Head & Shoulder on Dow Jones

Finally, after all the emotional trauma, normalcy is reinstated. It is very true that time is the healer for almost everything.

Ok, now to the reason I am blogging – I see an “Head & Shoulder” pattern in the Dow Jones daily chart.

Though the left shoulder is a bit elongated, we can see that the neckline of the pattern is sloping downwards. This gives a target in the range 8600-8200 for Dow Jones. I still believe the biggest impact on the stock markets will be when the US fed increases the interest rates. Being an optimist, I hope the markets are considering this well in advance [markets are usually ahead of news :-)] ie. now.

Dow Jones went from 10,600 to 9800, then created a new high 11,250 and then created a new recent low 9700, and then again went back to 10,600 and now is at 9700. Now compare this with Indian stock market, Nifty went from 5300 to 4800, then went to 5400 and then to 4700 and again back to 5300 and now it is at 5200.

US, Europe, China are at their lows of 2010 [15%, 17%, 30% down respectively from their recent highs], which is not the case with India. As I had predicted, Indian markets are going to rally after the monsoon news, they did :-). But how long is India going to be decoupled from the world markets – I believe not for long. If the above mentioned head & shoulder pattern in Dow Jones fructifies I am sure we will follow and could expect levels around 4600 for Nifty.

All in all it makes me believe, the chances for a double dip recovery are very high, though the dip we are going to get now may not be as low as that of 2008’s.

Ohh between, I have been gyming very hard, also going to my swimming classes regularly. Recently started boxing training at the gym :-). Boxing burns more calories than the cardio workout. Even with such regular and rigorous workout I am unable to reduce 1kg per week. So, I have to reduce my target for August 2^nd drastically. I am hoping to cut atleast 5-6 kgs by then.

-Sri