Not a time to play the game of Averaging

The US markets took a tumble on Friday with the DOW down 1.37%, the NAZ 1.09% and the S&P500 down 1.29%. More importantly it broke the crucial support at 13400.

The coming week and especially Monday and Tuesday will remain crucial. The 50EMA stands at 13291 and that will remain as the next support. Whether this will hold or not will decide what happens next. Given these uncertainities, we choose to err on the side of caution. Therefore we don't advocate a buy on decline strategy.

We might have a mid session market update depending on any adverse market action.

The Nikkei is holding out well. The HSI has broken onto 52 week highs and that is encouraging as we feel the Sensex lags the HSI by a few weeks.



India:
We closed the day sligthly in the red. The adverse reaction in the DOW might suggest some impact on our markets today. However the support we have marked is at 14300. If this fails the next support is 14000. This brings out 2 scenarios. If the 14300 support holds we will go onto make new highs. However if support is found at 14000, we will not make new highs and use the pullback rally to exit our longs.

Looking ahead, if 14300 is held and we go onto make new highs, the ensuing Wave C will target 12350. However if Wave C starts without making new highs, the target will be 12800.

Our preferred scenario is we go onto make new highs and we feel this is supported by the fact of the listing of the mega IPO(DLF) and FPO(ICICI) over the next few days.