The momentum on the ASI was not impulsive at all from the start of the present wave at 6254 points. Nevertheless it crawled up to 6603, thus giving a return of 349 points. Presently there is a visible turn and the trend has a reversal to the down side. At the top of 6603 the RSI just touched the oversold region of 70 points, whilst at the end of day of Friday the 26th of August 2016, it stood at 56.50 points. What was significant now is that the MACD has given the 1st sell signal, when it cut the signal line from above, with the 1st down bar on the histogram as well. This is bearish as we know. Also the 9sma which acts like a partner of the price line got breached from the top, which is once again a short term bearish signal. PSAR too gave the 1st dot yesterday, thus showing the strong bearish signal in the ASI.
But there is an indication that the market has another 1 more move to the up once the pullback or the correction is complete. Based on the Fib retracement line drawn from the low of 6254 to the high of 6603, the 38.2% support line sits at around 6466 points, whilst the 50% support line is around 6426 points. We can expect the ASI to retrace down to these very important support level, and thereafter resume the trend extension to reach resistance between 6710 and 6752.
Going by the values of many counters we can see that there are some popular and large companies with PE's less than 6, and these are the Counters that will take the Market to the next extension.
I expect to share those counters in the next few days.
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