S&P
500 managed a steep rally of 1.24% today. Does this mean – the worst is
over and S&P500 done with correction? Let us find out.
Trading
Rule: When market breaks down below a well defined support, then
pullback to the previous support is a shorting Opportunity
As you
can see in the chart above: 100 dma was a solid support for the index
for more than a year now and the breakdown below 100 dma this time
appears decisive.
What happened today?: A Steep Rally
How does the chart look now?
As you
can see above: the pullback has been to 100 dma. The question: Is the
pullback to test 100 dma as resistance or this pullback marks the end of
the downtrend? .
Trading
Rule: In Strong Bull markets: there are false Breakdowns. It means
market breaks down first and then quickly erases all the loss and climbs
back above the support.
If
S&P500 continues with rally over next few days – then this breakdown
would be considered as false breakdown and market then would resume
uptrend
Well,
next few days – that’s the answer market needs to discover. So, it
would be premature to celebrate. Keep an eye on what market does next
from here on
"We
don't only tell you what stocks did, we tell you why, and we tell you
where stocks are headed next. How? By tracking the psychology of the
markets, tracking patterns and indicators that reveal where stock prices
are trending, giving us high probability trade opportunities."
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Jet
Airways rallied 9% today to close at 232. Does that mean stock is ready
to rally? Well – just look at the chart and you will understand why the
rally means nothing
Jet Airways is a sinking stock
As you
can see in the chart above: Jet Airways stock has declined from 650 in
May 2013 to now at 232 by Feb 2014. It’s too dramatic a decline and
chart has been so badly damaged in this fall that any rally will invite
sellers sooner than later. Technical turnarounds do not happen by one
day bounce. Sharp rally can sometimes break the downside momentum but
that is no guarantee of up move.
Why stock was up 10% today?
Competition
Commission of India’s (CCI) approval for purchase of 50.1 percent stake
in Jet Privilege Private Ltd (JPPL), a customer loyalty programme unit
of Jet Airways. But this news has been there for months. The news may
offer some floor for time being but it does not change the operating
environment of the company. Also, remember – few days back Federal
Aviation Administration (FAA) has warned Indian airlines on safety
issues and has put a ban on new flights to US. Things are tough and
today’s rally can only be perceived as a relief and not a game changing
event neither fundamentally nor technically.
"We
don't only tell you what stocks did, we tell you why, and we tell you
where stocks are headed next. How? By tracking the psychology of the
markets, tracking patterns and indicators that reveal where stock prices
are trending, giving us high probability trade opportunities."
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invite you to become Premium member of the website and get access to
all our recommendations. WE just charge 2500 rs/pm .To join us plz mail
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You run
the risk of drowning. The same happens with the stock that tries to
rally against the trend. It eventually sinks to New Lows.
Have a Look at one such stock: Bank of Baroda
Here’s the weekly chart
As you
can see in the chart above: Bank of Baroda began its downtrend in 2011
and since then every attempt of the stock to rally against the trend has
resulted in fresh declines. The stock is a prime example of why one
should never try to hunt for a bottom in a stock that is in downtrend.
Reason: It’s not worth it.
Trend persists longer than one can imagine
Power sector
has suffered a lot in last five years with all sorts of problems from
project clearances to coal availability to indecision on tariffs to
poor health of SEBs.
Tata Power Company is
India’s largest private sector, integrated utility company. The company
has an installed power generating capacity of about 6000 MW. The
company through
its subsidiaries and joint ventures has a presence in power
transmission, distribution and trading. The company’s health is the best
way to gauge the health of the Power sector.
Well, Pictures speak for themselves. Here’s the Tata Power stock Weekly Chart
Well as
you can see in the chart above – the stock has witnessed waterfall like
decline. From Highs of 145 in CY2010, the stock has come down to 72 and
still there are no signs of revival and turnaround.
Well, How
can a sector or a leading stock in a sector make a bottom when
political noises are for free power and no tariff revision. Add messy
coal policy and we have a total recipe for disaster as far as Power
sector is concerned. Tata Power stock will continue suffer as long as
these voices remain loud.
"We
don't only tell you what stocks did, we tell you why, and we tell you
where stocks are headed next. How? By tracking the psychology of the
markets, tracking patterns and indicators that reveal where stock prices
are trending, giving us high probability trade opportunities."
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invite you to become Premium member of the website and get access to
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Here’s one breakout that seems to have shocked everyone with its vertical up move
The Stock is Aurobindo Pharma
TRENDZOFMARKET COVERED THE STOCK AT 195 AND 205 TO BUY THIS STOCK FOR MEGA GIANS
HERE IS MY BUY CALLS FEW MONTHS BACK
http://trendzofmarket.blogspot.in/2013/10/aurobindo-pharma-stock-can-test-280-300.html
SEE WHERE THE STOCK IS NOW HIT 502 TODAY MORNING STUNNING 240% MOVE IN JUST 3 MONTHS TIME YOU CAN GET SUCH CALLS ONLY FROM TRENDZOFMARKET
Here’s the Weekly chart of Aurobindo Pharma
As you
can see in the chart above: there was a well defined resistance of
201-205 before October 2013. The stock then broke out above 201-205 and
resulted in vertical upmove. From levels of 205 – the stock zoomed to
490 i.e. 1.5x in less than 4 months. That’s what breakouts do if you
catch them at right spot and stay with them little longer.
Remember, all break outs do not take vertical path. There are many that consolidate for weeks and months before taking off.
"We
don't only tell you what stocks did, we tell you why, and we tell you
where stocks are headed next. How? By tracking the psychology of the
markets, tracking patterns and indicators that reveal where stock prices
are trending, giving us high probability trade opportunities."
We
invite you to become Premium member of the website and get access to
all our recommendations. WE just charge 2500 rs/pm .To join us plz mail
us to trendzofmarket@gmail.com
This is what happens when a long standing support cracks
Panic Sell off
Trading Rule: When one level cracks – then market races to the next level of support. That support stands at 200 dma.
S&P500
had a dream run for last many many months and it never cracked even
below 100 dma during that period. But with market now cracking below 100
dma: expect total bearish pressure on markets. Today we saw dramatic
selling in US market. Buy the dip crowd will now give way to sell on
rallies crowd. We are going to witness a different market over next few
weeks and hence be careful.
Remember,
when markets break down: No support is good enough to stand the bearish
force. We have been cautioning on a market for a while and now its time
to just stand aside and let the bearish force play itself out.
S&P500 despite all the bearishness is holding up well. Here’s why
Here’s the Daily Chart of S&P500
As you
can see in the chart above: S&P500 seems to have strong Horizontal
support at 1770. First, in October – it took a while for index to break
past 1770 and when it did that in Nov – it never looked back. Post
breakout: index consolidated a lot above 1770 and then in December,
S&P500 managed a stunning recovery from 1767 all the way to 1850.
Now, it has pulled back pretty violently but again seems to be holding
its head above 1770 despite all the bearishness.
That’s not all: the current Horizontal support level also converges with 100 dma: the solid support level of 2013
As you can
see in the chart above: S&P500 during 2013 managed to hold its head
above 100 dma every time index pulled back. It seems to be doing the
same now – trying its best to hold 100 dma. Will it succeed? We will
wait and see. Rest assured breakdown below 100 dma will lead to panic
and S&P500 can slide all the way to 200 dma i.e. 1706. So, that’s
why the current level seems a very interesting place to watch the
market.
OUR PREVIOUS REPORT ON S&P:
http://trendzofmarket.blogspot.in/2014/01/after-brutal-friday-correction-where-is.html
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