ASI - RSI is at 22 points on the Daily Chart

Every body knows that there is PANIC  all over the world. Sadly no Leader locally or globally can be looked towards instilling Hope and Confidence to the People of this country or the World. In that sense the sentiments are ruling every human being, and it is grappling all markets, especially the Global Financial Markets.

ASI is now treading the oversold areas. The RSI is at 22 points, at the time of writing. We have seen it falling to as much as 12 points twice during this year. Therefore a pullback can happen, as the norm in an oversold scenario.

The 1000 sma was also breached down today, which was the 2nd time it happened during the 2016. This is an area that acts as a strong level up or down for the ASI. Now that the index broke down from that, it will now become a strong resistant to break in a recovery.

The next support is around 6280 points, which is the 50% fib retracement. Hitting that can bring the RSI down to about 18 to 15 points.

Only relief for the bulls is that we are still on the corrective 2nd wave, and even if the ASI pull back to 5800 and bounce, it could be the 3rd wave, which has helped the bulls to thrive in the past. But the bears are very strong at this time.

ASI - The week ended with a ray of hope

ASI survived the turmoil that prevailed for three straight days, wherein more than 100 points were erased. Today's behaviour in the market helped the index to close on a positive note. As mentioned in the previous posts the fall of 38 points in 2 days and then a fall of 64 points yesterday was too much of a hit, just as much as the rise of the market from a low of 5800 points.It is interesting to keep a tab on the daily fluctuations based on points, as that is the first action that takes place for all analysis to happen.

Analyzing the previous 3 days will help us to conclude that the market dropped on average +/- 34 points per day, in that sense today's recovery of 29 points is almost as near as the fall. Thus it will be foolish to conclude that the market is going to go northwards from Monday onward. Even the Volumes and the Turnover do not contribute to a rapid market advance. If some one expected the market to fall 34 points continuously for 20 market days, means that for the month it would have fallen 680 points. Similarly if another expects the market to rise 29 points every day for a month, means that the market will go up 580 points for a month. Both these scenarios are not in line with the reality. Therefore a happy medium must be expected. But that happy medium is very difficult to be summarized, given the inertia we witness in the market. Nevertheless I expect the market to fluctuate between 100 and 200 points in the month of June. The momentum suggests a behaviour closer to 100 points than 200. In other wards the market could close 100 points minus of today's level or higher, i.e 6366 to the down side, and 6566 to the high. 

Weekly chart suggest that the market concluded the 1st wave to the up and moving within the counter trend. I do not say this based on elliott Wave count as I'm not an expert on that. But I do believe on at least 3 waves up or down, when spotted can be really profitable. My thinking of the 1st wave is purely based on that premise. Therefore the present retracement is a counter trend which could drag the market down to around 6380 points, before the 3rd wave to happen. At that point we could see the market retesting the recent high of 6700 points.

ASI - dropped 64 points amidst PANIC.........

Re-emergence of Capital Gains scare helped to send shock waves in the market. ASI dropped 64 points the highest fall since the beginning of the retracement from the May high of 6700 points.

The news of the CGT imposition has fueled up the already NEGATIVE SENTIMENT in the market. How the CGT is going to be imposed, or whether it is going to be clamped on Stocks is not clarified as yet. But the news itself was enough to deter the Sentiments even further. The information carried in the news mentioned that the Government will not be charging it by using the former Tax regime, but will be drafting a new Tax regime. How and when this will be finalized is also another point to ponder.

Negative sentiments breads more panic, as such we have to just rely on the retracement areas to see how steep and deep the fall and damage is going to be.

Bottom fishing for the value Investors is what is going to take place, as the Panic selling doesn't care about value when they sell. Traders too will benefit if they spot swing lows as and when they take place.

The next support will be the 38.2% fib resistant level of 6380 points, and if that happens tomorrow, then the RSI will be below around 25 points, as it is at 31 at the end of today's trading.

Assuming a swing low at 6300 points means that the index had moved 500 points from the March low of 5800 points. This is roughly 175 points per month increase for 2.5 months. Given the negative sentiment in the market the pace is still too fast, which can take the index upto 7350 points.

 

ASI - 19 points dropped in 7 market days

The ASI is trending through a painful side way movement. In a matter of 7 days the it had retraced only 19 points, beforethat it struggled to move up about 19 points. The critical point to learn here is that the index to fall 38 points it took only 2 days. What actually happened is this, on the 6th instant in my last post on the ASI, the close was 6519 points, then in 5 days it crawled up 19 points to 6538 , and in the next 2 market days it fell 38 points. This shows how confused and lackluster the market is at present, and 38 points drop in 2 days  is not at all positive. The index closed around 6500 points today. This is a psychological support level, which caused to erase about 200 points of the previous uptrend of 900 points. That is about 23 to 23.6% retracement of that up move. The next level in the fib retracements is at 6380 points which is the 38.2% retracement level. Before this level there is another major area of support at 6450 points. However the momentum and the sentiment in the market is so negative that it will be great to see these levels truly support the market. Whilst that is the negative side, the positive is also can be aggressive as the market is hunting for anything good to propel the market to the next level. Traders can do nothing but wait.

TJL - Broke out of the high of 36.30. Will be very volatile now.......

On the 6th of January 2016 I stated thus on TJL.N.0000

--- My 1st post on TJL was on the 13th of December 2015. At the time I expected the stock to re-test the high of 36.30, and if done it was a gain of 5%, from the lowest low of the 2nd of Dec '15 which was 33.80. As such it was on my watch list. Yesterday the 5th of January 2016, it hit a high of 36.30, but failed to close above with strong volumes. This is not bullish for the time being, unless it goes up and closes above 36.30 with strong volumes. Presently it is trading below the psychological resistant point of 36.00. Until and unless the stock moves beyond 36.00 and closes, I do not expect it to move into higher highs in the short term. Hence I will take it out of the watch list until an uptrend is visible ---

It is really great to see that the stock has now moved above that high of 36.30. However we can see that the stock is stressed out, which is very critical to be sorted out for the counter to re-energize and keep extending the up move. This is the reason why the price took a big hit since the 5th of January 2016. We can see that the price re-testing 36.30 on the 5th Jan '16, and nose diving to a low of 28.80 by the 19th Jan '16. That was a hit of 7.50 in a matter of 9 days. A 21% fall in that short period was the first instance for this counter since 2012. Thereafter the stock rallied 19.4% from 28.80 to 34.40 within 12 market days. For the next 21 days it went through a painful fall from 34.40 to a low of 27.50. It took 55 market days for the stock to break 36.30.

Therefore I do not expect the stock to rally the way it did since low of 2012. The stock had trade above the 200 day moving average from August 2012 right until January 2016. That is more than 41 months. From now onward I expect the stock to trade with many swings, and volatility. The present trend extension can be tested between 37.70 and 38.00, whilst the support is between 34 and 35.70. This counter in my opinion is a stock for the long term, but with a trend twisting from a rally to a choppy phase it will allow traders also to squeeze some juice out, provided you wait for ideal pull backs and corrections.

ASI - 6500 points looks a major support

IMF assistance to the economy is an obvious breath feeder for Sri Lanka, and could be the game changer for the ASI as well. Fundamental changes that could follow through to energize the economy can trickle down to many Companies and Sectors listed in the bourse. In this context the ASI too is not wanting to give into the bears as it remained almost at the close of 3rd instant.. Looking at the intra - day the market close was somewhat bearish as the index was about 25 points higher, but could not last long as the Turnover levels did not help the momentum positively. RSI is at the neutral area of 46 points, and the 9 day moving average is at 6547 points. On the down side the next major area of support stands at 6400 - 6450 points, whilst the upside is the previous high of 6700 points.

ASI is heading towards 6500 points

After the top of 6708 points on the 16th ultimo, the ASI has come down gradually to 6519 points. This is an average fall of 14.54 points per day for 13 days. There is a major psychological support at 6500 points, and a fib support at 6506 points. A failure to hold there can expose it to track downwards to 6450 area, as many feel this level is a support to hold in the short term. In the meantime the RSI has now fallen below the middle level of 50 points, as it is now around 47 points. As long as we are trending within the present uptrend I expect the ASI to move beyond 7000 points and possibly move beyond 7500 points. On to the down side I would not worry as long as we are above 5800 points which was the starting point of the present uptrend. Either way the pace in the market is very slow, and trading too makes very erratic. No stock follows a trend for continuous days. As such it is very important to watch your stocks very closely to get in to a position. Following basics such as minimizing the number of stocks to watch to about 5 the most and buying them on dips, whilst sticking to the stops need to be followed with responsibility. As for the investors who are looking for periods beyond 6 months from now, the present momentum is an ideal platform. There are many counters that offer very attractive returns for who ever that would look for more than 6 months.