Global cues still uncertain, edgy

The last hour did look a bit crazy yesterday?

It did and I think it must have hurt sentiment quite a bit. I don’t know where the selling was coming from but the fact that the market broke through 5,000 so easily and closed so much below that - put all those questions of a retest of a January lows back in the minds of traders.

So even if we see a little bit of a bounce, I think trading sentiment would be quite skittish and jittery and people would be still watching behind their backs on whether more downsides have opened up after yesterday’s fall.

It’s tricky to say the least; global cues are still very uncertain, one can see how edgy and how unconvincing Asian markets are this morning as well. So we remain in dangerous zone once again though there might be little bit of a pullback because we looked a bit oversold yesterday to that extent there might be some recovery but confidence will be very shaken.

Asian Indices:

The US was flat and Asia while it is in the green it is not doing a whole lot. The Nikkei is up just about a third of a percent, Kospi is absolutely flat, Hang Seng is up 60 points. It is Taiwan, which his up this morning but markets like Singapore, China, Hong Kong, Korea are not doing too much so very sideways and flat across Asia today.

For the whole market though we are in a rough space or rough spot right now?

We are and the problem is that when downsides are opening up they are opening up with greater momentum. So the rallies that we are seeing is essentially short covering rallies; we are not seeing great buying conviction which is taking the market higher and that’s disappointing which is why the market goes up a bit because of short covering and at the first sign of global trouble we go down and we down with more momentum than we went up with.

I don’t think the screen is showing any great strength. Does it look oversold? Yes it did yesterday; there is no question about that the way some of the stocks fell off in the second half of the session. It does appear a bit oversold at this point in time and to that extent one might get pullbacks. But if one follows the opinion, which is coming through from short-term traders over the last many weeks, I think people are going wrong trading. One doesn’t want to trade with technical and hold on to some levels as becoming being sacrosanct because no level is as we found out over the last few days.

I don’t know what kind of a trading view one can take at this point in time. We broke 5,000 yesterday; if the market figures out that its oversold and some of the shorts cover up a bit we might get back to 5,000-5,100-5,050 kind of levels that’s entirely possible but would that mean that sentiment would have changed overnight? I don’t think so. This market is not about technical; we have a global equity situation on our hands and we are pretty much going to be governed like it or not given that.

A trading view is fraught with a lot of hazard right now and if one looks at the screen and see what it’s trying to say, I think one have to admit however bullish one maybe that the screen is showing more weakness than strength these last few sessions. So maybe a pullback maybe a bit of short covering but beyond that it’s difficult to say how much upside. I traders would probably be resigning themselves to a bit more downside eventually to this market.          

Is it the global market or the global mood then that has caught the market on its knees?

That is the result or that is the reason for the refusal to go out and buy. I think people are genuinely concerned that global markets are opening up another leg of downside and you could forgive the markets or participants for thinking like that because it looked much better last week and suddenly everybody in the globe is talking about a retest of the January lows. Which of us know where global markets will move over the next few days. We just do not know, it is not about valuations or it is not about a certain level of the market or anything like that it is about what you wake up to every morning and that is completely out of our hands and sadly, you like it or not that is what the market is following at this point in time.

The economic data is not confidence inspiring at all everyday, manufacturing data is weak, ISM data weak, housing construction weak. So the dollar continues to be weak and commodities are flying away on the other side.  So every morning you are waking up to a fairly bad kind of global scenario and that is not very comforting at all. My guess is that sentiment will rebuild only when you will see a little bit more by way of stability. Like you saw last week we have made a move up to 5,300 because global markets around us were somewhat stable unless that happens I do not think you have a big chance of getting back and staying well above that 5,000-5,200 kind of levels. Forget breaking 5,500 on the way up.