Markets for 10 aug 09

The new week opens at the back drop of massive falls on thursday & friday that had generated the fears in the minds of traders that if the last swing low of 4420 is breached then nifty can fall like a stone to its previous swing low of 4380 which is the make or break pont for the bulls. Over emphasis on poor rain falls last week and 4 suspected death cases from swine flu out of a population of 120 crores, makes traders to seriously think whether to laugh or go along with the news channels to continue shorting the markets on every rise.

Well, the 2 days of well coordinated falls in the markets have definitely dented the very short term out look that can only be repaired if nifty rises to close above 4600 levels. Although a good rise in us markets on friday night to be followed up by asian markets may mitigate the bearish out look on indian markets for some time, yet unless nifty rises to close above 4600 levels, chances of a sustained recovery looks bleak & every rise may meet with ruthless shorting till such time nifty is made to fall below the critical level of 4380 to induce a bearish feeling to liquidate balance of the weaker hands.

For intraday trading on monday, even a rise in nifty to sustain above 4525 can bring some hopes for the trapped bulls because sustaining above 4525 can take nifty towards 4557. A follow up buying above 4557 can take nifty towards 4580 levels to again encounter shorting pressure, as a 100 point rise under such bearish condition looks to be a bit too much under the present circumstances although short covering by the bears can take nifty towards the 4600 levels but sustaining above it seems to be highly ambitious for the bulls who would prefer to liquidate their longs to wait for the alarming news on rains as well as swine flu to die down as had happened in june.

ON THE DOWN SIDE PATH OF LEAST RESISTANCE, NIFTY MAY FIND INITIAL SUPPORT AROUND FRIDAYS LOWS OF 4464 TO GENERATE A FALSE HOPE AS IF A TEMPORARY BOTTOM IS ESTABLISHED ONLY TO SLIDE LATER TOWARDS 4444 TO 4433 A BREACH OF WHICH CAN QUICKLY TAKE NIFTY TOWARDS THE INTRADAY DECIDING POINT OF 4420 WHERE THE BEARS WOULD LIKE TO POCKET WHATEVER PROFIT THEY MAY GET AS THIS IS A POINT WHERE BULLS MAY AGAIN SPRING INTO ACTION AS HAD HAPPENED ON 29TH JULY WHEN ALL BEARS WERE CAUGHT NAPPING.

AS PER HOURLY CHART ABOVE, MARKETS LOOK OVERSOLD AND IMPORTANT HOURLY INDICATOR IS GENERATING A FEEBLE +VE DIVERGENCE WHEN THE PRICE WAS MAKING NEW LOWS BUT THE STOCHASTIC INDICATOR WAS NOT MAKING A NEW LOW AND IS ABOUT TO COME OUT OF THE LOWER ZONE THAT SHOULD GENERATE SOME INITIAL UPWARD MOVEMENT. HOWEVER FAILURE TO MOVE HIGHER THAN 4525 AND SUSTAIN ABOVE IT CAN AGAIN WEAKEN NIFTY AS WELL AS THE STOCHASTIC INDICATOR.