WEEKLY TECHNICAL VIEW SENSEX - NIFTY

TECHNICAL ANALYSIS OF SENSEX AND NIFTY FOR THE WEEK STARTING 16^TH MAY 2011:

We are witnessing a very HIGH VOLATILITY drama in our markets recently as there is an INTENSE fight going on in between big time BULLS and BEARS.

Levels around 18200 for SENSEX and 5470 for NIFTY is attracting buying may bi from LONG TERM PLAYERS but at the same time STRONG RESISTANCE is seen around 18700 and 5600 for SENSEX and NIFTY respectively.

TECHNICALLY the picture is quite CONFUSING and would not be so confusing had SENSEX and NIFTY broken down their lows of 5^th may at the end of last week BUT since last week was of a very small range and weekly close represents a STAR CANDLE PATTERN it suggests that the MARKET is in decisive.

Confusion from CHARTS has arrived from two DISTINCT possibilities for the short and medium term future.

ONE , is of a STRONG LOWER TOP on the weekly chart assuming that the upside rally from end march till april WAS a CORRECTION of the first leg of bigger correction started after SENSEX and NIFTY had their TOP in November 2010 IF THIS IS TRUE SENSEX AND NIFTY WILL HAVE TO CLOSE BELOW 78.2% RETRACEMENT AND BELOW THE SUPPORT TREND LINE WITHIN SHORT TIME.

SECOND, probability suggests that the UPSIDE rally started from end march could be the FIRST lg of a fresh up move and the downward correction from april till date is A CORRECTION of that only.

IF THIS IS TRUE FIRST REQUIREMENT WILL BE A SENSEX CLOSE ABOVE 18724 AND 18976 AND A NIFTY CLOSE ABOVE 5605 AND 5693.

SO to have clarity for the future move a big up or down candle is needed next week .

From technical analysis point of view both the possibilities have something in favour of each of them as in both cases TRENDLINE AND FIBBONACI resistance and support levels have worked BUT more technical evidences favours the FIRST scenario which suggests that more down side is left and EMA (EXPONENTIAL MOVING AVERAGES) have given sell crosses on both DAILY AND WEEKLY charts so for for the BULLISH possibility to happen we will have to watch 5/8/13 DAY EMA buy cross to happen in a few days if the upside break out takes place. 

BEYOND TECHNICALS :

Generally we  avoid any fundamental event or possibilities to have any impact in predicting our markets as we firmly believe that TECHNICALS remain atleast six months AHEAD of fundamentals but in this report we have tried to present a picture of INFLATION IN USA as nowadays the world has not remained a round one but has flattened and so a bigger event anywhere in the world can have DIRECT AND IMMEDIATE impact on our markets too.

“The chart at the end is the most important one you will see this year. It will affect every single investment you own—mostly for the worse.

  It shows the U.S. monetary base as tracked by the Federal Reserve. You can plainly see that between late 2008 and today the money supply hasskyrocketed.

    The Fed has printed up nearly $2.5 TRILLION in new money out of nothing. Throughout its history, the U.S. government has never abused its money printing power like it is now. Even Y2K and the terrorist attacks of 9/11 are just tiny blips on this chart.

Inflation is already soaring…

·         A World Bank report shows that global food prices have risen 36% in the last year.

·         The price of gas has hit $5.00 a gallon at some stations in Washington, D.C.

·         The U.S. dollar has already lost HALF its value against other sound currencies, such as the Swiss Franc.

·         The price of gold just hit an all-time high at over $1,500 an ounce.

“Remarkably accurate.” —FORBES magazine “Dick Young delivers a wealth of cogent and useful information in each issue, and does so with clarity and purpose.” —Jack Bogle, Former Chairman, The Vanguard Group “Forecasts worth their weight in bullion.” —Money magazine

    This inflationary tidal wave will wipe out many of your friends and neighbors. They’ll watch the purchasing power of their savings evaporate like a puddle in the summer sun. Their pensions and social security checks won’t rise anywhere near fast enough to keep up.

    And don’t count on a rising stock market to save them—or you. Today’s recent stock market rally is a direct result of the Federal Reserve’s program of “quantitative easing.” (The Fed’s term for printing money.) Federal Reserve chairman Ben Bernanke stated that the intention of the program was to drive down interest rates and boost stock prices.

    But stock market gains built on this foundation of the Fed’s easy money won’t last. When the tide from this money-tsunami moves out, many stocks and mutual funds are doomed to crash. That’s why my subscribers and I are putting our money into investments that will benefit from both phases of Ben Bernanke’s money flood.