Thursday, October 16, 2008

S&P 500 and Nifty Future Analysis based on Daily Charts

Friends, After some time I am back with my analysis of S&P 500 Futures of US and Nifty Futures of India based on Daily Charts. For some time I was scared posting my analysis fearing direct interference by those in power but now it seems they have exhausted their arsenal for some time and we can expect charts to show some direction on its own (not influenced by interference). S&P 500 Futures
S&P 500 Future Daily Chart
Looking at the S&P 500 Futures Daily Chart I arrive at following conclusion:
  1. It looks oversold in the short term. Last week we saw it showing eight handle (8xx) which confirmed my view that US Markets are in Primary Bear Trend.
  2. RSI (14) is showing divergence and possibly S&P 500 might find some support at current level (at the time of writing this its at 920).
  3. It is too far away from even 13 Period EMA which is again a signal of oversold condition. Although on Monday, it went up to touch 13 EMA and came down from there. The 34 EMA is near 1120 and the 55 EMA at 1160 !
Although it looks oversold, I would not advice "investing" and its only for traders to ride a short term long opportunity if it gives one. We should always keep in mind that the Main Trend is strong and it can remain oversold for some time given the primary trend is down. Nifty Future Daily Chart
Nifty Future Daily Chart
Looking at the Daily Chart of Nifty Futures, it made a hammer today, which means today's low can be a good support for short term. Following is my view based on the chart:
  1. It is too far below the Main Downtrend Line - Line1 which is near 4200, means it is in oversold zone for the short term.
  2. The EMAs are also far above and it almost reached 13 Period EMA on 14th Oct and fell from there. The 34 EMA is near 3975 and 55 EMA is near 4090, which confirms short term oversold condition.
  3. The tentative Previous Support Line - Line2 should act as resistance if it goes up, the level for that is around 3800.
Once again I would reiterate my position that even if a market which is in Primarily Bear Trend is oversold, only experienced traders should venture out with opportunistic long positions. An investor should stay away from markets unless a suitable condition is confirmed.


  1. true the S&P is way oversold, and true it is not an investing sign.

    I will add that it is possible to see the market rally as much as 30 to 50% to the upside, but trade the market, dont invest in it.

    More important is trading with the trend, look for opportunities to short rallies!

  2. Thanks Moyo,

    But 30% will be too much I think.

  3. Shorting the rally is a good thing to do :P


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