SESAGOA: Is Kumo cloud turning red?

The technical analysis of the Sesagoa stock, using Ichimoku analysis, is given above.
The closing stock price as on 29th December is 323.00

One look chart, or the Ichimoku chart, provides these additional indicators to ponder upon:

The short term indicator – Tankan Sen – is at 305.90 and the other indicat0r = Kinjun Sen is at 308.98. slightly above the short term Tankan sen

Another indicator, Chikou Span – which refers to the price 26 days behind – is at 326.  In other words, today’s closing price is below the price 26 days ago – a bearish indicator.

The other two indicators, Senkou Span A and Senkou Span B, which form part of the Kumo cloud are 344.16 and 345.13 respectively.  In other words, Senkou Span B is slightly more than Senkou Span A – a key indicator that the Kumo Cloud is turning red.   The forward indicators for Kumo Cloud do not project a favourable turnaround in the near term, raising speculation that the prices might drift lower in the short term.

It is advisable to adopt a wait-and-watch attitude and not take fresh positions in the stock at present.

What is Ichimoku Analysis?

One of the many technical indicators that analysts use to study the movement of prices in the stock market is this ICHIMOKU ANALYSIS.

As you rightly guessed, Ichimoku is a Japanese term that means "one look".  This Ichimoku analysis  is used to gauge momentum along with future areas of support and resistance. The Ichimoku indicator is comprised of five lines called the tenkan-sen, kijun-sen, senkou span A, senkou span B and chickou span. This indicator was developed so that a trader can gauge an asset's trend, momentum and support and resistance points without the need of any other technical indicator.

This charting technique was created by a Japanese newspaper writer. It does look very complicated when a trader sees the indicator for the first time, but don't hesitate to give this indicator a try because the complexity quickly disappears once you gain an understanding of what the various lines mean and why they are used.

The five components of this interesting indicator are described hereunder:

Tenkan-sen (Conversion Line): (9-period high + 9-period low)/2))
The default setting is 9 periods and can be adjusted. On a daily
chart, this line is the mid point of the 9 day high-low range,
which is almost two weeks. 

Kijun-sen (Base Line): (26-period high + 26-period low)/2))
The default setting is 26 periods and can be adjusted. On a daily
chart, this line is the mid point of the 26 day high-low range,
which is almost one month). 

Senkou Span A (Leading Span A): (Conversion Line + Base Line)/2))
This is the midpoint between the Conversion Line and the Base Line.
The Leading Span A forms one of the two Cloud boundaries. It is
referred to as "Leading" because it is plotted 26 periods in the future
and forms the faster Cloud boundary.

Senkou Span B (Leading Span B): (52-period high + 52-period low)/2))
On the daily chart, this line is the mid point of the 52 day high-low range,
which is a little less than 3 months. The default calculation setting is
52 periods, but can be adjusted. This value is plotted 26 periods in the future
and forms the slower Cloud boundary.

Chikou Span (Lagging Span): Close plotted 26 days in the past
The default setting is 26 periods, but can be adjusted.

NIFTY poised for higher open on 27 December

Nifty ended the penultimate week for calendar year 2010 in positve territory with a gain of 31.60 points at 6,011.60 on Friday, the 24th December 2010.  In a day of relatively thin trading across the neighboring markets in Asia, it was heartening to note that the broader Nifty index surpassed the pyschological 6,000-mark

From the technical perspective, the Nifty had thrown out some interesting indicators that augur well for optimism and higher opening on Monday, the first trading day of the last trading week for calendar year 2010.

The above chart gives a broad picture of the key levels - following Ichimoku Analysis.

Tankan Sen, the short-term average, stands at 5,909.85, while the broader Kinjun Sen stands at 5,883.28, at the end of the trading session on 24th December 2010.   At the end of trading on December 23, 2010, the levels of Tankan Sen and Kinjun Sen were 5,872.48 and 5,917.20 respectively.

On Friday, the short-term Tankan Sen has decisively crossed over the longer-term Kinjun sen from below - a definite sign of bulllishness in the market.   This bullish sign is signalling a positive opening on Monday.

Yet another bullish sign for positive opening on Monday is the Chikou Span.  A close above 5,998.60 - being the chikou span, also augurs well for the market sentiment.

However, a word of caution.  The present level of prices falls within the Kumo cloud - a technical region of NO TRADE.  The outlook for the day will be cautious optimism with a limited range bound trading.  The upside is capped at 6146 while the lower level will be 5906.  With F&O series closure due on Thursday, volatiliy might be in play on the last week of trading for 2010.