Uneventful Day – 29th Oct 2008

It has been a rather uneventful day where the bulls and bears slugged it all out. Neither side really won end of the day but what is clear is, there is no confirmation of the upmove yesterday at this juncture still. We will need to look at the next couple sessions. One thing for sure is, the wild swings have become the norm. The Dow rallied 10% overnight, and you know what, it is the second time this month alone. The HSI got crushed on Monday of around 12% or so and the following day it rebounded right back. Talk about volatilty! Unbelievable. That is the word you’ll see me use very often these days. I haven’t been around for very long but seriously I don’t know anyone who’s still alive who has seen this sorta action in their lifetime.

Looking forward, prepare for 2 scenarios-

1. Bull – A retracement following a move up to re-test key support levels, and then a bounce off is seen as bullish. And a sustainable rebound could be seen thereafter.

2. Bear – It was a fake rally (which is quite bad) leading to lower lows after cracking supports. When a technical rebound is due, the market will find any reason to rally. And we have seen that this week. Can this be a confirmed lower high? Not really. With just 1 candle, I will call it more of a fake rally.

I am inclined to feel, in the mid term, scenario 1 should come into fruition. However the market is extremely unstable and unless you have guts of steel, you do not want to mess with it at this point. One thing I keep emphasising is that, volatility is NOT a characteristic of a bottom. That does not mean we cannot set a mid term bottom now. However, a true bottom fishing period will more or less present itself in the charts over the course of a few months.

That’s it for me for today. Loads of action coming up. Feds cutting rate (with a 50bp cut FULLY priced in). Some corporate earnings coming out as well. USD (its fall largely contributed to the rally last night), gold and oil will also be in focus.

Have a good evening!

PS : The charts tell the truth!