Capitulation! A new word in the lexicon, of newbie’s. Market they say is going crazy, depressing….. Kaput. None of this is true about the market. Market is what it is; it’s just the participants who have gone crazy, depressive and kaput! The search for the bottom is frustrating. For the experienced it’s a matter of patience and for people like me (greenhorn analysts, newbie’s), the search is more akin to the new exploit of Indiana Jones. Maybe we should call it Indiana Jones and the Hunt for the Bottomless Pit. Ironically all the divergences (indicators and oscillators) seem to be failing and all the convergences (crude, inflation, global markets, politics) seem to be working! Maybe we should stop looking for divergences and wait for positive convergences to sail us through. Nifty continued from where it left on Friday. A new low, few more brave bulls sacrificed at the altar. Old bears happy with their hunt, new baby bears born out of this fall, bidding for their moment of glory. The 5 minute chart above shows a steady decline, with every pullback a new shorting opportunity. Daily chart (below) is getting to be more of a challenge. We have made a new low, broke the last barrier 4050. Below that, the red channel suggests a more ominous target of 3750/3800. The only positive signs to provide some solace; MACD histogram still showing positive divergence, the time cycle completes today, and we seemed to have formed a bigger double bottom when taking August 2007 lows into the picture.
The flip side is that barring the global cues we are afflicted with a very fragile political situation which does not augur well for the market. In these circumstances even the best of technical signals fail. Since the Bears have had the successful run in the markets I sum up my post with a word of praise for them;
Fall is graceful and mysterious.
It sneaks up on you like a crisp chill.
It steals the vegetation of life.
As it drifts into the slumber of night.
Hmmm I would have preferred this as a eulogy for bears…but it’s too early for that for the time being!!!