Technical view by Nooresh

Sensex new low in Dollar terms… or Triple bottom almost !!

Sensex Dollex :
The dollex index which is Sensex in dollar terms gives good divergences and insights many a times.
If we see here that we made a good double bottom 591.2 and 594.2 around the 12800 /12500 zone and good divergence and we saw a good move to 15500. Now although Sensex has not made a new low around 583 which is close to trendline support. This would be a level to watch in coming days as DOLLEX is an index which should matter more to Foreign money . !! Also its down 50 % from highs . Even Nse defty is exactly same in pattern.
Can we say the PAIN is more difficult for FIIs or will it get interesting for them sooner !.

Sensex Technical View :

Sensex breaks 14100 and makes a low of 13150 the very next day. It was stated in the last two views it was clearly stated that below 14100 the head and shoulders pattern suggests a minimum fall to 13100-13300 . Technical Analysis is a step ahead in finding news and todays move was a clear example of it.
Also with the target completion area of 13100-13300 we saw a decent recovery of 400 points from the lows. Also updated on the chatbox for people to do partial buying at 13100-13300 in good quality stocks.

In current market conditions traders have to be cautious with controlling the risks and minimize losses so can make goood money on right days.

Some of our views :

Although in past few sessions we had more then usual stop hits but discipline saved us and helped us to invest today in good stocks.

HAVE PUT up the last 3 newsletters sent to clients - where it was cearly stated -- SENSEX HAS 2 SUPPORTS PLACED AT 14400 AND 14200. A BREAK BELOW 14100 WILL MEAN A DEEPER CORRECTION TO 13300 - 13100 REGIONS.

SMS/yahoo Messages on friday :
12-Sep-2008 10:55:27 Sensex if sustains below 14000 intra day exit all longs.14100 is important on closing basis

12-Sep-2008 10:55:33 below which 13300/13700 is support where investors can get ready for long term buy as done at 14k-12.5k.

12-Sep-2008 15:17:20 Sensex has broken 14k. Traders can exit longs , 4500 call, IFCI , IDFC exit. Dont stay leveraged !.
There were some stock specific investments suggested at lower levels of Sensex around 13100-13300 which did bounce back sharply and will be discussed on the blog in due course .

Market Observations :
One of the major reasons to use technical analysis is to have an edge. Head and shoulders pattern and 14100 break confirmed a fall of 1000 points in short term technically. Although there were no NEWS ! on friday but suddenly Lehmann blow off etc etc comes in.... Smell the news technically and react before others !.
One of the most amusing things is US is in a big soup but no new lows made there :) !! still arnd 11k and the whole world reacts more :) ... Crude has gone to 95 which is a relief in terms of inflation and once it goes near 80 lot of emerging economies could have lesser fiscal tensions.
For last few months i have been continously mentioning that we may see weakening of economic data around Sept or lil later. As expected In this period we have seen inflation near 13 % , US data continuing with banks, employee, IIP nos for India etc. It seems it would get worse on the data side but quite a lot of it is being discounted Lehmann was on Sale a mth back up got bankrupt now officially . Weaker sentiments in coming weeks will create good stock specific opportunities !!! We did enjoy 12500 to 15500 coz of simple strategy of staggered buying which is again recommended !! Many of the stocks like BOI ,SBI etc of the earlier favorities have not corrected so will look towards other picks.
Stocks to watchout for :
IFCI one of the old time favorites looks a good bet arnd 40 levels with a long term view. Just some time back we had a call at 32 to 45 . Investors with long term view should accumulate.
Reliance Inds at 1800-1850 , RPL 140 can be bought in small quantities and keep provisions for further dips ! .
The options are many in the stock specific investment so investors can start buying 30-50 % of intended qty around 13100-13300 zones and keep provisions for further levels. This would work well for people who followed us at 12.5k -14k and exitted at 15k. Others can do the same for available cash.
For stock specific and exclusive advice -- check for details.
Best Regards,

Article by Nooresh Merani

Nooresh has written 2532 articles.

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