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Sunday, August 24, 2008

Weekly Trends and Analysis

Analysis for the week ahead. I will present a bigger picture look at things after we look at the charts.

Starting with the daily. Some comments on the chart - open in new window to view. Here we can see the MACD is signalling danger. Last time it happened, we had a major downslide. Will we do the same this time? We need to watch this week very closely.

Next the weekly chart. Here the stochastics is trying to crossover to the downside. Last times it happened resulted in major mayhem in the markets. Break 4240 and its probably over for the market - Under this 4150 is also strong support but 4240 might be more important as its last weeks panic low.

Daily log chart shown here to present a different look at things. Note how we are back in the downtrending channel on this one.

Lastly hourly charts with comments on it. Nothing more to say here.

Overall charts and market are showing some confusing views. Prefer to sit out in cases like this. I am looking to build short positions at higher levels maybe starting today. So many strong resisitances at higher levels. This week being expiry week might see a lot of index management by the market makers. Might be a good idea to sit out...Daytrading can be done though. I have given some key nos in the charts above. Play in between these levels.
Okay now coming to the bigger picture.
Lets face it folks. We are in a major economic upheaval. We need to pay attention to the global picture also. Being in the US of A, I see things here and I am convinced beyond a doubt that we are probably in a very serious economic predicament - There are no jobs..Jobs are being cut as it is...People have stopped buying cars and houses...Overall tighening of spending. Flashback to 6 months back and it was very very different. People were upgrading their cars, their houses and so on...Its funny what a few months can do. The last few years saw people spending without any restriction money that they did not even have in the first place. Easy credit and uncontrolled spending is what lead to all of this. So pain is being faced right now and may continue for more time than what people are expecting.
Come home to India and as I said some time back, the PE growth in our markets have been quite pathetic over the past year. 8% or so. I mean that is really bad. We factor in inflation and the real growth becomes even more pathetic. We are in for some dire times folks. Be careful with your money.
BUT as they say, its always darkest before the dawn and the same is applicable here. Markets are a leading economic indicator. We will begin to recover before the broader economy. When?
I expect we shall see a major downturn over next few weeks...maybe a month and then go toward new lows....The next new low at maybe 3600-3400 levels will be a fantastic buying opportunity for the longer term. Again note that the levels and timeframes here are more of speculation that anything else. Take it with huge handfuls of salt :)
Its my longer term view on the markets and economy and so will be continuously updating them...I think we shall make a significant bottom within next 3-4 months...Then a big upmove into March of next year...More decline/consolidation after that...But let us see how the next few months play out first.

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