Saturday, April 11, 2009

Markets This Week... Changing Trend?

Dear Readers,
Markets world over gained good this week and the present up move has remained in effect so far. I post my views here about S&P 500 Index of US and Nifty Index of India futures. I will share my views about these two indexes based on weekly, daily and hourly charts for short to medium term trends.

S&P 500 Future:
The rally that started in march is continuing so far and S&P 500 future has managed to get past an important resistance at 838. It closed just near the next resistance level (855) I told in my last post here and now following are the points that I feel are important for traders:
  • If next week it manages to keep above this level around 855, we can see an important development on Weekly Chart and the possibility of it touching the very important level of 929 as well. If it does go there, it will be an interesting event.
  • Looking at the development on charts I feel it can retrace somewhat and behave volatile and then resume the up trend. However, a straight up move if is there, then it is more an overbought situation and bulls need to be cautious.
  • Resistance - 855, 876, 917, 929
  • Support - 823, 804, 774
My advice is - ride the trend but don't forget that this is a vertical rally. Anyone who says "worst is over" may be living in day dreams. So, be cautious if you are riding this short term up trend.

Nifty Future:
Indian Stocks are rallying harder than the US ones and as I posted earlier, the fact that Nifty Future has managed to cross and remain above 3264 may very well be beginning of end of Main Downtrend Line. It closed below 3366 though, the resistance I posted in last post. There are few important developments we witnessed this week:
  • First time since it went below 34 EMA on Weekly Chart, it has closed for the week WELL ABOVE that and also, 5 EMA has crossed over 13 EMA for the first time! Is the trend changing? May be yes. May be no. However, the signs that are emerging do not favour bears and already it has closed three days in a row above the Main Downtrend Line that had mainained all throught this Bear Market so far.
  • If we raise the above mentioned trend line to Sept high and extend, then there is a case for bears as it touched that line and close below it.
  • On Daily Chart it is first time since the down move started that we see it closing above 200 SMA! Also, its the first time that 34 EMA has crossed above 55 EMA on Daily Chart! These things do point out to strong uptrend and a change in medium term trend as well.
  • Resistance - 3366, 3400
  • Support - 3264, 3230, 3175, 3129, 3095
Looking at the things right now, there is no doubt that bulls have ruled for past one month or so but the fact remains that this is a vertical rally and so caution is advised.

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