Sunday, November 21, 2010

Sensex: Break of crucial levels and rise in intraday volatility!

Previously we stated that "price confirmation of the downmove will be obtained below 19900". This level showed its importance when falling prices stopped there for a day and then whipsawed and closed back above this level the next day but to only give up on 19th closing the week at 19585!
Prices have broken down below the crucial level and the nature of bounce also suggested corrective uptrend with impulsive downtrend thereby confirming that we are in for a correction of some higher degree
We do not rule out the possibility of corrective bounce back up till the psychological 20,000 mark before the downtrend resumes but the weakness shown by market makes this scenario a little delayed after further down move
Rally in global markets also failed to produce any sustainable bounce back in Sensex
Advance Decline ratio has been in extreme favor of more declining stocks in entire last week. Smallcap index showed very steep selloff which was not seen since many months now. Intraday movements has been quite violent and volatile - not a good sign for uptrend to be intact
A break of upward sloping trendline since March 2009 will happen if prices closes at 19300 which can result into steep selloff and bears can then take on full control of market movements
Please be ready for some crackling moves next week given the increase in volaitlity accompanied by November expiry next week.
When dealing with markets and forecasting the future course of actions we are always evaluating probabilities. Please beware no one can predict market with 100% probability and there is no such sure things as someone might claim.

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