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Wednesday, November 5, 2008

A Reversal Day

While the the whole world rejoiced at Barack Obama's victory as the first ever African-American President of the USA, the Sensex suffered a reversal day.

A reversal day is a 1-day price pattern usually signifying a short-term trend reversal. We had 5 days of a 'V' shaped move that propelled the Sensex up from the 3 years low of 7700 and was typical of a bear market rally.

Today, the day started at almost the 10950 level but ended at 10120. So, the high of the day was higher than yesterday's while the close was not only near the low of the day, but considerably lower than yesterday's closing level of 10630.

This indicates a strong reversal, which was confirmed by the higher volume of transactions on the BSE. I would avoid buying for the time being.

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