BSE Sensex Short Term

The last head and shoulders pattern that i posted approximately a month ago did not work out, it was pretty obvious after the right shoulder got taken out. Its been pretty crazy out there, but i think the market gods finally spoke to me over the weekend.

I have 2 scenarios here:A and B in order of preference.

Just a reminder that the FOMC meetings will run from Tuesday to Wednesday, till the announcement, additionally the Europeans may add some market moving yet insignificant chatter to the mix..

Maybe this time is Different

or maybe not!
Huge Head and shoulders on Franklin Resources Inc. (BEN)
The right time is here. Bigger decisions and larger chop will be prevail at the 84-88 level. If the H&S plays out. This stock could half.

A move back above 116 could be the all clear!

BSE Sensex Short Term

Fuzzy long term count, but on the short term its all very common..

All that Glitters might turn into junk

My last gold post did not take place, as gold just rolled over. No short was initiated.
This current big bounce however provides an opportunity yet again, on something that has taken the last four years to build up.
The chart sums it up. On any push further up around 1655 i will be shorting and will stop shorting at 1675.

I just hope yesterdays pop and drop is not the train leaving the station.

Looking at the Sensex as an FII would.

FII flows consume a lot of analysis and much time is spent trying to figure out what news moves the FII and when and how the flows will move. Surprisingly with all the interest that FIIs generate, a Google search barely pulls up any mention of the "Dollex-30", besides the rare occurrence of it as a benchmark on some dollar denominated offshore fund.
The Dollex-30 quotes which the BSE started in 2001, combines the Sensex with INRUSD fluctuations to very simply display the P/L of an FII investing in India in Dollar terms. In my view this is much more useful in judging FII behavior than looking at levels on the Sensex, especially over longer time frames.
I started watching the Dollex-30 a few months before i started on the blog and have since used it successfully to determine many major turning points in the Sensex. There have been some data issues with the Dollex-30 since November 2010 and so i went ahead and found myself a substitute. As you can see, till the data was published the instruments move pretty much in sync, except for excess volatility during tops and bottoms.

So instead of the Dollex-30, I now use this instrument as a Dollar proxy for the Indian Market.

On the BSE Sensex the 61.8% retracement from the March 2009 lows to the November 2010 highs sits at approximately 12,895, which is quite a way off from the current 16020 level, and corresponds more closely to the 38.2% retracement, and the December lows (15136) are in no mans land between the 38.2% an 50% retracement.
 
At the same time the Dollar proxy made a low in March 2009 @24, high in November 2010 @83.66. The Dec 2011 low made @46 was at the 61.8% level and the last rally that lasted till late February 2012 saw resistance at the 38.2% level (approx 61).  The market is now currently again at this level, and the fibs are working remarkably well with the Dollar proxy chart.

In summary,  from a local view (Sensex) has retraced only approx 40% while the FII's have felt a bigger pinch with the (Dollex-30) retracing 61.8%. Should this 61.8% level break, FII's will begin to get weak at the knees..

S&P 500 Daily

This is a follow up to the previous post  S&P 500 Weekly, that i posted two weeks ago.
From the action in the last two weeks i think a clearer line in the sand can now be defined. A BLUE line that was part of the original post on the weekly chart has been changed to GREEN just for emphasis. It goes through the lows on 3/16, 6/16, the breakdown and retest 8/3, 11/8 before the market collapsed and again in 2012 resistance and then support for the 1st two weeks of Jan after which the market launched higher.

I think if the S&P 500 breaks this line in the next few days, we get a waterfall event like that of August 2011.
For the Elliotticians out there, it looks like a 5th wave is due which will most likely have extensions.

S&P 500 Weekly

My last S&P 500 post on Feb 1st was blown out of the water by a 9pt overnight gap up in the futures and this post carries the same risk, if we make it above 1375 and hold.
On a side note the Emerging Markets and BRIC post that i posted on March 11th, have played along very well and are midway along an intermediate decline..

Onto the chart...
Since the 2009 bottom the S&P 500 has been in a huge blue channel after breaking down from an initial wedge, during the August 2011 bout of selling. Since the October bottom it has tested the underneath of the wedge and pulled back. I think the Bears are shy and now cautious from getting their asses handed to them every time they get their hopes up form the last few dips in November, December, March and April. The bulls on the other hand continue to BTFD as even the major declines of May 2010 and October 2011 have been recovered. From the date on the video it is apparent this has been a theme since November 2010, that has continued to work. The reason for the bull bear discussion is that IMHO nobody (from the twittersphere, except Faber, Prechter and the perma-bears, which are knackered and bloody) expect a 150 pt (Aug 2011 style) immediate drop in the S&P500 to approx 1200- 1125, which would just keep it within the larger blue trend.



In summary i am looking at the current bout of selling in the S&P 500 to intensify and continue to the 1200 ish levels while the emerging markets continue the decline.....