Technical Analysis Newsletter

Our weekly Technical Analysis newsletter is published here.

Newsletter dated 21th March 1998.

Title : Short term trading times !

The near foregone conclusion of a BJP government has lent a slightly bullish undertone to the market. There is hesitancy - which is understandable given the nascent nature of our coalitions. The Sensex has cautiously moved up and rests above the neckline and also just above the 200 DMA. Last week we had expected a slightly prolonged sideways movement then to be followed by a sharp upward movement with a target of 4400 eventually. Instead the Sensex has cautiously moved up. The pattern in the movement suggests that an explosive breakout is almost definitely ruled out. The present rise almost resembles a rising wedge. The rising wedge formation is nowhere near complete , but usually a rising wedge formation when followed by a downside breakout almost guaranteeds a sharp downside fall. The conclusion is this - The market will find it very difficult to break the resistance around the 3800-3900 level. There may be a fall from that level to test the falling channel. A basing sideways movement is another distinct possibility.

Recommendation: Short term: Trade Short term on the Support and resistance levels or stochastics. Go short around a 3900 level reaction ??. Pyramid upwards ? Medium Term: Wait to pick up at lower levels on the next reaction.. Long Term: Existing positions can be averaged downwards. For the gutsy target a large position over the next 3 months in a phased manner.

The other option: The market quickly breaks above 3900. Its a bull run. Start pyramiding for a 4400 target.

(An Amrok Group Concern)
H-1 Sudharshan Gardens,102-Velachery Road,
Guindy,Madras-600032. India.
Tel: 91-44-2353610,2353612,2352200,2350133.
Fax: 91-44-2350485.
BBS: 91-44-2351238.