FIIs were net buyers of equity on Mon. and Wed. (Nov 9 and 11), but were net sellers on Tue. (Nov 10). Their total net buying was worth Rs 7.0 Billion. DIIs were net buyers of equity on all three trading days. Their total net buying was worth Rs 6.5 Billion, as per provisional figures.
India's electricity demand fell 4.3% to 94.6 Billion units in Nov '19 against 98.84 Billion units in Nov '18. It was the fourth straight month of power demand decline, as per CEA. Power demand had declined 13.2% YoY in Oct '19 - the steepest monthly decline in more than 12 years, reflecting a deepening growth slowdown.
ADB has slashed India's GDP growth forecast to 5.1% in FY 2019-20 from 6.5% that was forecast earlier. For FY 2020-21, GDP growth forecast has been cut to 6.5% from 7.2% on the back of risk aversion, credit crunch, slumping consumption and rural distress.
The daily bar chart pattern of Nifty has been correcting after touching a new high of 12158.80 on Nov 28 and penetrating the upper Bollinger Band. The correction has dropped the index below the middle band (20 day SMA, marked by green dotted line).
Note that the lower Bollinger Band is at 11819 and the rising 50 day EMA is at 11777. The zone between 11777 and 11819 should provide good support to the index on the downside.
Daily technical indicators are looking bearish to neutral. MACD is moving down below its falling signal line in bullish zone. RSI is exactly at its 50% level. Slow stochastic has dropped inside its oversold zone, and may have triggered today's pullback past 11900.
Nifty's TTM P/E has slipped down to 27.76, which remains well inside its overbought zone and much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is falling inside oversold zone, hinting at some near-term index upside.
The index may be forming a 'head and shoulders' reversal pattern with a 'neckline' at 11800. The left 'shoulder' and 'head' have formed already. A technical bounce towards 12000 followed by a fall towards 11800 will complete the right 'shoulder' formation.
The right 'shoulder' hasn't formed yet - and may not form at all. However, the possibility of formation of a known reversal pattern should be treated with respect and caution. In case the pattern does play out, Nifty can move down to test support from its 200 day EMA.
S&P 500 index chart pattern
The daily bar chart pattern of S&P 500 seems to have brushed aside feeble bear resistance. The index bounced up after receiving support from its rising 20 day EMA and touched a new high of 3028 on Fri. Jul 26.
The index gained 49 points (1.6%) on a weekly closing basis, and is trading above its three rising EMAs in a bull market. However, bears are refusing to give up. Volumes were heaviest on Thu. Jul 25 - the only down day during the week. A sign that 'smart money' is getting out?
Daily technical indicators are in bullish zones but showing weak upward momentum. MACD is moving sideways below its falling signal line. RSI is moving sideways above its 50% level. Slow stochastic has re-entered its overbought zone.
All three indicators are showing negative divergences by failing to touch new highs with the index. Some correction or consolidation may follow.
On longer term weekly chart (not shown), the index closed well above its three rising weekly EMAs in a long-term bull market, but has formed a 'broadening top' reversal pattern since Jan '18. Weekly technical indicators are looking overbought and showing negative divergences by failing to touch new highs.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 continued its sideways consolidation with a downward bias for the third straight week. The index touched a high of 7599 in bull territory on Tue. Jul 23, but dropped below its 20 day EMA the very next day.
FTSE dropped to seek support from its 50 day EMA on Thu. Jul 25. On Fri. Jul 26, the index bounced up above its 20 day EMA to close above its three EMAs in bull territory - at 7549 (gaining 40 points for the week).
Daily technical indicators are turning bullish. MACD is moving sideways below its falling signal line in bullish zone. RSI and Stochastic are rising above their respective 50% levels. The index seems ready to resume its up move.
On longer term weekly chart (not shown), the index closed above its three weekly EMAs in long-term bull territory for the 8th straight week. Weekly technical indicators are showing upward momentum in bullish zones. MACD is rising above its signal line. RSI is moving up above its 50% level. Stochastic is rising inside its overbought zone.
WTI Crude Oil chart
The following comment was made in the previous post on the daily bar chart pattern of WTI Crude Oil: "Falling volumes during the technical bounce may encourage bears to defend the 200 day EMA vigorously."
Oil's price dropped below its 50 day and 20 day EMAs, but bounced up after receiving support from the 56 level. After crossing above all three EMAs into bull territory, oil's price formed a small 'reversal day' bar (higher high, lower close) and pulled back to its 200 day EMA.
Daily technical indicators are in bullish zones. MACD is rising above its signal line. RSI is above its 50% level but showing slight downward momentum. Slow stochastic re-entered its overbought zone, but is slipping down.
Bears are giving ground grudgingly. Oil's price has formed a bullish pattern of 'higher tops, higher bottoms' after forming a 'double bottom' reversal pattern inside the support zone between 50 and 52. A convincing price move above 67 is necessary if bulls are to regain control of the chart.
On longer term weekly chart (not shown), oil's price managed to close just above its 200 week EMA in long-term bull territory. Weekly technical indicators are in neutral zones, and not showing much upward momentum. Falling volumes during the recent rally should be a concern for bulls.
Brent Crude Oil chart
The daily bar chart pattern of Brent Crude Oil dropped below its 20 day EMA into bear territory, but bounced up after receiving good support from the 62 level.
Oil's price rallied past its 20 day and 50 day EMAs, only to face strong resistance from its 200 day EMA. Strong volumes on recent down days show that bears are active.
Daily technical indicators are looking neutral to bullish. MACD is rising above its signal line in neutral zone. RSI is moving sideways above its 50% level. Slow stochastic re-entered its overbought zone, but is falling down. Some more consolidation is likely.
Bears are giving bulls a hard time. Oil's price has formed a bullish pattern of 'higher tops, higher bottoms' after forming a 'double bottom' reversal pattern inside the support zone between 58 and 60. A convincing price move above 75 is required for bulls to regain control of the chart.
On longer term weekly chart (not shown), oil's price closed above its 200 week and 20 week EMAs, but just below its 50 week EMA in long-term bull territory. Weekly technical indicators are looking neutral to bullish. MACD is below its sliding signal line in neutral zone. RSI is facing resistance from its 50% level. Slow stochastic is rising towards its 50% level.
FIIs were net buyers of equity on Tue. (Jun 18), but net sellers on the other four days. Their total net selling was worth Rs 15.7 Billion. DIIs were net sellers of equity on Wed. (Jun 19), but net buyers on the other four days. Their total net buying was worth Rs 30.2 Billion, as per provisional figures.
USA has warned that it would be compelled to take some "additional action" against India over "unfair" trade practices as the two countries have made "no headway" on these issues.
Sovereign Wealth funds and State Pension funds are piling into India, buying stakes in everything from airports to renewable energy, attracted by political stability, reforms and a growing middle class.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex consolidated sideways during the week - getting good support from its 50 day EMA - but lost about 250 points (0.6%) on a weekly closing basis. The index is trading well above its rising 200 day EMA in a bull market.
However, on the closing (line) chart (see below), the index had broken out below a small 'head and shoulders' reversal pattern (with purple neckline), followed by a pullback towards the purple neckline - and may be forming a larger complicated 'head and shoulders' pattern with a green neckline.
Why complicated? Because the 'head' of the larger 'head and shoulders' pattern is itself a 'head and shoulders' pattern. Note that the green neckline has not been breached yet. Bulls can be expected to put up a strong defense here.
What if the green neckline gets breached? The larger complicated 'head and shoulders' pattern will get technically confirmed. Sensex can then be expected to move down to test support from its rising 200 day EMA.
Daily technical indicators are looking bearish. MACD is falling below its signal line in bullish zone. ROC faced resistance from its '0' line and dropped back into bearish zone. RSI is below its 50% level. Slow stochastic has emerged weakly from its oversold zone.
Some more correction, and a part or complete filling of 'Gap 2' (formed on May 20) may be on the cards.
Formation of a reversal pattern - specially one occurring near a lifetime high - should be treated with respect and caution. The up trend from the Oct '18 low and the bull market are intact. So, there is no need to sell in a panic. But buying can be restricted for the time being.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty closed lower for the third week in a row as it dropped down to test support from the upward 'gap' formed on May 20. The index closed above its weekly EMAs in a bull market, but has formed a 'rounding top' reversal pattern.
Weekly technical indicators are looking bearish. MACD is about to fall from its overbought zone. ROC is below its 10 week MA and has fallen to its neutral zone. RSI and Slow stochastic have dropped from their respective overbought zones. Some more consolidation or correction is possible.
After touching a high of 29.90 on Mon. Jun 3, Nifty's TTM P/E has moved down to 28.99, which is still well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) has dropped sharply inside its oversold zone. Some near-term index upside or consolidation is likely.
Bottomline? Sensex and Nifty charts are consolidating after touching lifetime highs, but showing some bearish reversal signs. Any pre-budget rally can be used to book profits. Avoid the urge to do bottom fishing among small/mid caps.
S&P 500 index chart pattern
The following remark appeared in last week's post on the daily bar chart pattern of S&P 500: "As long as the index trades above its 200 day EMA, bulls need not worry too much."
It is time for bulls to start worrying. The index successfully tested support from its 200 day EMA on May 29 and 30, but the support was breached on Fri. May 31.
The index formed a small (8 points) downward 'gap' below its 200 day EMA, and closed in bear territory for the first time in four months. Support at the 2750 level may not hold for long, as strong volumes on recent down days indicate bears are regaining control.
Daily technical indicators are in bearish zones, and showing downward momentum. MACD is falling below its signal line. RSI has dropped down to the edge of its oversold zone. Slow stochastic sliding deeper inside its oversold zone.
Some more correction, and a drop towards the support zone between 2700-2725 is likely. The (purple) down trend line has dominated the chart during the entire month.
On longer term weekly chart (not shown), the index closed below its 20 week and 50 week EMAs, but well above its 200 week EMA in a long-term bull market. Weekly technical indicators are looking bearish, and showing downward momentum - hinting at more correction.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 has slipped into bear territory by closing below its three daily EMAs. What had seemed like the 'handle' of a 'cup and handle' pattern is turning into a bearish 'head and shoulders' reversal pattern with a 'neckline' at 7200.
Daily technical indicators are in bearish zones and showing downward momentum. MACD has crossed below its signal line. RSI is falling below its 50% level. Stochastic has entered its oversold zone.
Some more correction is likely - which will negate the 'cup and handle' pattern (refer last week's post).
On longer term weekly chart (not shown), the index closed below its merged 20 week and 50 week EMAs, but above its 200 week EMA in long-term bull territory. Weekly technical indicators are looking bearish, and showing downward momentum.
FIIs were net sellers of equity on all five trading days. Their total net selling exceeded Rs 41.9 Billion. DIIs were net buyers of equity on all five trading days, but couldn't match the pace of FII selling. Their total net buying was worth Rs 28.8 Billion, as per provisional figures.
India's IIP contracted to -0.1% in Mar '19 from 0.1% growth in Feb '19. It was the lowest IIP number in 21 months. IIP in Mar '18 was 5.3%. On annual basis, IIP slowed to a 3 year low of 3.6% in FY 2018-19 against 4.4% in FY 2017-18 and 4.6% in FY 2016-17.
According to CRISIL, operating margins of domestic cotton yarn spinners may shrink by 1-1.5% in FY 2019-20 due to lower cotton output, rising cotton prices and moderating demand.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex shows a sharp downward breakout from a 'diamond' reversal pattern, due to heavy selling by FIIs. Though the index has dropped below its 20 day and 50 day EMAs, it is trading above its 200 day EMA in a bull market.
Can the index fall even lower? Anything is possible when FIIs decide to turn bears. However, by touching an intra-day low of 37370 on Fri. May 10, the index has already corrected 50% of the last leg of its (2 months long, 4200 points) rally from the Feb 19th low to the Apr 18th top.
The 125 points upward 'gap' formed on Mar 12 can provide some support. The 61.8% Fibonacci retracement level of the 4200 points rally is at 36890 - which falls in between the 'gap' and the 200 day EMA.
In case the index falls below 36890, there is likely to be stronger support from the 200 day EMA and the (blue) up trend line. In other words, Sensex is just above a strong support zone, from where a technical bounce can be expected.
The level of the right apex of the 'diamond' (~39000) can act as a resistance if and when a likely technical bounce moves the index above the 50 day and 20 day EMAs. Sensex may consolidate within a 2000 points range (between 37000 and 39000) till election results are announced on May 23.
Daily technical indicators are looking bearish and oversold. MACD is falling below its signal line in bearish zone. ROC, RSI and Slow stochastic have entered their respective oversold zones, and are showing negative divergences by falling below their Feb '19 lows. Some more downside is possible before a technical bounce occurs.
Finance Ministry mandarins are trying to 'invent' new arguments on a daily basis to put positive spins on negative data that are clearly pointing to worsening economic conditions (viz. unemployment, falling auto and FMCG sales, NBFC loan defaults, lower IIP and GDP).
What should small investors do now? What they should be doing at all times: follow a financial plan and asset allocation plan, and continue with monthly SIPs. Treat daily market gyrations as entertainment.
NSE Nifty index chart pattern
The following comment appeared in last week's post on the weekly bar chart pattern of Nifty: "The index ... appears to have formed a 'diamond' pattern, which usually acts as a trend reversal pattern at a market top."
FIIs may not have read the post, but they sure respected the reversal pattern, and started selling heavily during the week. The index dropped sharply to seek support from its 20 week EMA - negating all gains made in the previous 7 weeks.
Below the 20 week EMA is a support zone between 11100 and 11230. The 50% Fibonacci retracement level of the 1270 points rally from the Feb '19 low of 10586 to the Apr '19 top of 11856 is at 11220 - which is just below the upper edge of the support zone.
If the support zone gets breached, expect stronger support from the 50 week EMA and the (blue) up trend line. As long as the index trades above its 50 week EMA, the bull market will remain in force.
Weekly technical indicators have started correcting overbought conditions. MACD has slipped down from its overbought zone, and is falling towards its rising signal line. ROC has crossed below its 10 week MA and fallen from its overbought zone. RSI has dropped from its overbought zone. Slow stochastic is about to follow suit. Some more correction is possible before a technical bounce can occur.
Nifty's TTM P/E has moved down to 28.14, which remains well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is rising towards its oversold zone and can limit near-term index downside.
Bottomline? Sensex and Nifty charts have broken out below 'diamond' patterns, which often signal trend reversals. Stay invested, follow your asset allocation plans and let the correction play out before jumping in.
In a trading week with two holidays, FIIs were net buyers of equity on Tue. and Thu. (Apr 30 and May 2), but net sellers on Fri. (May 3). Their total net buying was worth Rs 3.1 Billion. DIIs were net buyers of equity on Tue. and Fri., but net sellers on Thu. Their total net selling was worth Rs 0.5 Billion, as per provisional figures.
Passenger vehicle sales dropped 17% YoY in Apr '19 - the worst decline since Oct '11. All the major OEMs showed declines between 9% (M&M) to 42.5% (Nissan). Honda bucked the trend with growth of 23%.
Nikkei India's Manufacturing PMI fell to 51.8 in Apr '19 from 52.6 in Mar '19 (a figure above 50 indicates expansion). It was the slowest pace of expansion in 8 months.
BSE Sensex index chart pattern
For the past 5 weeks, the daily bar chart pattern of Sensex has been consolidating sideways near the upper edge of a large upward-sloping trading channel.
In the process, the index appears to have formed a 'diamond' pattern - which can be looked upon as a 'head and shoulders' pattern with a bent 'neckline'. Such a pattern is usually a trend reversal pattern, and should be treated with caution. (Read more about the diamond pattern here and here.)
Daily technical indicators are looking neutral to bearish, and showing downward momentum. MACD is sliding below its falling signal line in bullish zone. ROC has slipped below its 10 day MA in neutral zone. RSI and Slow stochastic are seeking support from their respective 50% levels.
All four technical indicators had showed negative divergences by failing to touch new highs when the index touched its lifetime high of 39487 on Apr 18. That is often a warning of a possible change in trend.
Note that Sensex is trading above its three EMAs in a bull market. In a bull market, one makes money by going long. Formation of a 'reversal pattern' should be respected, but short the index if and when a downward breakout from the 'diamond' occurs.
If FIIs remain buyers, their liquidity flows can overcome technical and fundamental headwinds. They seem to have 'discounted' a second term for the NDA. If an unlikely upset occurs on May 23, all their bullish bets will be off.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty has been consolidating sideways near the upper edge of an upward-sloping trading channel for the past five weeks.
The index is trading well above its weekly EMAs in a long-term bull market, but appears to have formed a 'diamond' pattern, which usually acts as a trend reversal pattern at a market top.
All four weekly technical indicators are well inside their respective overbought zones. While an index can remain overbought for long periods, the formation of a 'reversal pattern' should be treated with respect and caution.
Lok Sabha election results are less than three weeks away. Corporate Q4 (Mar '19) results declared so far have not shown much improvement. Economic fundamentals are turning weak. Investors would do well not to go bargain hunting now.
Nifty's TTM P/E has moved down to 29.24, which remains well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is in neutral zone - hinting at some more consolidation or correction.
Bottomline? Sensex and Nifty charts are still hovering near the upper edges of their respective upward-sloping trading channels, but may be forming 'diamond' reversal patterns. Stay invested, follow your asset allocation plans and control any impulse to dive into a market near a lifetime high.
FIIs were net buyers of equity on all three trading days this week. Their total net buying was worth Rs 26.3 Billion. DIIs were net sellers of equity on Mon. & Tue. (Mar 25 & 26) but net buyers today. Their total net selling was worth Rs 0.74 Billion, as per provisional figures.
According to ICRA, Indian basmati rice exports may touch an all-time high of Rs 300 Billion in FY 2018-19, on the back of strong demand from Iran and firming up of prices. The previous highest export figure was Rs 293 Billion in FY 2013-14.
A consortium of Tata Group, GIC (Singapore's sovereign wealth fund) and SSG Capital Management will invest Rs 80 Billion to buy a stake in GMR Airports Ltd, which is a unit of GMR Infrastructure Ltd. GMR operates airports at Hyderabad, Delhi, Cebu (Philippines), and is building airports at Goa and Crete (Greece).
Note the following comments from the previous technical update on the daily bar chart pattern of Nifty: "The index is just 400 points away from its lifetime high. Charts tend to have 'memory'. Profit booking can emerge as the index approaches 11760."
The index had touched an intra-day high of 11573 on Fri. Mar 22 - moving above the upper edge of the upward-sloping trading channel. It closed 116 points lower due to profit booking, and formed a bearish 'reversal day' bar (higher high, lower close).
Nifty opened with a downward 'gap' and touched an intra-day low of 11311, as profit booking continued when trading resumed on Mon. Mar 25. A pullback towards the upper edge of the trading channel during the next two days touched a lower top of 11546 today.
The index closed 101 points lower to form another 'reversal day' bar (higher high, lower close) even though FIIs and DIIs were both net buyers today. A fall to test support from the 46 points upward 'gap' formed on Mar 12 is a possibility.
Daily technical indicators are correcting overbought conditions. MACD is falling towards its rising signal line inside its overbought zone. RSI and Slow stochastic have slipped down from their respective overbought zones - hinting at some more correction.
All three EMAs are rising, and Nifty is trading above them in a bull market. It should be just a matter of time before the index rises to touch a new high. However, bears are putting up a stiff fight to defend the upper edge of the trading channel. Further upward progress may be slow.
Nifty's TTM P/E is at 28.05, which is much higher than its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) has received support at the edge of its overbought zone. Some consolidation or correction may follow.
On a longer-term weekly line chart (not shown), Nifty may be forming a large 'head and shoulders' reversal pattern, with a neckline at 10000. Such a pattern will get technically confirmed only if the index falls below 10000. A move above the lifetime high of 11760 - touched in Aug '18 - will negate the pattern.
If FIIs keep buying, a fall below 10000 will remain a distant dream. However, it is prudent to respect a large reversal pattern - till the pattern gets negated.
S&P 500 index chart pattern
After a day's correction on Mon. Jan 14, the daily bar chart pattern of SPX 500 brushed past bear resistance at 2600, and soared above its 50 day EMA to close at 2670 with a 2.9% weekly gain.
Looming overhead is a resistance zone (marked by light gray oval), where the sliding 200 day EMA, the upper Bollinger Band and the (purple) down trend line have converged.
Bears can be expected to put up a stronger resistance when trading starts on Tue. Jan 22 (after the long weekend).
Daily technical indicators are looking bullish. MACD is rising above its signal line in bullish zone. RSI is moving up above its 50% level. Slow stochastic is moving sideways inside its overbought zone, and can trigger a correction.
On longer term weekly chart (not shown), the index closed well above its 200 week EMA and just above 20 week EMA in long-term bull territory, but remains below its falling 50 week EMA. Weekly technical indicators are in bearish zones. MACD has started to move up inside its oversold zone. RSI and Slow stochastic are moving up towards their respective 50% levels.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 consolidated sideways during the first three trading days - facing resistance from its 50 day EMA and getting support from its 20 day EMA.
On Thu. Jan 17, the index dropped below its 20 day EMA and the 6800 level intra-day, but recovered to close at 6835 (just below its 20 day EMA). Bulls bought the dip on Fri. Jan 18.
The index remains below its falling 200 day EMA in a bear market, but closed above its 20 day and 50 day EMAs with a 0.7% weekly gain. FTSE may have formed a bullish 'inverse head and shoulders' reversal pattern with an upward-sloping neckline.
Note that the index is yet to breakout above the neckline. A convincing close above the Jan 11 top of 7002 with good volume support is required to technically confirm the reversal pattern. (At the time of writing this post, the index is trading around 6980.)
Daily technical indicators are looking bullish. MACD is moving sideways above its signal line in bullish zone. RSI has bounced up after getting support from its 50% level. Stochastic has re-entered its overbought zone.
On longer term weekly chart (not shown), the index tested resistance from its 200 week EMA and closed just below it at 6968. It remains below its three weekly EMAs in long-term bear territory. Weekly technical indicators are turning bullish. MACD has crossed above its falling signal line inside its oversold zone. RSI is rising towards its 50% level. Stochastic is moving up above its 50% level.
FIIs were net buyers of equity on Mon. and Wed. (Jan 7 and 9) but net sellers on the other three days during the week. Their total net selling was worth Rs 5.7 Billion. DIIs were net sellers of equity on Mon., but net buyers on the other four days. Their total net buying was worth Rs 11.3 Billion, as per provisional figures.
India's IIP (Index of Industrial Production) dropped to a disappointing 17 months low of 0.5% in Nov '18 from an upwardly-revised 8.4% in Oct '18, due to a high base effect and a contraction in manufacturing growth. The previous low of 0.3% occurred in Jun '17 (a month before GST introduction).
BSE Sensex index chart pattern
The bearish 'rising wedge' pattern (refer last week's post) on the daily bar chart pattern of Sensex has morphed into a 'diamond' pattern, which usually has bearish implications. In other words, the likely breakout from the pattern is downwards.
Since a 'diamond' - a somewhat rare pattern - tends to be a reversal pattern that forms at a market top (refer this post), its formation was ignored earlier. But now it has become visibly obvious that Sensex has been consolidating within a 'diamond' during the past 10 weeks or so.
Since a 'diamond' can sometimes be a continuation pattern, an upward breakout can't be ruled out. The index has closed above its three EMAs in bull territory with a 0.9% weekly gain. That gives bulls a slight advantage.
Note that a 'diamond' can be viewed as a 'head and shoulders' reversal pattern with a bent 'neckline'. In this case, the 'head' is actually a bearish 'double top' reversal pattern with two left and two right 'shoulders'.
A 'diamond' starts out as a bearish 'broadening top', which is followed immediately by a 'symmetrical triangle' pattern. The eventual breakout follows the 'rules' of a breakout from a 'triangle'.
That means, all four possibilities are on the table - a downward breakout, an upward breakout, a 'false' upward/downward breakout, and a sideways move through the right 'apex' of the 'diamond' that negates the pattern. (Hope you are not thoroughly confused!)
Remember that the 'height' of the 'diamond' (~2300 points on Sensex chart above) should be added/subtracted to the breakout point to set the upward/downward target. Wait for the breakout before taking a buy/sell decision.
Daily technical indicators are giving conflicting signals, which is often the case during periods of consolidation. MACD is facing resistance from its gradually sliding signal line in bullish zone. ROC is about to cross below its 10 day MA in neutral zone. RSI has moved above its 50% level. Slow stochastic is rising towards its overbought zone.
Of the few Q3 (Dec '18) results announced so far, TCS has met expectations but Infosys has slipped badly. IndusInd and Bandhan Bank have shown downward pressure on margins due to large provisions for IL&FS loans.
The macroeconomic environment is favouring bears again. Oil's price has started to rise. The Rupee is slipping against the US Dollar. After weak auto sales growth in Dec '18, the shock of the dreadful IIP number in Nov '18 may be the proverbial straw that breaks the back of bulls.
NSE Nifty index chart pattern
The bearish 'rising wedge' pattern on the weekly bar chart pattern of Nifty has been replaced by a visibly obvious 'diamond' pattern. The 'diamond' is usually a 'reversal' pattern. That means the likely breakout from the pattern is downwards. (Read gory details about the 'diamond' pattern in Sensex post above.)
A 'diamond' has measuring implications. The 'height' of the 'diamond' (~700 points on Nifty chart above) should be added/subtracted to the breakout point to set the upward/downward target. Wait for the breakout before taking a buy/sell decision.
Weekly technical indicators are giving conflicting signals. MACD has merged with its signal line, and is moving sideways just below its '0' line. ROC has dropped sharply from its overbought zone. RSI has moved above its 50% level. Slow stochastic is rising towards its overbought zone.
Nifty's TTM P/E is at 26.00, which is well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is rising in neutral zone, hinting at near-term index correction.
Bottomline? Sensex and Nifty charts have been consolidating within 'diamond' patterns for the past 10 weeks. Breakouts from the patterns appear imminent. Remember that an upward breakout should be accompanied by a volume surge. A downward breakout doesn't require volume support for confirmation. Wait for the breakout before initiating any buy/sell decisions.
(Note: Markets fluctuate, but there are always opportunities if you know where to look. Learn how to choose fundamentally strong stocks. Become a paid subscriber of my Monthly Investment Newsletter. A limited number of new subscriptions are being offered till Jan 21, 2019. Enrollments have started. Contact me for details: mobugobu@yahoo.com.)
S&P 500 index chart pattern
The following remark was made in last week's post on the daily bar chart pattern of S&P 500: "...Friday's curtailed trading formed a 'gravestone doji' candlestick pattern, which can lead to a pullback towards the plummeting 20 day EMA."
The expected pullback turned into a sharp rally. The index closed above its three EMAs in bull territory on Fri. Nov 30. Bulls managed to prevent the 'death cross' (of the 50 day EMA below the 200 day EMA) for the time being.
The next hurdle for bulls is the previous (Nov 7) index top of 2815. Bears can be expected to put up some resistance there - as they had done in Oct '18.
Daily technical indicators are turning bullish. MACD is rising above its signal line in bearish zone. RSI has just crossed above its 50% level. Slow stochastic is rising towards its overbought zone. Some more near-term upside is likely.
On longer term weekly chart (not shown), the index closed just below its sliding 20 week EMA, but above its 50 week and 200 week EMAs in a long-term bull market. Weekly technical indicators are in bearish zones. MACD is falling below its signal line. RSI is facing resistance from its 50% level. Slow stochastic is falling below its 50% level.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 consolidated sideways during the week, and continued to face resistance from its 20 day EMA. However, it appears to be forming a 'rounding bottom' reversal pattern.
Though the index closed below its three EMAs in bear territory, the probable acceptance of the BrExit deal by all parties concerned, plus the fact that US and China have agreed not to escalate their trade war have brought a sea change in market sentiments.
(At the time of writing this post, the index is trading almost 150 points higher, and has moved above its 20 day and 50 day EMAs.)
Daily technical indicators are looking bullish. MACD is rising above its signal line in bearish zone. RSI is above its 50% level. Stochastic has entered its overbought zone. Some near-term upside is likely.
On longer term weekly chart (not shown), the index closed below its three weekly EMAs in long-term bear territory. Weekly technical indicators are in bearish zones, but showing upward momentum. MACD has started rising below its signal line. RSI and Stochastic are rising towards their respective 50% levels.
