Pithaly

The 100 day moving average line is at 15,398.
(On both, the weekly and the daily, approximately).

I would wait for the Sensex to:

1. Cross that.
2. Move higher.
3. Come back to re-test the 100 day moving average line.
4. Take a good support on it for a few days or a week or two.


Alternatively,

1. I would wait for the sensex to react down from what ever top it makes now.
2. Check if the new bottom is higher than the earlier bottom at 12500.

All this, before INVESTING for the medium term. It's too early to speak of the long term yet, unless a few fundamentals start to show persistant change.

Ever since the bear run started, the Sensex has made three attempts to cross the 100 day moving average line in the daily charts, the last being at 17,600 or so, when the 100 day moving average line crossed DOWNWARDS with respect to the 200 day moving average line and from there the Sensex just kept sliding.

On the daily charts the moving average convergence-divergence is still well below the 0 neutral level. Not a bullish sign.

The price rate of change is at around the highest levels achieved earlier. Not bullish.

The Sensex was not able to cross the daily moving average line which is at 14,925 since it exhibited a high for the day of 14980. Not bullish.

Volumes are still very low compared to the volumes during the bull trend.

This does seem however, to be the bear market counter rally developing. Wave B in Elliot Wave language.

The termination of wave B leads to the unfolding of the most destructive Wave C, which may be as far way as 6 months from now. So wave B may take the Sensex anywhere from 16,200 to 18,000 or thereabouts.

If you must buy, then buy now. Not when the sensex is 17,000 to 18,000. that's the point where you lighten your current and EARLIER load!

If not, hold patience for 6 months or so, or till the signals given above are negated and confirmed before investing.

One could always play in a small way for 10% to 15% gains in the short term, with the attendant risks involved. Which implies that this play is best done in group A shares.

Look, the time to buy was when things were the most pessimistic. Since then the shares have risen considerably. for example, from it's bootom of around 1,000, SBI now trades above 1,500 which is a full 50% rise! To expect further rise from here without a change in fundamentals seems to me as a tall order.

If no further fundamental bad news emerges from the US, then I expect that the Sensex will trader sideways for 6 months, before beginning a new destructive slide.

A bear market ends in hopelesness, despair, blood, and total capitulation. That has not happened as yet.

And the most important signal of the ending of a bear market in India!

THAT OF A SCAM!!

Please keep checking the horizon for signals of a major scam.

On the other hand, the 200 day moving average has not been pierced on the downside (as mentioned by me earlier) technically indicating that we are still in a LONG term bull market, which is experiencing an intermediate term downtrend.

We would be squarely placed in a long term bear market on violation of the 200 day moving average line in the weekly charts which is at 11,899.

If the expected wave C emerges, then this possibility exists. Else, with the strengthening of the dollar and the fall in crude prices and the likely substantial fall in commodity prices over the next few months, a strong wave B may be emerging, which would culminate in a very weak wave C and the continuation of the bull run. This extended bull run did happen in the US after the severe Black Monday fall in 1987 for another period of 13 years till 2000!

The usual disclaimer applies: "If ya don't listen to me, you will lose money"

Which of course begs the question "What did I say?" Heh.

KakStearns