State of the Market|Reading the Psychology of the market

I have changed the market observation format - now find more pictures and charts. Do let me know your feedback.

Market Observations

1. S&P 500 - continues to trade below 50 dma of 1113 - not a great setup for bulls. Overnight - it closed flat and consolidated on the Tuesday gains. Global Bulls continue to hope for V-shaped recovery, but technically right now any such hope would be called as wishful thinking. Traders are inclined to sell on rallies below 50 dma


Source: Stockcharts [www.stockcharts.com]

2. Primary reason for concern - USD index setup. USD index after pulling back on Monday to near 200 dma has bounced strongly and looks ready for powerful rally. If that happens, it would be difficult for riskier assets to outperform


Source: Stockcharts [www.stockcharts.com]

3. The Big debate right now: What will Nifty touch first? - 100 dma of 5020 or 200 dma of 4630
4. Month to date - Nifty is up 1% - not bad - but choppiness is making lots of people nervous.
5. FIIs net bought 396 crores worth of stocks in cash market whereas DIIs remained neutral. Have FIIs run out of selling?
6. Make of Break stock for the market: Reliance. The stock is holding on to important long term moving average. It has not cracked below 200 dma despite all selling of last 2-3 weeks.


Source: ChartAlert [www.chartalert.com]

7. The same is the case with ONGC. It is just holding on to 200 dma and not cracking - big relief for Nifty


Source: ChartAlert [www.chartalert.com]

8. If I have to explain in simple terms - what these stocks are doing - here’s a picture that explains the current situation of Nifty and Oil and Gas Sector.



9. Kirit Parikh Committee has submitted its recommendation on Fuel price deregulation. Will Government implement the proposed recommendations? I would be shocked if that happens…pure kite flying exercise completely divorced from political reality
10. What best HPCL and BPCL shareholders can hope for - USD 65 crude oil price in International market.
11. Banks have been gross underperformer in last few weeks with two exceptions - Axis Bank and Bank of Baroda.


Source: ChartAlert [www.chartalert.com]

12. Steel stocks made a grand comeback yesterday with Tata Steel up 4.7% and JSW Steel up 8%
13. Aban - One stock where street is disappointed with last quarter earnings but quite hopeful going forward. It is getting reflected on charts. The stock did not crack below 200 dma post earnings.


Source: ChartAlert [www.chartalert.com]

14. Yesterday, metal and real estate stocks bounced the most - a good sign or a bad sign - real rally or short covering.
15. I was on NDTV Profit 2:30 factor yesterday. Topic - Structure of the Market




16. Consumer Durables has made a fresh 52 week high. Is this a reflection of consumers making a strong comeback?


Source: ChartAlert [www.chartalert.com]

17. In last 2-3 days, Titan and Rajesh Exports part of consumer durables index has made fresh 52 week high. Keep an eye on Gitanjali Gems - stock belonging to this index.
18. RNRL: Technical Bounce or Fundamental News flow: The stock yesterday traded 3.5x volumes of 10 day average.


Source: ChartAlert [www.chartalert.com]

19. Fundamental Talk: Aditya Birla Nuvo is trading at 40% discount to its intrinsic value as per analysts. Reason - The company’s conglomerate structure and a misplaced conception of sluggish growth across its businesses
20. One stock that has made sharp turnaround - Mphasis. It is now trading well above 50 dma of 702
21. When any fundamental report gives Valuation call on FY12 basis – one should give it a pass. It just tells – stock is expensive on FY11 basis.
22. Call on the market.



23. Advice is the only commodity on the market where the supply always exceeds the demand. My notes is just one more addition to the supply
24. In market, any one can look stupid at any point of time.
25. The market teaches humility and hence one should never be arrogant of one’s belief.

Please share your comments on what you think of market observations, market and trading in general

Disclaimer - The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers