In my previous post I had written markets might retest bottoms, and that is exactly what happened. The markets touched 8400 odd whilst last time on a closing basis they had touched 8500. The good part is that the bounce back happened from these levels, which in essence means that if we can hold this bounce back then it might spell an intermediate bottom for the markets. However if these levels are broken then its an all together different matter of markets collapsing further down. Lets hope that we can hold these levels, and bounce back from here. The closing of the markets was a positive signal with the markets closing at the highest point of the day, also the American markets provided some good news with an impressive close on the Dow Jones....
Also another interesting fact is that when we moved up from 7500 levels to 10,500 odd levels a gain of 40%, this was achieved in 6 trading days, however the fall from 10,500 to 8300 has been achieved in 10 days and the 11th day saw a bounce back. This might be an indication that the rush to the bottom is slowing down a bit!!! Although the momentum charts are trading below the positive territory still it is trading at a level of around 85, whereas in the earlier weeks it had touched levels of 75, indicating a strong negative trend. (anything below 100 shows a negative trend, with the trend gaining momentum on either side the index trends away from 100. E.g. a 60 is a very strong negative trend, whereas a 110 is a medium positive trend. 100 is flat trend).
In the meantime, the news continues to be mixed, whereas now fears of Citibank getting into trouble has started to surface, along with GM and Ford, at the same time there have been voices of a stimulus package coming from Indian Govt coming are becoming stronger...so its a mixed bag, but lets hope that this contagion does not come into Indian companies...
So where do we go from here, if the markets fall below the 8500 levels convincingly on a closing basis, would mean that we would have made a new bottom. That would mean that we would go down further, then possibly bounce back, then again would retest the new bottom, and then if that new bottom holds then the markets would start to stabilise....whew!!! now that's a long process...however if this bottom holds then it would mean that we would seen the bottom for the time being and the markets can start the rebuilding part...
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