Thursday, July 17, 2008
The Rally in Global Markets
What a move in US and European markets yesterday!!! The Dow and S&P 500 both 2.5% up and Nasdaq even 3% !!! I have been hearing an all around cheer and chatter of happiness since morning and the Nifty and Asian markets are following suit. So, is the end of gloom there? and is this the beginning of a new up move in global markets? Well, I have my reservations for that.
As I told in my previous posts, the US markets looked oversold and a relief rally was due. My arguments are following:
1. The Moving Average Sequence on hourly charts have turned positive but that on Daily Charts is still negative. In fact the S&P 500, has been unable to cross the 13 Day EMA.
2. The volume is not supporting the up move. If it has to qualify for a Breakout, then the volume has to be higher than average which is not the case.
3. Looking closely, this looks like a "Typical Bear Market Rally" - fierce and vertical.
Let us see if this move continues or fizzles out. My bet is on the latter option. For S&P 500, the hammer low of about 1200 is still intact and it may get tested in the course of coming sessions.
For your reference, I am uploading the EOD chart of S&P 500 which should tell the story in short. Please note that this is a Yahoo Finance chart, copyrighted by Yahoo Inc. USA. The link for this chart is S&P 500 EOD chart from Yahoo Finance
Look at the EMAs, Volume and MACD. MACD histogram showing a bottoming out situation? Lets see in coming days.