WEEKLY OUTLOOK: 20APR TO 24APR 2009

(Markets from East to West)

JAPAN NIKKEI225 (8908)

This index moved sideways but found support at our given mark 8694. This sideways move could be a halt before another leg up towards the target 9800.

This market is also a buy on declines. Supports are at 8693, 8577 and 8460. Short term traders may not initiate fresh longs on a close below 8577. However, the medium term turns negative only on a close below 8300.

CHINA SHANGHAI (2504)

Defying the negative divergence of its momentum indicators, this index has been moving up slowly and steadily. Finally it has moved convincingly above our given resistance band 2460-2475 and made intraweek peak at 2549. Reaching up to this mark has technical significance as it has recovered more than 38.2% of its down move from May 2008 peak at 3786. This could also be construed as having formed its bottom for the current year.

Now the next mark to be watched is at 2725. A move above this level would be yet another confirmation of its bottom formation. However, it would be too soon to declare it as a resumption of bull market because there are much higher levels to be surpassed before that.

Outlook for the week ahead is sideways to neutral.

Resistances are at 2549 and 2726. A close above 2726 would target 2975.

Needless to say, this market is also a buy on declines. Supports for the week are at 2466, 2440 and 2414. Short term traders may avoid fresh longs below 2440. The uptrend loses momentum only on a move below 2300.

HONGKONG HANGSENG (15601)

This index moved robustly past our given resistance zone 15764-15781, but failed to close above here. The daily charts are suggesting reversal pattern, implying that there is lesser confidence in its moving higher for the moment. But the momentum indicators are not pointing towards any cooling off immediately. Therefore, the best scenario next week would be a sideways trend with lesser conviction to move higher soon.

The only resistance visible is at 15977. Once past here then it would be headed towards its 200dma at 16480. It would also be advisable to remain vigilant at current levels because the first leg of the uptrend from March lows could be nearing its end anytime soon.

Supports would be at 15327, 15126 and 14925. Desist from initiating fresh longs for the short term, if below 15126.

INDIA SENSEX (11023)

Intraday deep corrections were grabbed by the bulls as if some life time opportunity to get into the markets. But a reversal pattern on Thursday and late hour profit booking on Friday signals to observe constraint. Although there are no negative signals from the momentum indicators and oscillators, the rise from March lows could be concluding its one leg up at the current levels.

The envisaged scenario is a movement between a range of 9500 and 11700 over the next four weeks before it takes its future course. But odds are in favor of the bulls and the projected target of this corrective uptrend is 12500. This viewpoint is negated only on a close below 9500.

Outlook for the week ahead is unclear. Resistances are at 11171, 11367. Move above the second resistance would be very positive and could take up to 11640 or 11820. But remain very vigilant if starts moving up from current levels immediately.

There are multiple supports up to the level of 9500. It is also a buy on declines market. Supports at 10900 and 10770 could be utilized to initiate fresh long positions. Stop loss for long positions would be the support at 10660. Support below here would be at 10225.

INDIA NIFTY (3384)

Its 50dma and 100dma have converged and the index has given a close above its 200dma. These are very positive signs. Its huge derivative participation could have helped it to achieve these benchmarks but the SENSEX has yet to move above its 200dma. In other words, the mixed signals point towards constraint at current levels.

The envisaged scenario here would also be a movement between the levels of 3100 and 3700 over the next four weeks. Needless to say, the odds are in favor of the bulls and the projected target for this uptrend is 3900 to 4050 over the medium term. At the same time it should also be borne in mind that this could also be the highest target in this calendar year because there is no confirmation of the end of the prevailing bear market and the Indian markets also could be charting a bear market rally. Favored view is that we are still charting a bear market rally (corrective ‘B’ wave as per the Elliot wave theory).

Resistances are at 3511, 3550 and then at 3680.

Supports are at 3300, 3237 and 3172. Very short term traders may desist from initiating fresh longs below 3300. Medium term traders can buy up to the levels of 3237 with stop at 3170.

U.K. FTSE100 (4092)

The move above our given resistance band 4070-4085 is positive but closing only just above this zone is not a very convincing breakout. The current level is its 100dma (100 days moving average) area and this index has made two unsuccessful attempts earlier also in Jan and Feb to move convincingly past this dma. So, the short term traders need to be vigilant in this zone.

The outlook for the week ahead is not clear. A sideways move within a narrow range could be expected. There are not many negative signals to pull it down soon.

If it manages to move past the current level with strength then hope for the test of its 200dma around 4500 in the days ahead. Resistances on the way would be 4138 and 4212.

Supports are at 4023, 3995 and 3966. Short term traders may desist from initiating fresh longs below its first support. Yet, the uptrend would lose momentum only on a close below 3966.

U.S. DOW (8131)

It made an intraweek peak at 8191 but trended lower to close below our given crucial resistance at 8152 on Friday. Indecision prevails with confidence waning, somewhat. Perhaps, the markets could still be figuring out those -“better than expected?”- results declared by the financial companies last week! Besides that, the Economic data still weighs heavy on the minds of the market players.

Outlook is not clear for the week ahead. A sideways move that does not breach 7800 would not be a negative. But the prevailing momentum could get neutralized below 7800. Watch out!

Resistances for the week are at 8191 and then 8524. Closing above the first resistance would be a very positive signal and the target of 9000 would come into the reckoning.

There are multiple supports up to 7800 and short term buying could be considered at 8068, 7992 with stop at 7800. Medium term is positive as long as above 7530.