BG40 - Daily chart - 24.01.2008

The broader market index - BG40 - we have a base from which we rebounded today - slightly above the Gap at ~ 345.

This Support level is to be viewed as highly emotional - so a failed break should be entered for a swift upside move. Just like the 'blue-chip' index SOFIX - the broader market sentiment took a massive hit due to unwinding of the highly leveraged speculators and the withdrawal of foreign buyers.

The brief rally till the FED meeting in the month end is to be faded.

SOFIX - Daily chart - 24.01.2008

The Major BSE index - SOFIX.

Chart points that the massive unwinding of the leveraged speculators led to panic selloffs.

Now that the break of the major Support at 1419 was broken - we can at best assume there will be some tests to regain that level and possibly a visit of the 20 day MA.

This goes well with the short term rally in DAX, FTSE, Asia and US markets in anticipation of the FED scheduled rate cut at the Jan 30 FOMC meeting.

There are basically 2 scenarios - we either see some relief rally due to next cut and confirmation that the intermeeting 75bp cut this week was for the right reasons - or we just drop lower.

As in this shaky global situation our local market is tightly correlated to the global market sentiment I expect we will follow the global market moves with a bit lagging effect.