Thursday, December 1, 2011

EOD Analysis for 1st December 2011 and Outlook for 2nd December 2011

Lots of liquidity injected into the global systems with concerted action by a lot of Central Banks.
So far so good; readers still need to remember that the market capitalization loss in the last 6 months has exceeded 13 trillion dollars [not counting the losses in commodities, bonds, private equity and 'hybrid' and 'structured' derivatives] This is far greater than QE1+QE2+QE3*[expected to be $545 billion] plus all of BoJ interventions, all of ECB interventions, all of BoE interventions and debt monetization continues to haunt inflation woes!

I am very disappointed with our media actors talking about Food Inflation coming under control and all nonsense; has the cost of aatta, chawal, daal decreased by even 50paise a kilo? Does your bhajiwala reduce the cost of your potatos and tomatos by even 25paise a kilo? That is the big economic situation we are living in - Economic Contraction yet Hyperinflation. Even the proponents of EW are harping all over with the dictionary meaning of 'Deflation' i.e. decrease in credit availability. That is what the banks are doing; less business credit, staff reduction but absolute punter action on all commodities driving the common man berserk. What one can purchase with a 100 rupee note or 10 Euros or 10 Dollars - the purchasing power of these notes are simply decreasing due to debt monetization. So much so for the fundamentals

Yesterday itself, we had highlighted that a corrective C wave is unfurling that will try to take out 4911-4944-4994 as it progresses. The huge gap up fulfilled 2 levels and the last poke towards 4944 and possibly 5032 is pending. Tomorrow is Friday so we may have some postive aspects in the first half and then some profit booking towards the end of the session. Option writers spot is tethering between 4900 and 5000 for now

Critical levels remain unchanged; conditions for bulls have already been highlighted
Condition for bears gets stronger only with a close below 4880 and then 4780. The gaps on upside created yesterday and today are in all likelihood due to be filled before 16th December as the OI in both instances did not exceed 24 million; today, the OI was 23.8 million on open despite such a big relief but increased to 25 million when the profit booking game started.

Inference: Sell on Rise is preferred strategy being deployed. Gap-ups and gap-downs will be a common phenomenon until about March 2012 by which time the full blown effect of the debt crisis will unfold.

For tomorrow, 4944-4994-5032 will be sell levels; no buying encouraged for Friday factor and recommend folding maximum positions by EOD regardless of profit or loss and take fresh guard on Monday

1 comment:

reachnagraj / theknight16 said...

Just a note of caution: When I say EW proponents, I don't mean our seniors of the team but the likes of Bob Pretcher and his team!