Bulls held ground as expected, but there is a long way to go

Yes the market turned around making the bulls stronger. But this is not the only time this has happened during the recent past. Also when the market had come down so much, a small breather is not the best we could expect. As such I earnestly hope that this could last for a few days, and hopefully for weeks. But lets take the days as they come, without being highly ambitious.  For the value investor there are opportunities. I know this because I notice that many careful long term investors have very very slowly started going long today. This crowd would love to see the bears in control, but the short term traders will be the bulls if the trend is going to become a rally for a few days. The question is the magnitude of buying power they would want to put in to the market. Which is a big question. Therefore caution is the best friend for any one who would expect the market to rally. If a rally were to start, then 1st the 6903 points will be the mark to break, as the 10% fall from the 7670 points high is at that. For this to happen the market should go up by 5% or 347 points. Well we have to wait and see for that, after all it took only 7 days to bring the market down by 380 points, and how long do you think will it take to move it up by 340 points. I personally do not want to guess, as my guesses have not realized thus far since.............

Market can turn up tomorrow if some conditions are met

7 days tumble made 384.72 points crumble, leaving all and sundry in a jumble which only a selected few could mumble. Ironically on the 12th of January 2015, exactly 1 year ago, the market started to fall till the 31st of March, during this period the index fell 910 points, an 11.86% drop. 2nd fall started 2 days after the General Elections, on the 19th of August 2015, since then to date the market has come down a precipice by 1003.89 points, or 13.33%. RSI too is 2 points away from the 52 week low of 15.05, which was on the 30.03.2015. At present the RSI is at 17.32. Based on this scenario I believe the market to close above today's close, on the morrow. Let me repeat- Tomorrow's close to be higher than Today's. That doesn't mean...... that all is well.

Correction is a fall of 10% or more. Can last for 2 months. Bear is 20% or more.

Market was a field day for the Bears, as it was hammered down more than 60 points. Day by day we see more bears joining the party. It is very painful to see how the values are falling. Given the rampage of information streaming through the print and electronic media, and the VIP's in the authoritative places, it is no surprise that the Market is falling. At this pace I won't be surprised to see the index is testing the 700 day moving average at 6596.40, or 6600 which is a psychological level. Failure there can obviously expose 6500 points, which may not be impossible at this rate. Fundamentally we do not see any light just yet. But we are in Sri Lanka, a country that has no war, no turmoil, no chaos. If we can't make this Country flourish, then it will not be the problem of the Land, but the Man. Fear has kept all away due to the lack of beneficial information for the bulls, till then the risk of negativity will take it's toll on the overall market. Just as much as the Price and volume makes the bears to hold the roost, so will the bulls. But presently it is the Bears on play.

However Markets Go through Bull markets, Bear markets and Corrections. Any time the index trends up and falls 10% or more upto 2 months it is called a Correction before the market move back to the up trend channel. Same will be the case when the market is trending down and goes up 10% more within 2 months. My analysis says that the market is going through a correction. This is the 2nd time it has happened during the last 52 weeks.  The 1st time the market fell 10% or more was on the 27th March 2015, but in 2 market days the trend reversed and moved up. The 2nd time it went down 10% or more was on the 1st of December 2015, and the index is moved down for the 25th market day, at the end of today's trading as well. The next thing is that the market has fallen 261.79 continually for the last 6 days. The bulls may have a sigh any time soon, but till fundamentals are not in favour the turmoil will be frustrating.

 

HITANG INDALA AVURUDDAK GIYA - One year went by while we were standing

There is a lot of news that is flowing about Economic Turmoils, Regional conflicts, Commodity Price fluctuations, Terrorism, Market Crashes etc when it comes to the World and Sri Lanka. Then inside the Country we have a lack of action in promises, plans and business activity leading to low confidence levels in the public, households and mostly in business activity. As such we get the feeling that the Economy is on an almost FREEZE. Dollar is Rising, Interest Rates are Rising, No New Dollars are coming in a satisfactory way, but Dollars in our Reserves are slowly but surely coming down, DWINDLING. This chaos is leading people to be scared of the GONI BILLA the IMF's probable entry to the Country which has given shivers to the Biggest Business tycoon to the lowest Man who knows how to read the News and understand. This has lead to in action or almost Horror like FEAR on new investments, or New Business to come in thus far in 2016, and in the last 13 months. HITANG INDALA AVURUDDAK GIHILLA is what some one told me in Sinhalese, meaning that 1 whole year has passed while we were Standing. Even though it was told in a lighter vein, it means that we have waisted 1 whole year of our  age without doing nothing. 

SAD and SERIOUS. 

BUT if you want to plan your investments and trades on Technicals, you must be humble enough to respect the TRADING PLAN. I know it is hard to filter through so much of confusion and turmoil. That is why we must understand that the PRICE and VOLUME filters all these.  IT IS THE TRUTH no one can argue about it and win. PRICE AND VOLUME AWAYS WIN. There is nothing wrong in reading and understanding what's going around in the World. Which is so much easier now, thanks to the World Wide Web, but lets trade with HUMILITY and PATIENCE, strictly sticking to the rules and setups.

ASI - DISASTER

The Start of 2016 was not the best since 2006. In fact the market began to usher in the new year with a positive note when it moved up 18 to 20 points on the early hours of 4th, the 1st day of trading for the year. But it wasn't for long. Ultimately we saw 197 points drop for the 1st five days of the week. Market after failing to stay above the 100 day moving average in the early 2015, kept on tumbling down the 200, 300, 400 day moving averages. During the latter part of 2015 the market tried to take support at 500 day moving average , giving a sigh of relief for the bulls. But the expectations were all shattered as the index plummeted down 500 sma within minutes of trading on the 4th. Today's close at 6726.28 means that the trend may drag the market down below 6700 points, too soon. This incidentally will be another critical level of support as the 600 day moving average sits at this level. If we fail to take support at that then the 700 day moving average is at 6600, whilst the 800 day moving average is at 6480 points. If the bears want to hammer it down further then the 1000 day moving average is around 6257 points. The last time the index has fallen below 1000 day moving average was in 2008 - 2009 period.

However I still want to maintain that the Market is on a correction, and  hope we will not see it below 6500 points. A failure to hold that, means we may be moving to a BEAR MARKET territory.  I also believe that the market is at a pivotal period, where once the bears are gone the bulls will certainly take the market to a new level.

ASI may recover before heading to 6700 points

All Share Index was too fragile to sustain above 6800 points. As such had to give in to the Bears. Thus breaking it below 6800 to close at 6775.27 today.  There may be a slight relief tomorrow, OR the present downtrend could continue further. Therefore tomorrows performance will be critical to watch. Unfortunately
the pessimism is so severe which can be prevalent during the day. Any sentiment change relevant to our traders can change the tide to the positive, despite the pessimism that's around the World. There are many sectors in the Economy who can benefit from the present environment, but the prices suffer due to the sad set of affairs. A true bear market will come only if the index falls below 6500 points. Till then it will be a Correction, but a painful one.

TJL Re - Tested 36.30, but NOT BULLISH

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.