>EAGLE EYE ON 07/09/09 (SHAREKHAN)

Dead cat bounce
Markets on Sep 04, 2009: Bounce

Nifty has closed positive less supported by volumes giving a sharp pullback till 61.8% retracement of the fall from 4750-4575. Further it is expected to move lower, as it has strong resistance at 4750 from where it has reversed down thrice earlier and which is also a 61.8% retracement of the entire fall from 6357-2552. Since Nifty was unable to breach 4750 on the upside on three occasions, the significance of this resistance level becomes crucial. So unless this level is taken off on the upside, we maintain our short-term bias down for the target of 4350.

On daily chart, Nifty is trading above its 20 daily moving average (DMA) and 40DMA ie 4558 and 4506 respectively, which are crucial supports going forward. The momentum indicator (KST) has given negative crossover and is trading above the zero line. The market breadth was positive with 775 advances and 487 declines on the NSE and 1,581 advances and 1,215 declines on the BSE.

On hourly chart, Nifty is trading above its 20 hourly moving average (HMA) and 40HMA ie 4661 and 4628 respectively, which are crucial supports in the short term. The momentum indicator (KST) has given positive crossover and is trading around the zero line.

To see full report: EAGLE EYE 070909