A PULLBACK RALLY POSSIBLE

SENSEX

For this week SENSEX has strong supports at 19454 and at around 18900 just below 19000 there are two supports one is a Trend line which is the upper end of the year long channel SENSEX did break out of this channel in early September and there is a GAP on weekly chart around the same level we strongly feel that this support should work this week although it will be very interesting to see how strong the supposed bounce back will be and any weaker rise in coming one/two weeks should only be used to exit longs as and when such rallies starts weakening again.

SENSEX has one more support at 19431 which is its 89 day EMA watch closely if SENSEX is able to hold this EMA on closing basis.

On the other hand on SENSEX weekly chart its MACD is on the verge of a sell crossover so the support SENSEX takes this week should be such strong that MACD can not generate sell signal because MACD gives crossover a little late but generally they are very valid signals so watch these few supports and MACD in this coming week.

NIFTY

Supports at two Trend lines other support levels are 5838/5829 should work this week and expect at least a halt to the massive fall

As shown on daily NIFTY chart we have its 89 Day EMA and 50% retracement level which is also 5841 so this week we expect some bounce back although again repeat our more than one old view that November 2010 can see a major top and 21108 could be it so we will be very careful in following the up move that we may have this week and we will watch the strength and weakness of the supposed rally from supports shown here

 Also we would like to mention here that we are tracking SENSEX and NIFTY much more closely but when there are some major turning points in main indices at times the sector indices also play very very important role in giving clues well in advance in our technical view in past few weeks we did mention weakness in other sectors like BSE-METAL and BSE-REALITY here are updated charts of these indices

We have presented two sector charts in this week Technical view one is BSE-PSU and the other is BSE POWER.

PSU index almost touched its high of January 2010 but POWER index just could not even cross the all important 61.8% Fibonacci Resistance level of the entire 2008-2009 crash as we all know Government Of India relied heavily on the PSU disinvestment policy to meet the BUDGETARY DEFICITS and emphasizing the importance of very crucial infrastructure facility called power it had drawn bigger projections to curtail the power shortage in the country and to meet the growing demand of power from the robust industry but looking at the weakness in these two specific indices we feel some drastic damage is coming in the future regarding government policies for these two sectors as we firmly believe that Charts do foretell the future well in advance. Off course we will be first here to point out any strength in these index but at present the future looks blink and any corrective rise in these sector stocks should be used to exit longs.