Pre-Open, Mar/19

We are getting into a new week and can we have the new look sensex number at the end of this week? It appears so as we have been consolidating at this level for quite some time. It is time and we should move on from here.

Bulls would be expecting good opening then after one hour of choppiness, could expect a higher levels. Here is why:

1. 5 weeks of negative closing so far. 5 is a Fibonacci number.
   
2. US markets came of their lows of the day before closing. Nasdaq is down by 0.25% and S&P 500 and Dow were down by 0.4% which is not bad. In fact, crude decline brought down Oil stocks otherwise decline should be even lesser.
   
3. It was the Friday-nervous syndrome which had hit the world markets on Mar/16.
4. China has increased interest rates to cool down its economy. That is going to help moderating commodity prices and will help controlling inflation all over the world.
5. Sensex EPS of 840 for FY-08 means we are at PE of 14.84 at 12300. Nifty EPS of 240 for FY-08, the PE works out to be 14.8 at 3550. If we factor a growth of 15-18% for next year, our stocks appear attractive.
6. Markets started off going down immediately after the break as inflation number was released. If there have been more down side left, sensex could have gone earlier than that. It was just an excuse for traders to go short at that point of time. It is same as any small announcements or even board meetings have caused the stocks upper freeze.
7. I don't think any nose diving market will give any chance of setting up your shorts, especially for retail to do that, it is nearly impossible. There is some kind of sideways battle is going on and I believe we are at the bottom of it.
   
8. Last but not the least, Asian markets are steady in the morning.
   

Bears have not lost the game also. The two previous lows have been broken and they hope the correction continues this week also.

Whatever kind of position you are taking in this situation, have a suitable SL for your trades, otherwise your capital is at big risk.

Wish you all Happy trading Monday.