Markets to move up....last leg of bear market?

OUTLOOK: VERY POSITIVE

Now with the Nifty and Sensex up in the green (on the charts), some happy times should be here....Specially considering that this uptrend is coming after a long time. The last uptrend that we saw was on 29 th of July, and it did not last for a very long time, lets hope that this uptrend lasts longer...

MACD : Just getting above the zero into the positive territory

Also as I have written in my many previous posts some of the stocks have already seen there bottom and now have started to consolidate, this can mean that smart money could be finding its way back into these stocks....

As the classical definition of the last leg of a bear market goes: " When the markets would not react to bad news, and latch onto any good news to move up".....this definitely seems to be coming true wherein the bad news of IIP nos was shrugged off by the markets and the good news of inflation coming down was lapped up by the markets....

Its time to be cautiously optimistic at last...keep an eye on MACD, we need to trade above 0 to remain in the positive zone....

More Downside to Come???

Although most of the analysts are unanimous with the earnings downgrades, there are only a handful who are actually putting their hands up and quoting levels for the markets. Earlier today I was reading an interview with Shankar Sharma, wherein he is predicting a 20-30% downlevels from the current levels for the market!!! Some excerpts of his interview as published in moneycontrol.

"Markets will not discount this substantial slowdown in advance so I reckon somewhere in the middle of the month i.e. this month the market will begin to get a sense of how bad their numbers are going to be. I wouldn’t be surprised if a few major companies across the world came out and issue earnings warnings that they are not going to be able to meet the numbers that they had forecasted for this quarter. Therefore we see the market beginning to sell-off probably in the middle of December and this could continue I reckon to the middle of January or end of January."

There are some reports emenating from the US that the recession fears are getting stronger than ever before, and this recession would be the worst that the world has seen after WWII. As published in an article in the bloomberg:

The U.S. economy may be headed for its deepest and longest recession since World War II as mounting job losses take their toll on consumer confidence and spending.

"Employers cut payrolls last month at the fastest pace in 34 years as the unemployment rate rose to 6.7 percent, the highest level since 1993. The 533,000 drop brought cumulative job losses this year to 1.91 million, the Labor Department said yesterday in Washington. At 12 months, the recession is already the longest since the 16-month slump that ended in November 1982. The recession is the 11th since a downturn that occurred in 1945, the year that World War II ended."

Another factor that needs to be kept in mind the rising US dollar. This is not particularly good news for the developing economies, whose currencies are falling in sync Vs the US dollar on a rapid pace. Hence till such time that we see a cooling off the US dollar or atleast stability there seems to be slim chances of EM's recovering swifty, add experts.

Sensex Analysis

OUTLOOK : POSITIVE

From the looks of it, we might be out of the woods, if we can have a couple of days of decentupmoves. The upmoves of the past few days has ensured that we are close on the charts ofpositive territory. Now with the news flow of the rate cuts coming in, the markets should gain some traction. Until there is a sharp downmove, we can safely assume that we would be out of the short term bearish trend if we close in the greens for a couple of more days!!!

What needs to be seen now would be whether the FII selling subsides (which in any case it does due the Christmas break abroad), and if it does then there is enough domestic money waiting on the sidelines to take the markets up in a hurry. Only a cap of caution being the quarterly results which are not expected to be good...If we can have some decency on that count also then we can safely say that we might have seen the worst behind us.

As written in my previous posts, last series has held up well, and the retesting and holding of the lower levels of around 8500 have augured well for the markets. Now with the tripletesting of the bottoms, we might have formed a base from which we can aim for higher levels. . . provided that the levels of 8500 hold up. Also a couple of other factors seem to be in the favour are, that we have started to trade above the Moving Averages line and if we can trade in this region for some more days, not giving up the gains then we would have firmly gone out of the bear phase, at least for the short term.

MACD: slowly trying to get into positive territory, now left with just some more ground to cover

image courtesy:indiabulls