Sensex Technical View :
Technically there is no trend in short term with none of the moves being confirmed the next day or a breakout. Overall the downward trend remains and would continue to do so till we dont start making higher tops and higher bottoms. I have been bored writing the same thing for last few sessions --- Wait for a clear move above 9300-9500 or below 8300-8500.
As i have discussed that after 7700 low a counter phase could last 20-40 or more sessions or roughly 4-8 weeks.
We are already through 25 odd sessions. So clearly put in the next 2 - 3 weeks Sensex needs to give out a clear move out of the small range of 8300-9300. Also technically there is a possibility of an extended bear rally if we start staying above 9300 zones. Still there is no clarity but there should be a close watch from here on as if we dont breakout above 9300 then the risk below 8300 opens up too!.
Sensex is a composition of a group of stocks. The heavies like RIL , SBI , LT , ONGC ,ICICI Bank , Infosys are some main constituents. Many of the stocks are very very close to Oct lows.
Still there is no signs of a bounce back or fall in any of the above stocks !! quite a lot of them are weakening technically and if they start sustaining below the lows they can crumble too is a concern. A very strong bounce is needed to improve the structure ! ..
Some of the stocks and crucial levels which would decide the next course are mentioned roughly in the next para. Make a note of the same for trading decisions.
SBI is testing 1000 levels a lot. It needs to move out above 1150-1200 zone as quickly as possible coz a break below 980 leads to supports way deep at 850-700.
RIL testing 1020-1050 zone. Needs to move above 1180-1200 quickly and make a move to 1400. on the downside 930 recent low is imp and next 800-850.
LT is stayin very near to oct low of 680. Next support is 600-620 on channel below that 500-450. Needs a sharp move above 780 to 900.
ICICI very close to 280-300 lower support zone. Needs a strong move above 350-360 towards 450.
Infosys 1100 is a crucial level for now. 1250 on upside needs to be broken to move to 1450 zones. Below 1100 the next zone is 950.
ONGC 615 is a level to watch on support and 700-720 on upside to be broken and go to 800. Below 615 next level is oct low of 540.
In simple terms all the heavies or at least some of the heavies need to lead a bounce back and break recent resistances as soon as possible over next 2-3 weeks otherwise the technical structure would keep weakening and a breakdown could lead to a quicker fall.
Also there are still no clear signals on a breakout on either side so its a CLoSE WATCH in next few weeks. But once the levels break on either side the move can be strong and one should follow the trend with a trailing stop and not try to go towards a contra-strategy as move could be very sharp !!
Difficult to guess a reason for any side move and maybe we could again remain in a range for long time but out here we are just looking into the possible technicalities for the markets. Hope things would clear of sooner.
Stocks to watchout for :
Have listed quite a lot of stocks above and some charts in yesterdays posts. Would decline from giving any stock specific view as none of them might click well as moves are intra-day or some sessions. Also the major way of my stock and trade picking is on a clean trend and in ranged markets i do tend to go wrong tooo so have been stating to trade with lower volumes only if one really needs to trade.
The last few sessions have been very boring and frustrating as there is no clear move with stops being hit on either sides or very small targets made. Sometimes its better to do nothing in such a situation as the hit ratio of trades may not be good and returns may be negligible also unless you are very quick which many of us are not.
Market Observations and Thoughts :
In the past few months many a time i had discussed on a bottoming out scenario to come around the 8 -9 mth frm Jan ( fibo calculation ) and a cash generation exit around 16k . Although the expectation of Sept/Oct being went right , the index level went terribly wrong and was expecting a bounce from 11k. Fortunately we could get out of it through some other stock bouncebacks frm 8k -10.5k and getting exit in some strong stocks picked but yes some picks have been disasters too.
So what next ... In previous posts i have repeated next 3-4 months would be a real test for investors/traders. As per fibo 13 month comes around Feb. Even if a long term bottom is in place time wise pressure remains till Feb. Also if its not the bottom then a testing or break could happen in Dec-Feb period. The market scenario is uncertain and one of a kind as per statistics.
Ideally the best time to invest would be in Feb-March and stability or turnaround could start March-May . This has been the preferred guess from my side since a long time although levels went wrong in Oct maybe again we may or may not be exactly correct in next few months. But yes i do feel there would be ample opportunities in these 3-4 months as a sharp bear rally could also be there and gr8 investment/trading gains on cracks too.
So if one is a a very defensive investor and low risk apetite then can go SIP mode very very slowly in this period or rather have a fresh look around Feb-March whether index is at 7-8k or 12k comfort could be back around Feb-March and more confidence by May.
This is just a personal guess or view which may not coincide with technical data as difficult to time technically. So investors do their own research .
But yes i do believe even if one has seen lot of notional losses and pure losses one can recoup a lot and make up for earlier mistakes .
One needs to be disciplined ( conserve capital , be prudent , no leverage , high cash, be alert and react to opportunities ) in this uncertain period of say roughly 3-5 months. No euphoria or capitulation is permanent !!!!!!
Happy Investing ,