titled "Rebuild Your Portfolio" I had suggested to retail investors to come completely into cash at the level of Nifty 4600. In case you have, then look out for the crucial levels of Nifty and Sensex as discussed above and be ready to once again start rebuilding your portfolio for the long term.

Monday, June 29, 2009


Dow Jones is precariously perched at the top of current bullish run. Whether you call it bear-market rally or start of a bull run, Dow is likely to face stiff resistance going forward. The best case scenario is that Dow reaches 9500 and tips over for serious correction. But the most likely tipping point will be between 8625 and 8700.

The current week will be a shortened trading week for US markets with markets remaining closed on Friday, being Independence Day. June employment data will be released on Thursday and the rest of the week doesn't foretell any significant up move for the market.

Negative sentiments could prevail with the sentencing of Bernard Madoff for his multi-billion dollar fraud, that being a reminder to investors that Wall Street is still not the right place to park one's hard earned money.

However what is more important is to watch Dow level of 8250. In case 8250 is breached on a closing basis then we are going to have trouble going forward. Dow will then be available for trading at 7250-7500 levels in the short term.

Monday, June 22, 2009


Cricket fans in India have no place to hide. India has bowed out of T20 World Cup quite disgracefully. Strong words to say but India's performance at T20 World Cup does warrant such comments. India lost all its Super Eight matches in most disturbing manner. The promised fight was missing and Indian performance can be summarily dismissed as a damp squib. Amongst Indian cricket fans there is disbelief and dismay and an all pervading feeling of being cheated by their heroes.

What went so terribly wrong? Every Indian cricket fan worth his salt was expecting fireworks from Team India. Expectations were so high that all other teams were being reviewed with disdain in comparison to the might of Indian team. The just concluded IPL-2 was very heartening for the fans. Display of power and finesse by Indian players at IPL-2 on foreign soil gave the fans enough reason to rejoice. There was a feeling that Indian players were peaking just at the right moment for T20 World Cup. IPL-2 was a platform which provided them with the right kind of match practice. IPL-2 was supposed to be a boon in disguise.

So how come the Indian team fared so badly at T20 World Cup? Did match fatigue creep in or was it just another example of absence of proper game plan. My guess is that it was both and much more. Such pathetic performance cannot be attributed to any single factor. The performance that we witnessed can be achieved with the help of a slew of factors. In a random order I will now try and list out some of the factors which accounted for such a debacle :-
  1. Year 2009 so far has been jam packed with international cricketing events. There have been many international series played by India leading up to IPL-2. That took a heavy toll on players, so much so that some players were not fully available for IPL-2 due to injuries.

  2. Then came IPL-2 and the rigorous regime of cricket. Prolonged packed schedule, back to back games, packed stadium and hysteria building exercises demanded that much extra from each Indian player. The result was that the Indian players were a spent force by the time they entered World Cup arena.

  3. Half the Indian team, including the skipper, were not 100% match fit as per the report submitted by team Physio to BCCI before the selection of the team. However BCCI chose to ignore the report and went ahead with selecting even injured players. The outcome of such a decision is there for all to see.

  4. Indian team entered the World Cup arena with the mistaken belief that they were invincible. This mindset has been the outcome of hype created by all of us. As Indians we have a tendency to get carried away and the players are no different. The swagger of most players as they entered World Cup arena was a telltale sign. Game plan was the last thing on their mind. In their mind they had already won the World Cup and we are all responsible for that particular state of mind. Each team had to be tackled with particular strategies targeting their weaknesses. No such effort was visible from Indian team while teams like England and South Africa exhibited the same in abundance.

Pity of all this is that there is a feeling of deja vu in this crushing defeat at T20 World Cup. It is as if we have been through this kind of situation 'n' number of times before. Everything feels so very familiar. The inconsistency of Indian Cricket is now a folklore. If anything, we must address this inconsistency before we start making heroes out of ordinary mortals. Time again for some serious brain storming at BCCI! All the very best BCCI!! Hope this time around you can find a lasting solution.