Monthly update

Its been over a month since my last update and the markets have pretty much just been dancing around going nowhere. Last month the NSE 20 share index closed at 3092 and since then we have continued to see further weakness with the index closing this month at 3016. The 3000 psychological support level is still holding. This level has no statistical weight to it and is simply a pure psychological level which means that the market can slice through this level pretty easily.

1. The NSE 20 share index

   

   The NSE 20 share index monthly chart reveals a market that is still in a confirmed downtrend. Though liquidity has dried out, the market still cant seem to find the strength to push higher. The monthly RSI and MACD are still in deep oversold territory and are yet to signal a change in trend.

   

   That weekly 50 day moving average has been my line in the sand. The markets have tried to push above this average several times but have been unsuccessful and is now beginning to selloff. The MACD is right now giving a fresh sell signal. Even with liquidity being this low, I cant help but wonder if we will see further weakness. One thing that’s certain though is that if that 3000 level is broken, then expect to see an acceleration of the selloff.

   

   The 200 day moving average support that has been holding has been broken. We are right now trading below this significant moving average and it will be interesting to see if we continue to see weakness. Notice also that the break today occurred with above average volume. How we trade tomorrow and for the rest of the week will paint a clear picture of where we are headed.

2. The NSE ALL Share index

   There is not much historical data on the All share index to paint a clear monthly or weekly picture. The index is fairly new to the market and thus a daily chart will be most accurate in painting a picture of where we are.

   

   This index reveals a market that has been moving sideways since July. Prices are still above the 200 day moving average. This to me looks like a consolidation pattern which is yet to resolve either to the downside or upside.

   Looking at these charts, its clear to me that the markets look weak going forward. Am not a buyer of stocks at this time, now the bond markets look much more appealing to me and I think we will continue to see much more interest in this market as investors look for ways to diversify their portfolio.

   I must also say that its encouraging to see investors finally embrace the bond markets and its about time if you ask me!!

    

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~ by Ade on October 1, 2009.