Friday, January 14, 2011

correction is WEAK:

Sensex :
From morning trades sensex started to drift slowly lower and its inability to cross even Wednesdays high and not even trying to touch the immediate 38.2% retracement level which was 19621 as it made a high of 19522 was clear weakness in it.
We said on Tuesday itself that markets will have a few days corrective/sideways move and in my yesterdays conference call I said that Wednesdays strong looking up move can prove to be a one day wonder.
But in any case confirmation is needed in price action and it will be a decisive  close below 18954 especially today .
When a strong trend emerges momentum indicators can remain in overbought or oversold zone for much longer period of time so if the stochastics can not go up from oversold zone as the downtrend gathers momentum we will not be surprised.
 Nifty :
Nifty closed at 5751 which is unfortunately lowest close sinse last four months so on a closing basis this is bearish.
Nifty could not even reach 38.2% retracement level of the last fall in an attempt from bulls to give a corrective rise from supports.
In last two months nifty touched 5790 and 5723 zone on four occasions on intraday basis but bounced back strongly to close much higher but yesterday it closed below its close on any day since September 2010.
If the support at 5685-5723 still holds we may have another effort to give a pull back rally but a close below 5685 will trigger stoplosses of larger players and which will be extremely bearish for nifty and its immediate support will be 200 day simple moving average which is 5606.

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