WEEKLY OUTLOOK: 23MAR TO 03APR 2009

FUNDAMENTALLY

Communism went bust long time ago because it made everybody poor equally, while their big comrades were busy using gold to decorate their toilets. But Capitalism should not be equated with that in terms of the ills of an ideology. People in general have enjoyed the fruits of abundance, just because of the success of free market economy. Yet, the capitalists became so arrogant with the ideology that they failed to recognize the consequences of an ‘unregulated’ free market economy that led to insatiable greed. The leaders are still groping in the dark and going to meet in London next week in the name of G20.

This summit could add a little to the already positive sentiment in the short term. But it can not come out with any quick fix immediately except for the long term. Still, the current sentiment is as such, that the markets are picking up only the positive triggers and overlooking the negatives.

However, the forthcoming economic data has not negated its negative outlook so far. The U.S. unemployment data is slated for Friday next week. Watch out!

WORLD MARKETS TECHNICALLY

Profit booking on last Friday happened amid low volumes, if compared with other days of rising markets. It means that the bulls are still hopeful of riding the tide higher in this ‘bear market rally’. Bears might not dare to initiate large-scale fresh shorts for the time being. But a correction to the recent gains is also due any time soon.

The feeling is that this negativity had crossed the limits and the bears must have developed cold feet in holding their short positions for such an overstretched period of indecision and unclear near term. At the same time, some divergent signs have also appeared in momentum and strength between Western and Asian markets. Chart patterns and Momentum Indicators of European markets are not as encouraging as those of the Asian; though the U.S. markets indicators are slightly better than the European.

So, in the days ahead, every market could be charting its own way, independent of each other and not following the DOW as strictly as they had been over the last one year or so. Asian markets are showing signs of having placed a “medium term” trough for themselves. But not to forget that this rally is just a counter trend to the ongoing downtrend and the long term picture has not ruled out those much lower targets in months ahead. So, enjoy the rally with a view that we are not out of the woods yet!

The outlook below is for educational purpose of the short to medium term ‘traders’ and not the ‘investors’! The current rally so far, can only be called a traders’ rally because there are no significant signs of value buying by long term investors in recent time. The bigger action is taking place in derivatives segment instead –implying that its traders’ doing mainly.

U.S. DOW (7776)

It formed peak at 7931 last week. This mark becomes its immediate resistance now. But its crucial resistance is at 8088. A move past here is required to play long safely for short to medium term. Then this index would have a target of 9000 in short to medium term, though with intermittent reversals caused by some resistances on the way up.

The index is halting tad below our 7780 mark mentioned last week, but it is not a negative sign.

Its 50dma at 7600 should lend support next week. Supports below here are at 7373 and 7200. Short to medium term traders could buy on declines near these levels with 7200 support remaining as final stop loss. No fresh longs on a close below here. But the Bears would restart their innings in full swing only if it breaches 7000, which looks quite unlikely in the near term.

U.K. FTSE100 (3899)

The rally was not as sharp as in the Asian markets. It meandered almost sideways over the last week. Immediate resistance is at 3960 but the hurdle at 4001 is proving to be formidable. Then further, a close above 4069 is needed to continue this current uptrend.

On the other hand, supports are at 3789, 3720 and 3664. A close below 3720 would be a signal for bulls to desist from initiating fresh long positions; and further a breach of 3664 would be a restart of Bear innings.

This index is not showing any strength of its own according to the chart patterns, oscillators and indicators. It needs very positive triggers to move up. The world market trend or the outcome of G20 meeting next week could perhaps, lend some support to the European markets. The favoured view would be to wait for a clear trend to emerge when it breaches either 4001/4069 on upside or 3720/3664 on the downside.

JAPAN NIKKEI (8627)

Three weeks ago, the market players had lost all hopes as this index was at the edge of an abyss to plunge below 7000 mark. But it did a volte-face from that point and rallied to gain handsomely. Now it is a ‘buy on decline’ market in short term to medium term. There are no significant resistances on the upside from current levels up to 9325.

On the other hand, it has left behind some gaps with high volumes. So, it could perhaps decline anytime to fill the gap around 8200 levels. Supports would be at 8200 and 8147. Buy near these levels. But desist from initiating fresh longs below 8147. Its 50dma at 7785 would also lend strong support on declines. So, this mark would be the final stop loss for short to medium term long positions.

CHINA SHANGHAI (2374)

This index has been in strong uptrend since November last. But there was no remarkable up move last week. It is facing stiff resistance from 2400 level. The indecision of Friday could also turn out to be an evening star pattern, a bearish formation, signaling downtrend besides a double top. So, it is poised at a crucial point from where it has either to move up soon to come out of its long term downtrend or restart another short to medium term downtrend again. A weak start on Monday would be negative.

But a close above 2400 would be positive, though it needs to give a close above 2450 to confirm that the low of 1665 on Oct 28 is its point of recovery for the medium term. But it may also not be construed as a long term recovery until much higher levels are breached. Yet, a close above 2450 would be a very good sign for the bulls.

On the other hand, there are multiple supports on the downside. The supports at 2300 and 2200 levels could be used for medium term buying levels on declines. Final stop loss for medium term long positions would be 2035.

HONGKONG HANGSENG (14120)

This index has also closed just above our given mark 14100 last week. Some more room is left for the bulls here also. It is also a buy on decline market for the short term. It could be headed up towards 15800 levels in the days ahead.

Immediate supports are at 13528 and 13350. It has also left behind a gap at 13400 levels which could be filled any time. Short to medium term traders can buy near these levels. Stop loss would be at 12800.

INDIA BSE SENSEX (10048)

The story is not different here either, though the indecision on Friday was not encouraging in immediate terms. On the upside, if there is a move above 10470 then the targets of 11000 and 11500 would come into the reckoning. But be watchful near 10470 area because a reversal from the zone below 11000 has a potential to trend down up to 8000 levels again. Short term traders can get knocked off in such reversals if they are not in a position to hold their long positions for a little longer time.

Still, it is also a buy on decline market in the short to medium term. It has multiple supports up to 9000 levels. The area around 9700mark and 9400mark would lend strong supports in the event of decline in the short term. Buy on declines near these levels. But avoid initiating fresh longs below 9365. Stop loss for long positions would be 9300 for short term traders while the medium term traders can place a stop at 8867.

INDIA NIFTY (3109)

Similar to Sensex, this index also faces resistance above 3150. So be watchful until it moves past 3200-3240 zone. If it manages to breach past this zone then stay long for targets up to 3500. But a reversal from the zone mentioned above has also the potential to touch 2500 levels again.

On the downside, 3000, 2900 and 2800 should lend support on declines. Buy near these levels with final stop at 2790.

STOCKS TECHNICALLY

RIL(1548)

Reliance Industries successfully surged past its medium term outer limit at 1500. Now higher targets could be 1650 to 1800 in short to medium term. Resistance at 1650 should be watched carefully.

Buy on declines up to 1400 with stop loss at 1380. Medium term traders can hold up to the support 1330.

INFOSYS(1346)

This stock also moved past its resistance at 1320. The next resistance is in 1400 area. Hold with stop loss at 1300.

SBI(1125)

State Bank of India surprised all the bears and surged ahead robustly. Hold with stop loss at 1050. It could move higher to 1170 and then 1250.

WEEKLY OUTLOOK: 23MAR TO 27MAR 2009

FUNDAMENTALLY
(Fundamental view point below could be more relevant to the medium and the long term but perhaps, may not get reflected in the short term trend immediately).

The talk of inflation/deflation would add to the already dampened spirits by rising unemployment and declining consumer confidence.
Therefore the focus should remain on the economic data as usual. There is some important U.S. economic data listed for next Thursday and Friday. (A new version of calendar is added below. It also includes calendar for Japan, U.K. and European Union besides the U.S.).

The run up to G20 was out of sight and out of mind last week but the talks may hot up as the date approaches near. Some investors and traders may also be gearing up for the quarterly earnings next month, which would be of great significance this time. In the meantime, the U.S. treasury plan to come out with details of rescue plan could be an important event next week.

However, the "non-fundamentalist" market players could also make themselves familiar with these two words : Qantitative Easing and MTM. These two words are making rounds in the policy lanes these days.


WEEKEND READING
1. Bank Rescue Plan: Details Soon

2. Here Comes the Great Recession

3. Sentiment Overview for Week Ending March20



GOLD ($952.6)
After dipping far below 900, it did a volte-face from 985 and climbed well above into positive territory. This happened due to sudden dip in the USD. Although, it could have caused a considerable heartburn among the short term traders, it has once again become a call of buy on decline. short term traders can initiate fresh longs on decline for targets of 1000, with stop loss at 913. Stop loss for medium term traders would at 860.


SILVER ($13.73)
Silver also behaved similarly because USD and commodity offset each other.
Now it is also a buy on decline for target of 14.55 with stop loss at 11.94 for short term traders. Medium term traders can hold with stop loss at 10.84.



TECHNICALLY INDICES
(In Order of East to West)
There are mixed signals for the short term though, some of the indices have left gaps open during the uptrend last week. The markets could trend lower to fill these gaps. But medium to long term are still negative and any short term bounce caused by triggers may not be taken as a sign of recovery unless some resistances far above are surpassed.

However, for very long term stock investors, there is an analysis of interest which must be given a reading with caution. It is a U.S. specific article but any sign of recovery there would be taken with open arms around the world. But the favoured view would be that any recovery would not be so immediate or start galloping next week or even next quarter onwards. More consolidation within a narrow range, accompanied by short term rallies from time to time is anticipated in the long term.
The much talked about bear rally could emerge on the horizon only when those higher levels given in the outlook below would be taken out. But these higher levels do not seem to be in a mood to be taken out soon unless the sentiment improves or the bottom of the pit is visible (the worst news also causes recovery, howsoever prolonged!). Until then!!!
China Shanghai Index could be watched closely this week!



JAPAN NIKKEI (7946)
This index displayed great strength as a morning star formation on march 10th could have given some encouragement to the traders to go gung ho about it. But in that jubilation, has left gaps behind it. Momentum indicators(MIs) are fairly well into the positive territory and pointing up but the index could trend lower to fill the gaps. Supports would be at 7660, 7538 and 7416. A bounce from 7538 would be positive while a close below 7416 would threaten its recent low of 7021. It needs to give a close above 8271 to turn things positive for itself.


CHINA SHANGHAI (2281)
This index is likely to continue its uptrend though, it would have to be seen if it can surge past its recent high at 2403. A move above here would be very positive signal for the whole trading fraternity around the world. Even now it is halting at its 200dma and a breach past this dma would also be a noticeable event. 100dma and 50dma have already converged and turning upwards while 200dma is also closeby intending to converge with these two moving averages. All these are signs of recovery, if seen technically but yet to be confirmed and believed amid this mayhem fundamentally.
A firm close above 2450 would be a technical confirmation of having put in place a medium term(long term?) bottom for itself. It would be worth watching this market over the next couple of weeks!!
On the other hand, a close below 2166 would be an alarmbell for long positions. Support at 2100 levels would have to play its crucial role to keep this index in uptrend while a close below 2037 starts another downtrend.


HONGKONG HANGSENG (12834)
Chart patterns suggest its inability to breach the resistances ahead. Next week's move could decide the trend in the short term. Supports are at 12507, 12286 and 12064. A rebound from 12286 would be a positive signal while a breach of 12064 would be a signal of threat to the recent low at 11345.
On the upside, if manages to close above 13563 then it would be a positive signal but it needs to give a close above 14100 to turn things positive for itself.


INDIA BSE SENSEX (8967)
As per our expectation, this index could not close above the given band of 9100-9200 and reversed lower. However, it is still trading within a very narrow band near this level indecisively. There are indications of more cuts in the interest rate also, if required. Yet, it could imbibe the world trend until election results on May 16th.
A move above 9200, though less likely, could take it to 9500 and signal a tendency to remain buoyant for some more time. But the favoured view is that it may trend lower after having respected the 9100-9200 band last week. Supports are at 8700, 8584 and 8457. A bounce from 8584 would be positive while a close below 8457 would threaten its recent low at 8047.
It would not be needless to remind that the medium and long term trend in this market is down. Only a close above 10500 mitigates negative outlook and that too for medium term only! Next week's candle formation could give a better picture, perhaps! So far, the near term trend is unclear.


INDIA NIFTY (2807)
Nifty did give the weekly close above our mark of 2805, but a lackluster one. It kept struggling with this level the whole week, almost. In the given scenario, it will not be prudent to expect the continuation of uptrend except if, it moves above 2836 or even above 2820 robustly! Otherwise, it is likely to take a cue from BSE SENSEX and trend lower.
Supports are at 2720, 2687 and 2652. A rebound from 2687 would be positive while a close below 2652 would threaten the recent low at 2539.
Noteworthy point in this index is that it has not breached its Nov 20th trough of 2503 so far while the sensex has breached its own two weeks ago.
Near term picture is not clear and next week's move could help to determine the short term trend in this market. But medium to long term trend is definitely down. Medium term trend would get positive on a close above 3000 only.


U.K. FTSE100 (3843)
This index respected the resistance 3925 mentioned last week though managed to reach up to 3913. Near term is unclear, yet the favoured view is a sideways move with some negative bias. Supports are at 3740, 3687 and 3634. A rebound from 3687 would be a positive signal, but a close below 3634 would threaten the recent low at 3461.
The resistance at 3925 remains, but to make things positive for this index, it needs to give a close above 4070.
Medium to Long term are negative and short term is neutral. Next week's move is awaited to identify the short term trend clearly.


U.S. DOW (7278)
It moved past our crucial mark of 7470 to signal the arrest of immediate downfall. Now, the 7500 mark would need to be watched as it has become the crucial resistance area.
Near term outlook is unclear but with some negative sentiment. Outcome of the "toxic asset plan" could have some positive impact on the sentiment but it would have to be seen for how long, because the economy is badly bruised and maimed.
Resistances for the week ahead are 7500 and then 7780. A close above 7500 would be great but it needs to give a close above 7780 to signal positivity.
Supports would be at 7151, 7021 and 6890. A rebound from 7021 would be very positive while a close below 6890 would threaten its recent low of 6470.
The favoured view is that the sentiment could improve only when economic data starts giving signs of recovery though, some intermittent bounces and even that much anticipated bear rally could be triggered by government actions from time to time.

WEEKLY OUTLOOK: 16MAR TO 20MAR 2009

FUNDAMENTALLY
The focus would be on U.S. Fed's interest rate decision next Wednesday where, the arsenal has in fact, run out of ammunition completely. So, it could be just a non event for that matter unless the rates are hiked, which is highly unlikely. But there is also a host of economic data lined up for next week, as usual. Market players should focus more on this data rather than those pep up talks by the governments from time to time. Things would remain under pressure until the unemployment rates start cooling off and consumer sentiment returns and people start spending.

The run up to next G20 meeting early next month(2nd April) would also attract attention though, the outcome, howsoever positive may not have any short term impact on the markets. But a negative outcome could certainly add heavily to the already dampened spirits! Watch out!
The focus seems to be shifting from the U.S. and more towards the European continent where there is much more to be revealed than visible economically.



WEEKEND READING
1. Sentiment in Gold, Stock and Commodity market
2. Treasury soon to offer details on toxic assets plan

Offer by the U.S. treasury to come out with details on toxic assets plan could evoke more positive response if the plan is transparent and unambiguous. It would be worth tracking this development next week.


GOLD($929.4)
Some strength in dollar has hindered the uptrend in this precious metal. Negative divergence in weekly and daily Momentum Indicators(MIs) does not bode well for gold in near to medium term. A breach of its 50dma in 900 area would be a cue to exit for short term traders. A sideways move is anticipated in the days ahead. However, its 200dma in 850 area should lend strong support in the days ahead. But medium term traders may exit below this mark.

SILVER ($13.18)
It has been holding well above its support 50dma at 12.5 and has even closed above its 200dma at 13.07. But strength in dollar could keep it in sideways mode over the next few days. Holding above 12.48 continuously over the next couple of weeks would a bullish sign. But short term traders may exit on a close below this mark and medium term traders below 11.56.



TECHNICALLY MARKETS
The downtrend has been wakened a little due to short covering all around. Some small scale buying for long term also could have taken place over the last few days. But it would be naive to think that buying interest has returned. Yet, some easing of the tense situation is surely apparent among the bulls. There are still multiple resistances ahead to be surpassed before that. Rather, it would be prudent to initiate fresh shorts near immediate resistances(with strict stop loss) for small gains as markets could remain sideways, if not trend lower below their recent lows soon. But there is no sign of forming a bottom so far even if there is a 20% rally from the current levels... because it is a primary bear market!

U.S. DOW (7224)
Dow closed above our upper boundary at 7200 mentioned last week. It is a signal of weakening downtrend in the short term. A sideways trend with some positive bias is anticipated in the near term.
Resistances above here are at 7470 and then 7780. Its 50dma is also in 7800 area. So, in the given situation it would be realistic to expect that this current up move would have maximum target around 7800 level. But a close above this level would cause more short covering and strengthening the uptrend.
On the other hand a failure to move above 7470 would be a cue to initiate fresh shorts. Supports are at 6856 and 6765. Breach of second support would threaten its recent low of 6470.

U.K. FTSE100 (3754)
Made a failed attempt to surpass 3800 level. Chart patterns do not suggest any firm conviction to surge ahead robustly. A sideways trend is envisaged in this index with some negative leanings next weak. Its crucial resistance is in the 4060 area. But a failure to close above 3925 would be a cue initiate fresh shorts. Supports are at 3638 and 3597. A close below this second support would threaten its recent low at 3461.

JAPAN NIKKEI (7569)
Respected its crucial support at 7000 and rebounded last week. A close above 7600 would help arrest the downtrend in short term. However, if fails to move above 7900 this week then it would be a signal of impending weakness. A close only above 8258 would mitigate the negative outlook in this index.
A sideways trend between 8200 and 7000 is anticipated next week. Breach on either side would determine the further trend.

CHINA SHANGHAI (2129)
Although, the uptrend seem to be loosing steam in this index, its holding above 2037 all these days could also turn out to be a bullish move in the making. 2035 and 1945 remain its crucial supports. On the other hand, a move above 2265 would be a bullish signal. Outlook is neutral to negative for the week ahead.

HONGKONG HANGSENG (12526)
A close above 13040 would signal some relief in the short term. But a close above 14086 is needed to mitigate the negative outlook in this index. A sideways trend is envisaged between 11000 and 13600 over the next few days.

INDIA BSE SENSEX (8757)
Similar to FTSE100, this index also does not suggest any firm conviction to move above its resistances nearby. At the same time it has been closing above 8500 most of the time during declines. The favoured view is that this index is a sell on rise near 9100 to 9200. In other words, it could also remain sideways between 9200 and 8000 over the next few days. Supports are at 8350 and 8047.

INDIA NIFTY (2719)
Here also the resistance at 2800 levels could be used to initiate fresh shorts with appropriate stop loss. But a close above 2805 could take it to 3000 levels in the short term. But the favoured view here also is a sideways trend over the next few days. Supports would be 2500 and 2250.

WEEKLY OUTLOOK: 09MAR TO 13MAR 2009

FUNDAMENTALLY
All those "deemed to be ghost stories" of the past year are turning out to be true and everything is falling in place exactly as they were envisaged that time. The fear of bigger collapse is still looming large, but obviously not unreal. On top of that is the concern of rising unemployment as that could lead to more protectionist stance and policies etc.

Misery index of the U.S., over the last 60 years, has so far recorded the highest percentage of unemployment at 10.8 in 1982.
It started rising continuously from 7.5 in Aug 1981 and peaked in Nov-Dec of the year 1982. Then gradually, it took about two years to return back to 7.4 levels in May 1984. That was during the conditions different from the present one. This time, most of the lost jobs are not likely to be created soon in the face of businesses shutting down for good.

One interesting question, though very rightly being argued is about the authenticity of the composition of indices. Some of the so called blue chips have become penny stocks and they still are there on the measure of indices. This question surely needs some expert answers!

Now for the next week, Banks and the companies like General Motors would keep us on the tenterhooks in the near term.

Last time it was the financial sector that led the boom; and now we are going to have at hand a plenty of time to work out the next sector as markets could remain at lower levels for much longer time than anticipated.

Weekend reading:
Stock Markets: When Will The Bull Return?
When economy bottoms out, how will we know?

YouTube links:-
The Crisis of Credit Visualised -I
The Crisis of Credit Visualised -II


GOLD(comex $942)
It was a week of indecision for gold as it trended lower to take support at $900, its 50dma. But somehow manged to hold above our crucial trend deciding support at $890.
Now, if it manages to move above $965 this week then one more wave of uptrend would resume to brush past its 1000 mark once again. Our medium term target of $1200 is intact as long as above $890.


SILVER(comex $13.32)
This time it was felt prudent to include SILVER also in the outlook as its Long Term charts also are portraying bullish picture.
In the medium term, hold it with stop at $12.46 on the downside. It would have more bullish connotation on a close above $14.6 and would head towards its all time high at $21.22 in the medium to long term. So it is also a safe haven along with gold and could be entered into at current levels and/or accumulate on declines with stop at $12.46. Immediate resistances for the week are at $13.53 and $13.78.
However, it should be borne in mind that for novice traders it is a very volatile instrument to trade on the index and many prefer investment through physical and certificates.



TECHNICALLY MARKETS
U.S. DOW (6627): After recording another new low at 6470, Friday was a day of indecision. But still there is no sign of any revival as per the weekly Momentum Indicators(MIs). However, the daily MIs are giving signal of some bounce early next week but finally to be met with formidable resistances ahead. A close above 6835 could perhaps, bring some hope of arresting the decline in the short term.
This index is stuck within two important levels: 7200 on the upside and 6300 on the downside. Breach of either of these would determine the future course in the index. But guns are loaded more in favour of the bears. Breach of 6300 would bring into reckoning the levels of 5100 in medium to long term. While a breach of 7200 on the upside would signal the arrest of the downfall in the short term. But medium term turns positive only on a close above 7670.

U.K. FTSE100(3530): It is also halting confused at the lowest level though, the odds are still against the bulls. Only a close above its resistance at 3690 could bring some relief in the near term but further, even a failure to move past 3815 would help resume the downtrend.
Medium term turns positive only on a close above 4000.
Support on the downside is at 3200 though, the long term down target of 3000 has been projected earlier in previous week's posts.

JAPAN NIKKEI (7173) : Thus far, it tried its best to remain above its crucial 7000 level. But the chart patterns are portraying an ominous picture even for the medium to long term. As mentioned in our previous posts, a close below 7000 on this index means very bleak picture for this economy and this time perhaps, it may not hold this given crucial level. The mood is in favour of the bears.
Though unlikely, it needs to give a close above 7800 to mitigate the negative outlook for this index.

CHINA SHANGHAI (2193): The continuous uptrend in this index since November seems to be losing momentum. It is giving signs of reversal downward.
If it manages to sustain above its recent low at 2037 and move above 2315 in days ahead then it would be a very bullish sign. But the odds are against the bulls as it has formed an evening star pattern on its daily chart which signals the end of the uptrend. Further, a breach of support at 1945 would confirm that its 52week low at 1665 is threatened and may not hold in medium to long term.

INDIA BSE SENSEX (8326): It has closed below our crucial support at 8500. The long term down target around 6000 to 6500 comes into the reckoning now. It made a low of 8047 last week and a breach of this would be a signal to brace for a fall towards 52week low of 7697 in short to medium term. Further, a breach of 7697 would be a signal to brace for lower targets of 7000 to 6500 in the short to medium term. A close above 9000 levels is required to mitigate the negative short term outlook; but looks unlikely in the given situation.

How much time it would take to hit the lower targets is a matter of debate because the volatility around the globe including in our markets is cooling off. In the given scenario, there are also lesser chances of rising like a tennis ball from the levels below, though intermittent bounces are a part of every fall.
A robust rally is not anticipated unless we get some good signs from the earnigns next season and also the election results in May. Technically this view is also substantiated by the fact that the symmetrical triangle formed on daily, weekly and monthly charts has been breached conclusively and that signals of drifting lower; if not immediately then in staggered manner over the next few weeks.

INDIA NIFTY(2620): Nifty is also signaling of drifting lower in short to medium term. The 52week low at 2253 may not hold once 2500 is taken out. Any bounce from current levels may find it difficult to move past the resistances at 2720 and then at 2790. "Sell on rise" situation remains, and the stop losses for short positions would be 2800 for short term traders and 3000 for medium term traders.
Initiate fresh shorts on reversal from the resistances mentioned above. The targets for short positions would be 2260 and then 2200.



TECHNICALLY STOCKS
Times have changed and do not expect those large moves of the past couple of years. The bounces from the levels below could be lacklustre and the momentum of fall also could be of consolidation nature. In the given scenario it is much better for short term traders to book small profits on either side frequently.
The overall picture is bearish and trend traders could initiate shorts near resistance levels with appropriate stop losses. Also trade according to the overall sentiment
of the market rather than being contrarian always.

RIL (1170): Buy near lower levels for short term bounces from 1060 or 1110 levels for targets of 1250 and 1300. Stop loss is 1050 for short term traders, while long term accumulation is suggested at levels below 1100 to 1000 with final stop at 850.

SBI(940): Sell on rise with stop loss 1000, for down targets of 865. Long term accumulation suggested on decline, with final stop at 750.

INFOSYS(1219): Bullish engulfing pattern could cause a rise up to 1320 in this stock in the days ahead. Depreciation in rupee against dollar helps keep it buoyant from time to time. But a failure to move past 1260 would be a cue to go short for target of 1165.

OUTLOOK FOR THE WEEK 02MAR TO 06MAR 2009

FUNDAMENTALLY
The fundamental news flow was on the expected lines last week -dismal and adding to the already heightened crisis of confidence. Even the greatest investor of our times, Warren Buffet suffered a massive downfall in profits at the hands of this gloom and doom. There is still no light at the end of the tunnel as the fog gets thicker and thicker. The hopes of early recovery in emerging markets is also in question for the moment.

There is a lot of U.S. economic data lined up for the week ahead (see the calendar at the bottom of this page). Besides that, The European Monetary Union and U.K. economic data also includes GDP and Interest Rate decision on Thursday next. The outcome of all this would be sufficient for some boom gloom and doom atmosphere next week! Watch out!

The weekend select readings are:
1. Banks and economy to keep bears' grip on stocks

2. Berkshire net sinks; Buffet says economy in shambles

3. How the economy was lost

4. Broken BRICs?




GOLD
It was a week of profit booking in gold. But it has managed to stay above our $920 levels so far. It is unlikely that a downtrend would commence but a breach of $920 can cause a retracement up to $850. This would be confirmed only on a close below $890.
It is more likely that in the given economic situation, gold would remain buoyant in the times to come and the medium term target of $1200 could be achieved.



TECHNICALLY MARKETS
THE WORD OF CAUTION, HOWEVER, IS THAT MOST OF THE MARKETS SEEM TO BE HEAVILY SHORTED AND SOME ANALYSTS ARE ADVISING ALSO TO COVER THE SHORT POSITIONS. ALTHOUGH THE FUNDAMENTAL AS WELL AS THE TECHNICAL PICTURE IS NOT POINTING TOWARDS A SHARP RISE AT THE MOMENT, HEAVY SHORT COVERING ANYTIME COULD BE A CAUSE FOR A SUCKER RALLY AS WELL! REMAIN WATCHFUL!

U.S. DOW (7063): It made a low of 7034 with high volume, just about 100 marks above its 12 year low of 6937. The index closing near its lowest point of the week is not a good signal. But the Momentum Indicators are about to enter their oversold region and it would have to be seen if they can take a bounce from there or stay there for days together!
Overall picture is negative and it needs to give a close above 7560 to heave some sigh of relief for a brief period at least. The positivity returns only on a close above 7900. Otherwise, it is a sell on rise up to 7560.
Support below 6900 is around 6300 but a fall up to that level could also attract short covering and cause a brief rally which may be cut short by negative economic data.
S&P500 closing well below its crucial 750 mark confirms the impending woes of the U.S. markets.

U.K. FTSE100 (3830): Making an attempt to build support at 3800 levels but the bearish engulfing on Friday may not help hold this level next week. 52 week low at 3665 can be a point of short term rebound. Yet, the things turn weak for this index below 3800 and then the long term target of 3000 comes into the reckoning. 3200 also would lend support on the way down.
Failure to move above 3980 next week would be a cue to remain short. Final stop for short positions would be at 4120.

JAPAN NIKKEI (7568): This index respected its crucial support at 7000. Momentum indicators on daily charts are pointing up and trying to enter the positive zone. But strongly negative cues from around the world may not help it to move higher beyond 8300, only where it turns positive. In the given scenario, it would have to be seen if it can hold its 7000 support levels in the days ahead. A move above resistance 7840 would be very positive while a fall below 7000 would be ominous for this index. The outlook is neutral for the week ahead but negative in the short to medium term.

HONGKONG HANGSENG (12812): Weekly charts imply that negativity prevails. A close above 13800 is required to turn things positive for itself, which looks unlikely at the moment.
Supports are at 12440 and then 11815. The outlook is negative for short term. A fall below 11000 anytime would be ominous.

CHINA SHANGHAI (2065): (please note that the China index has been reviewed afresh on Monday morning as the levels given earlier were mistakenly of another index of China. The error is regretted).
It has been a period of correction in China after a steep climb since January. Another support below here at 2030 could cause some bounce perhaps. But a breach of 1945 would be signal for resumption of another downtrend in this market. This would be further confirmed if 1815 is also breached.
Inability to move above 2195 would be a cue to remain short while a close above 2275 is required to initiate fresh long positions.
The whole world is focusing on this emerging market; yet a host of negative stories also keep making rounds from time to time. Here is one latest story on China for this week also.

INDIA BSE SENSEX(8892): On daily charts there are long legged candles suggesting that it has been respecting support at 8600. Daily Momentum indicators are also not diverging negatively and the weekly ones are still lying flat though, in the negative zone. But all this may not help paint a bullish outlook in short to medium term as it is faced with formidable resistances ahead. It would need to blow off the cap in the 9300 to 9400 zone in the first place, and that looks unlikely soon. But still it would be a "sell on rise" market up to 9700. All this implies that we may be trending lower in the times ahead with intermittent bounces from supports below.
Supports are at 8600 and then at 8300. A breach of second support would be signal that the 52week low at 7700 would be taken out soon to drift lower towards long term target of 6000.
Also watch out for a possible short term bounce from 8300 though, a close below 8500 itself would be another sign of impending weakness.


INDIA NIFTY (2764): Nifty also is signaling a strategy of sell on rise with stop at 2875 on closing basis, for the down targets of 2650 and 2510 for this week. The support is at 2658 and then at 2570. The crucial support would be at 2500. A close below here would imply that the 52week low at 2253 may not hold for long.



TECHNICALLY STOCKS

RIL(1265): Some news-based fireworks are expected on this counter next week as it proposes to merge its own company RPL with itself. This move could make it a mammoth corporate in India. But it faces resistances at 1335 and then at 1385. Short-term swing-traders can initiate shorts if it fails to close above here. But strict stop loss of 1400 on intraday basis is necessary. On the downside it has support at 1200 levels. A breach of this anytime would keep it loitering towards 1000 in the medium term.

SBI(1027): No clear picture for trading until breaks out of its range between 990 and 1150.
However, this is one of the best long term picks besides the other two here. So, long term investors can pick around 1000 and downwards with stop at 850.

INFOSYS(1231): Similarly, its better to avoid short-term trading in this counter as well. But its a world class company and should be invested into at lower levels of 1050 to 950.