Only for Technical Analyst.........

Friends,
I have been through for an article which I read today on ET which is full of technical view.
I hope some technical following of readers will answer me what they think of this view and if they do not agree it means there are many theories in Technicals and one is not sure which to follow as the writer has pointed some very good reasons with statistic....I perticularly will be happy to have a view from our learned friend Mr Ahmedsir.....who has advised me why I do not follow technicals and advice.....

Read on:

Sensex rally more than just short covering
3 Jul, 2008, 0247 hrs IST,Shakti Shankar Patra, ET Bureau

There’s an unwritten thumb rule in the market. When the local tabloid dumps hot Bollywood gossip to write about Sensex movements, you know it is time to watch out. We saw it happen in January this year and with bearishness reaching hysterical levels, this had to happen now. And it did, with a ferocity that left even the staunchest of bulls flabbergasted. After Wednesday’s amazing turnaround in which the Nifty gained over 5%, there’s now just one question at the top of every ones mind, ‘Have Indian equities bottomed out?’ While there cannot be a concrete answer to this as yet, there seems to be enough reasons to believe that Wednesday’s move was more than just short covering. It’s not uncommon for secular bull markets to retrace 50% before they continue in their primary trend, which is up. A classic example of this is the current “once in a life time” bull run in gold. After hitting a low of $253.85 on February 16, 2001, gold prices hit an intermediate top of 389.05 on February 5, 2003. Then started a savage correction in which gold shed 50% of this $135.2 gain to hit nearly $320 in April 2003. However, this turned out to be just a bull market correction as gold prices went on to hit levels above $1,000 earlier this year. Similarly, although the equity bull run started in India from a Nifty low of 920 on April 28, 2003, it started in right earnest only after the market crash of May 2004, which followed the ouster of the NDA government. So from a low of 1292.20 hit on May 17, 2004, the Nifty rallied all the way to hit a high of 6357.10 on January 8, 2008. A 50% retracement of this entire 5064.9 points gives you a Nifty figure of 3824.65. And the panic bottom that hit on Wednesday was 3848.25 while Nifty futures hit an unbelievably close low of 3818.10. Even for followers of Japanese candlesticks, Wednesday’s remarkable recovery meant that the Nifty almost created a bullish engulfing pattern. In technical parlance, this happens when the body of a large white candle completely engulfs the previous day’s black candle. As the name suggest, this means that bulls have totally “engulfed” or overtaken control from bears and if it happens after a prolonged bearish phase, is seen as a sign of a trend reversal. Now whether these technicals work and the end to this carnage is just too difficult a call to take, one thing is clear after Wednesday, bulls may be down but they are not completely out. Therefore, unless the lows of Wednesday are violated, there’s still hope for the resumption of the bull market in which this painful phase will be written off as just another correction like what happened in gold.


Some more how the market is broken with planning.... and has nothing to do with bad or negative news on Horizen.....otherwise market should break on its own....no planning is needed......

I am pasting it what I read in "Heard On the Street " in ET column:

A ) Tata Steel comes under bear assault ..
The bear cartel now appears to have trained its guns on Tata Steel. The stock has been the receiving end of what looks like a concerted hammering in the last three sessions. On Friday, over 2.5 million shares changed hands on the BSE, but delivery-based trades were just 16% of the total. Short sellers are betting that steel producers will shortly announce a cut in prices. Investors bullish on Tata Steel are of the view that such a steep in product prices look unlikely, given that demand is fairly strong. However, they do not have the money to back their conviction. Due to the sustained fall in stock prices since the last one month, bulls are struggling to find the money to keep up with their margin commitments. Meanwhile, bears are targeting key stocks in the Nifty with a vengeance. They have been steadily building up short positions in ONGC July futures, forcing a Rs 27 discount to the spot. Wipro has been another of their favourites, where the July futures are quoting at a discount of Rs 4 to the spot.

My comments:
I was in know of this modus operandi and but didn"t discuss it here as I have no proof to back my view but as I read it in ET I am writing it here.
The bear attack are all mastermind with the help of FII's....they move hand in hand.....The above example show how Nifty can be broken while hammaring some selected Nifty stock........

Now the second one:

B) Reverse swing
Proprietary trading desks of many foreign institutional investors doing derivatives arbitrage, have been forced to offload their cash market positions in the past few weeks, with many stock futures now quoting at a discount to the spot. These players used to short sell stock futures that were quoting at a discount to the cash market, buy an equivalent quantity of shares, and lock in the difference, which amounted to around 12% annually. Every month, the funds would then roll over their positions, as the difference between the futures and shares remained more or less constant. But with prices of futures slipping below the spot price, it has become unviable for them to carry forward their positions. As a result, the funds are dumping the shares they had purchased as part of their arbitrage transaction.

My comments:
One should see how the FII's plays ......
I have just written a post that Bears have shorted $7 bn in market which is bigger then what FII's sold in last 6 months....the day the tide will turn......see what happens....!!