Sunday, February 6, 2011

Has Indian Market made a Double Top?.......Patterns....

Dear Friends,
The upmost question that is coming to everybody's mind is has Indian market made a double top?Will it mimick the same pattern it showed in 1992 and 2000?
Let us analyse the situation.In 1992, Harshad Mehta Bull run the market made a top of around 4660 and then went down.Again it made a top of 4660-4700 and went down in 1994 and again made a top of 4700 in 1996 and went down.So of 1992 TOP of 4660 , market made 2 Double Top.Means market tried to attempt to break the TOP of previous high twice.
In 2000 , Ketan Parekh Bull run market made a high of 6156 something and then went in tail spin to touch 2360-2400 in Sep'01 when USA world trade centre was attacked by extremist.
But here the market PATTERN  differs then what happened in 1992 .In 1992 market made a  double TOP twice while in post 2000 top market didn't made any attempt to make a double top TWICE  and come down to the level of 2300.
Analyst are gungho about the market making a double top and then drifting down.The pattern of double top is there but there is no rule to made a low of retracement theory of 68% or whatever it is.One more thing and that is if the pattern is going to repeat then market should be making 2 DOUBLE TOP like in 1992, 1994 and again in 1996.
So here the scenario that comes out is like, market will try to attempt to cross 21k twice and will come down to 8k level twice before crossing the previous high of 21k to forge ahead......
so in simple words, we have made one double top...21k and now it should go to 3200 level and then again 21k and then again come down to 8k and then  only the previous high will be taken off........
That is what should happen if the technicals are right.It should mimick each move step by step of 1992 bull run......
and my simple understanding says that if such pattern is not repitative and market fails to exhibit such pattern then I am not with Technicals.........
I know market didn't mimicked 2000 top......of 6156 like 1992 .Only once market touched 2300 and not the second time it did again....after touching 6156 again....

Even if we look at the 21k top of 2008 and market going down to 8k, what is the retracement percentage?The market making a bottom from 21k to 8k is a retracement of 62%.
So the percentage keeps varing and technicals analyst keeps on boasting about these theories which they themself do not exactly know  what will be the retracement percentage.That is the biggest flaw in charts theory.At what level one should start buying?
So what pattern we need to follow?
1.When market made 2 double top and went to a low as much as 1800 from 4700 ..
2.Market never made 2 double top of 2000 top of 6156...
3.Market after breaking 6156 in 2005 (not sure about the year exactly) and then crossed that top of 2000 when market tried to attempt to make another double TOP and then retrace of 2000 TOP what was the retracement level?
There is also one more theory of filling the gaps.....the market needs to fill the gap and has to come to that much of retracement percentage and the sensex at what should come back , the targets are real scary.....3600-3200. I donno, whether there should be any pattern like that or not , because if it is there then each and every UPMOVE should follow with retracement value.For every RISE of 500-700 or 1000 points the retracement points should come.......
If these are the targets that are going to get achieved then I think we will get all those stocks at 2500 nifty level or 8k sensex level of 2008 Oct or 2009 Mar or even lesse then that .I have no doubt about it that if 3200 is coming then we don't need to BUY anything now.
But my question still remains that why market didn't made a TWO double TOP of 6156 of KP's bull run and why it made TWO  double TOP of HM bull run?It is all assuming......if it goes wrong they will say it will happen lateron and market goes up by another 5000 points.But it makes no sense if market goes up big way and then one proves right.
Even if for a brief period of time market from its journey from 2300 to 21k made a double TOP of 6156, when it tried to cross,did in second attempt went back as much as it went back in HM bull run?
I think market never went to the level percentage wise that can mimick the same pattern of HM TOP.
Inflation is going up.Over 17% inflation is very very HIGH and Government needs to tame the inflation.
I just read that world  analyst are expecting Commodities prices to go up and up due to higher demand from emerging market and that it will keep on going up untill new production capacity do not occur and that is a scary sign for the world.
This will affect the bottomline of Co in India and all over the world.It has started actually affecting to some Indian Auto Cos.
Well, It is hard to predict what will the BOTTOM of the market.
Our market has become slaves of FII money and if FII has become negative then the flow will be trimmed down and that will not help market any good.
I wrote recently that it will take time for normalcy to come back.The inflation is soaring on the back of high commodities prices and that is not a good news for market as for any market to go up the earning should go up.
Well, but there is always some sectors which stands out from the massacre and I am seeing that if USA  economy is come back to normal then there will be more jobs for IT service Cos and hence IT sector is where one should look on.
Another sector which will have direct relation with commodities will be Commodities sector itself as any price rise in Pulses, grains or Copper, Iron ore,Alu,will increase the profitibility of these Cos.
And now the evergreen sector.....Pharma.....It is an evergreen sector untill one invest in it judicioulsy and upcoming Co.
The rise in Inflation will let people think not to use certain things but Medicine is one such thing that no one can ignore it.One need to be physically fit to remian alive and that is why it is an evergreen sector but the condition is you are there in right stock at right time.
So don't buy anything in market in one go.Market is not in a runaway mode.Prices will go up and will also come down.Best way would be to buy in SIP manner which I always recomend to do.And perticularly when market is trying to find the bottom one need not go for allout buying.

No comments:

Post a Comment