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Thursday, September 30, 2010

A really long-term Sensex chart – what signals is it conveying?

Didn’t feel like writing much – was engrossed in the Ayodhya ‘tamasha’ unfolding across various TV channels. Of all the completely useless and unproductive causes that one can think of, this one surely will hold the pride of place!

But this is not a blog about political or religious commentary. It is about the stock market and the Sensex. I took a look at a really long-term Sensex chart, and decided to put it up here. I will try to reveal some of the not-so-secret information emanating from the chart on Saturday. Till then it is the readers’ turn.

Sensex_Sep2910_LT

What signals are coming from this chart? Is it bullish or bearish? Why?

Does the volume pattern reveal anything?

What is the 200 day EMA suggesting?

Would you like to buy, sell or hold? Why?

4 comments:

shiv said...

appears to be bullish as the breakout is after consolidation
i seldom sell

abhi.piscean said...

In my opinion, market is rising on lower volumes and its highly likely that it gonna comes down soon... FIIs are just waiting to pull out the money...

sreyO... said...

sir,

As you put up a long term sensex chart, I'm trying to put my view in that way only.

I think sensex is poised for a side wise movement for next 3 years or so between 19000 to 25000. Then a breakout may come upto 45000. After that it may fall again 55% to 60%.

So whether to sell or buy, depends upon the horizon of investment.

Subhankar said...

@shiv: the chart is definitely looking bullish. The bear market fall and the subsequent rise made a bullish 'cup-and-handle' pattern that has a target of 22000.

Minimum activity is a good idea. But unless you sell, your profit remains on paper. Some times, one needs to sell to buy lower - specially in a bear market.

@abhi: Good observation. Volumes have been on the lower side right through the bull rally. Consistent selling by domestic institutional investors have kept volumes low.

FIIs usually do some profit booking before the end of the calendar year. But they are unlikely to pull out in a big way because of the growth in the Indian economy.

@sreyO: You may be right. As of now, the first target is 22000. It seems like the Sensex wants to fall, but the FII inflows are keeping the index afloat.

For the long-term health of the bull market, a proper 10-15% correction is necessary. Let us see if it happens after hitting 22000, or before.