Weekly technical Analysis for week ended 27th November 2010.
Market has opened on Monday on a positive note moved near the high of last Friday and there after the next four days it has fallen vertically indicating that bears have taken control over the market for the first time. Market has closed in red for three consecutive weeks. This is the second time in this up move from March 2009 that it has closed in negative territory for three consiquetive weeks. Maximum periods of consiquetive weekly closes is four weeks in the entire run. We have to see whether this would be arrested after three weeks or would continue for another week. One of the noticing features of the movement of the nifty during this week is that it has also closed below 100 day EMA. The last week it has closed below 50 day EMA and this week it has closed below 100 day EMA which clearly indicates that bears are slowly coming into the market and has chances of taking the market further down. The closing of nifty below 5900 for two consecutive weeks is not good for bulls and nifty and bears would have been laughing at the same time as they has got an opportunity after a long time. One of the important points for bulls is the market should recover from current levels and move very swiftly towards the high of 6300 other wise its all over for bulls and we can expect a prolonged down move in the market which can last for atleast 6 months so nearly the first half of the next year should be good news for bears and bad news for bulls. So if the market does not move above 6300 in the up move which is expected to materialize in the coming weeks the we can be sure that we are in for a bad market for the bulls. One point to be noted that there have been very very heavy volumes on Friday fall which is just giving an indication that atleast we have made a temporary (short term) support for the market
One of the worrying feature of the market is that the charts of the individual stocks have damaged more that that of the index which is clearly indicating that the broader market is bearing the brunt of the bear onslaught and it is yet to be indicated by the indices. When the stocks appear to be more weak than the indices then we have all fair chances of market moving in the direction pointed by stocks. One worrying feature also is that we are seeing continues increase of stocks making a new 52 weeks lows indicating that the bears are becoming active.
I have been indicating for the last so many months that we would be completing 21 months in the month of November and we can expect to see market moving down there after i.e. in December or January and it appears that we might have started the down move from 21st month only. If we see the exact date of low for nifty in March 2009 it is 6th march 2009 so we must be completing 21 months on 6th December 2010 and we are just near that. If the market does not recover from here the we are in for a rude shock for bulls. In January 2008 also market has started to correct from 21st months onwards will this happen this time also.
Historically seeing market have never topped in November. Historically November has been bad month for bulls and in December markets recover and try to make a new high or go near it and then they collapse like nine pins from January onwards. Historically January of the years have been marked with start of the bear market and when ever it has happened then the bear markets lasted for long atleast for 6 months. So whether the markets move up now in December and there after start down move from January onwards or continue to move down we have to wait and see. Markets generally surprise every body so this time also they might have surprised every body by starting to move down from November.
If you apply Fibonacci time periods to bulls and bear market. The bear market lasted for around 13 months and current bull market lasted for around 21 months which happens to be exactly 161.8% if the time taken to fall so have we formed double top now? Only time would tell. If you are following the analysts in the market or following on television (which I donot like) non of the analyst has indicted the phenomenon of double top (refer chart below) every body was busy in projection of the market further upward and have collectively ignored the concept of double top and till now they have not calling it a top. This is one of the strong indications that the market might have topped out as when every body ignores major technical formation that is generally the top. If you see the other technical parameters line RSI and MACD etc., there was a major –ve divergence in daily charts ( refer chart 2 below) which has also been ignored by the market analysts. Generally analysts are carried away by one side of the market that they ignore any warning signs and this time also it seems they have ignored that signal. Even in the January top they have ignored the warning and also the negative divergences and we know that what has happened.
Market has opened on Monday on a positive note moved near the high of last Friday and there after the next four days it has fallen vertically indicating that bears have taken control over the market for the first time. Market has closed in red for three consecutive weeks. This is the second time in this up move from March 2009 that it has closed in negative territory for three consiquetive weeks. Maximum periods of consiquetive weekly closes is four weeks in the entire run. We have to see whether this would be arrested after three weeks or would continue for another week. One of the noticing features of the movement of the nifty during this week is that it has also closed below 100 day EMA. The last week it has closed below 50 day EMA and this week it has closed below 100 day EMA which clearly indicates that bears are slowly coming into the market and has chances of taking the market further down. The closing of nifty below 5900 for two consecutive weeks is not good for bulls and nifty and bears would have been laughing at the same time as they has got an opportunity after a long time. One of the important points for bulls is the market should recover from current levels and move very swiftly towards the high of 6300 other wise its all over for bulls and we can expect a prolonged down move in the market which can last for atleast 6 months so nearly the first half of the next year should be good news for bears and bad news for bulls. So if the market does not move above 6300 in the up move which is expected to materialize in the coming weeks the we can be sure that we are in for a bad market for the bulls. One point to be noted that there have been very very heavy volumes on Friday fall which is just giving an indication that atleast we have made a temporary (short term) support for the market
One of the worrying feature of the market is that the charts of the individual stocks have damaged more that that of the index which is clearly indicating that the broader market is bearing the brunt of the bear onslaught and it is yet to be indicated by the indices. When the stocks appear to be more weak than the indices then we have all fair chances of market moving in the direction pointed by stocks. One worrying feature also is that we are seeing continues increase of stocks making a new 52 weeks lows indicating that the bears are becoming active.
I have been indicating for the last so many months that we would be completing 21 months in the month of November and we can expect to see market moving down there after i.e. in December or January and it appears that we might have started the down move from 21st month only. If we see the exact date of low for nifty in March 2009 it is 6th march 2009 so we must be completing 21 months on 6th December 2010 and we are just near that. If the market does not recover from here the we are in for a rude shock for bulls. In January 2008 also market has started to correct from 21st months onwards will this happen this time also.
Historically seeing market have never topped in November. Historically November has been bad month for bulls and in December markets recover and try to make a new high or go near it and then they collapse like nine pins from January onwards. Historically January of the years have been marked with start of the bear market and when ever it has happened then the bear markets lasted for long atleast for 6 months. So whether the markets move up now in December and there after start down move from January onwards or continue to move down we have to wait and see. Markets generally surprise every body so this time also they might have surprised every body by starting to move down from November.
If you apply Fibonacci time periods to bulls and bear market. The bear market lasted for around 13 months and current bull market lasted for around 21 months which happens to be exactly 161.8% if the time taken to fall so have we formed double top now? Only time would tell. If you are following the analysts in the market or following on television (which I donot like) non of the analyst has indicted the phenomenon of double top (refer chart below) every body was busy in projection of the market further upward and have collectively ignored the concept of double top and till now they have not calling it a top. This is one of the strong indications that the market might have topped out as when every body ignores major technical formation that is generally the top. If you see the other technical parameters line RSI and MACD etc., there was a major –ve divergence in daily charts ( refer chart 2 below) which has also been ignored by the market analysts. Generally analysts are carried away by one side of the market that they ignore any warning signs and this time also it seems they have ignored that signal. Even in the January top they have ignored the warning and also the negative divergences and we know that what has happened.
Positives for Nifty:
§ Market is above 200 day EMA.
Negatives for nifty:
§ Market is below 15 day and 50 day EMA.
§ Market is below 100 day EMA
§ Daily and weekly MACD is in sell mode.
§ Weekly RSI has started to move down from over sold levels and now at 52 any move below 50 would not be good for the market.
§ Daily stochastic is in oversold positing indicating that prices are closing at the lower end of the trading range. Any up move of the Stochastic oscillators has chances of taking the market up.
§ Weekly stochastic is in sell mode.
§ -D1 is moving up and +D1 is moving down and at very low levels. and DMI has again moved above 20 indicating the down move might have set in.
Elliott wave analysis: There is not much change in the elliotte wave analysis the targets of 6425, 6811 and 7094 still hold good and we have to see whether the same would be achieved or not. I have some hope on achieving 6427 but doubt on remaining two. If we make a new high we have chances of seeing 6811 or near it with +/-100 points.
M.Sri Mahidar
Sunday 29th November 2010, Time 19.25 IST
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