Saturday, January 23, 2010

Markets: What to expect now?

The last 2 days of the week were pretty bruising and we had a good amount of fall. The fall leads us to question , is the move just corrective or we are beginnig a fresh round of fall.

Points to consider:
1. FIIs have sold 3300 crores in last 3 days and DII have bought 2500 crores. Obviously attempts to hold up the markets.

2. The rally which began from 4944 to 5310 lasted from 21/12 to 06/01.9 days for up move and the down move has taken 12 days. This is a positive for the markets.

3. The trend line joining the lows from July as attached provided support on a weekly basis. This comes to 4972 for the next week. Also, we got support at 100 EMA.

4. The 5 week low EMA has been broken twice since March and once we crossed that previous 2 times we went much higher. This comes to 5051 for the next week. A close above that is positive for the markets.

5. The resistances would come now at 5051, 5110, 5179.

6. The US Markets fell on news of Obama trying to regulate the big banks. This dragged the world markets down. Lets see how this pans out because Obama is in a tight spot now with election losses. regulating big banks always appeals to public sentiment.

Strategy is simple, go long with hedges only if closes above 5051. Also, watch if 4944 breaks and closes below 4972 on weekly basis.

Next week is RBI policy on Jan 29th and NTPC opens its fresh offering on 3rd Feb. Expect supportive noises from the RBI, provided the world markets help.

I would continue to keep adding Gold to my portfolio.

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