After a decent rally in USA &
Europe, we are eventually heading towards preliminary stage of another bear
market. Previously we discussed about the trend of GMMA on daily chart. It was
impressive at that time, but a month past. Now, including USA, all major
indices of Europe and Indian has significantly broken down in recent fifteen
days. Sentiment, confidence, uncertainty and lack of confidence these elements
create a good technical chart. And all these are bear bias. Europe crisis has
hammered over sentiments of global investors, uncertainty continuing without
any apparent consequence. One Greece has meltdown all over global equity
markets; they had lost recent rally and turning down into bear market phase.
When Indian markets were about to
enter into the bear market starting phase, the USA market has decently held its
rally of 6 month. Even the Europe had started to lose ground before USA. After
sustaining for two month of consolidation phase, the USA has slide equally to
the rest of global markets. Now as of today, the indicators have started to
prompt for a bear market; no matter it is a short term to medium term, but the
globe is under pressure due to various reasons, but one major is Europe, Euro
zone crisis!!
Here, we will discuss on
technical about four major global indices i.e #SPX, #DOW, #FTSE and #NIFTY
respectively USA, Europe and Indian.
1- S#SPX
–S&P-500 :- after making the Double
Top kind of pattern around 1415-20 level, this indices had Breakdown some
significant support level. One amongst is 1340 level. Previously, in Aug 2011,
there was a similar breakdown from this level and S&P had sink almost 19%
within 15 trading days. In this month it has recently broken down with volume
increasing on 15th may and retesting plus sustaining will affirm the
next move and sentiment. However, it
still not fallen as much as in Aug 2011, but the fear remaining high. Remaining
below 1340 for a week will create another selling leg all up to next support
level of 1280. Before this, a technical bounce back is expected after retesting
of 1290 as a support level, thus a resistance stands at 1340 and 1375 level.
2- #DOW
– Dow Jones :-It is a apparent instance of breaking down a Double Top pattern. Around 13300 level, DOW had formed DT pattern
in March & April 2012, and recently broken its DT support of 12700. The way
S&P moves is similar to DOW, except indices value, thus a technical bounce
back from current support of 12300 is very much on horizon, and 12700 &
13000 will be act as resistance for this bounce. The similar pattern had
witnessed a down fall of almost 17% in later end of July 2011. Things are to be
awaited whether history repeat itself.
3- #FTSE
– England :-‘scarce rally, drastic down’ is the perfect sentence for this
indices. Since Oct 2011, this market remained cautious on up side move, and
participated fully on down side with others global markets. 5630 was the strong support which had broken recently
and running much lower from this level. Expected bounce back level after the
recent fall was at 5365 level, but at of this time FTSE running slight below
this level. Sustain and surpass this level can prevent further drastic fall in
near term. There is nothing much to say about this indices, because it has no
strong pattern on daily chart, plus it is following the Euro zonesummit and
other local factor like election is on way. A very interesting point about FTSE
is, that on longer term it is a consolidate market within range of 1200 point
or 20% movement in whole.
4- #NIFTY-
CNX NIFTY-50 :- ‘Too many reasons always vulnerable’, GDP forecast is down,
uncontrolled Inflation, weak currency, divergent RBI policies, lack of govt
concern over some key decisions, these are the key factor with this Indian
market is suffering. NIFTY is already running into short term bear market.
After break down from Support level of 5150, it had fallen nearly 8%. More headwindsare
expected if a retest of 4950-60 fails on bounce back. 4725-4700 is strong
support for near term. On any bounce back or relief rally, 5040, 5170 &
5350 are the key resistance to attract fresh short. We does not see down side
below 4540 under current scenario, but if something worst happens in Europe
situation, and then it will be surely a 10% down circuit on NIFTY.
It is very
clear as of now that world has lost its retail charm in this month. Unless and
until Europe not come out of its self-destruction mode from financial system,
it is not going to rally in near term, and India needs to stands clear about
its prospectus policies, GDP and Inflation plus the major headwind for RBI
policy is now going to be ‘weak Indian Currency’, for this RBI need to use
foreign reserve to prevent further fall of INR as it has touched and trading
above all time low of 56.15 per dollar. Previous quarter result was not
adequate to lift market beyond any significant resistance. I see the volatility
in coming month will be higher so investor or traders needs to adopt cautious
step unless Europe not come out with strong solution and till next RBI policy
that will clear at least its view and preliminary steps for economy. As
recently, the fuel price was hiked unanticipated, this will impact of inflation
and RBI will find sceptical itself to make some decision on key rate changing. However, market always remains full of short
term opportunities and even during downside there are lots of opportunities
where one can accumulate profit by shorting stocks future, but without adequate
advice and perfection it’s not advisable to take any risk beyond Money
Management Rules.At another front of rating side, India’s GDP target has been recently
downgraded to 6.3% for FY13, Fitch has also downgraded
Germany. This will impact on medium term sentiment of investors. Overall, it’s
globally bear market year so ‘perfection with expertise is advisable’.
Best regard
Cj Bhargav
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