Weekly analysis : Back On Track, New Highs In Sight - 11/05/2018.

BACK ON TRACK; NEW HIGHS IN SIGHT - 11/05/2018.

 

Please note that next weekly update will be on 01/06/2018. No updates on 18/05/2018 and 25/05/2018.

 

REVERSAL ZONE CONQUERED.

 

After a break of one week, the Bulls are back with a bang. Just when it seemed that the consolidation would last longer, the Bulls made a comeback to overcome the critical Reversal zone (Nifty 10702-10736) with ease. This development puts the market in fine position just before the Karnataka election. In a favourable scenario, the market will make a new high very soon, but in an adverse scenario, the new high will get postponed by a few days but not cancelled.

 

MID-CAPS TO PLAY CATCH-UP.

 

The frontline indices are going from strength to strength and seem to be on track to target new highs very soon. But the same cannot be said about the Mid-cap index, which has once again showed divergence and is down by around 5% from its recent peak, whereas Sensex and Nifty are firing on all cylinders. A similar scenario was witnessed in January and as a result the Mid-cap Index pulled the frontline indices down. But this time, it seems that the frontline indices might continue to move north-wards, whereas Mid-cap Index is likely to play catch-up.

 


BACK ON TRACK; NEW HIGHS IN SIGHT - 11/05/2018.

 

Please note that next weekly update will be on 01/06/2018. No updates on 18/05/2018 and 25/05/2018.

 

REVERSAL ZONE CONQUERED.

 

After a break of one week, the Bulls are back with a bang. Just when it seemed that the consolidation would last longer, the Bulls made a comeback to overcome the critical Reversal zone (Nifty 10702-10736) with ease. This development puts the market in fine position just before the Karnataka election. In a favourable scenario, the market will make a new high very soon, but in an adverse scenario, the new high will get postponed by a few days but not cancelled.

 

MID-CAPS TO PLAY CATCH-UP.

 

The frontline indices are going from strength to strength and seem to be on track to target new highs very soon. But the same cannot be said about the Mid-cap index, which has once again showed divergence and is down by around 5% from its recent peak, whereas Sensex and Nifty are firing on all cylinders. A similar scenario was witnessed in January and as a result the Mid-cap Index pulled the frontline indices down. But this time, it seems that the frontline indices might continue to move north-wards, whereas Mid-cap Index is likely to play catch-up.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 34983, made a high of 35596, low of 34977 and closed the week at 35535. Thus it closed the week with a gain of 620 points. At the same time the Nifty opened the week at 10653, made a high of 10812, low of 10635 and closed the week at 10806. Thus the Nifty closed the week with a gain of 188 points.

 

On the daily charts, both the indices have formed a big White body candle which helped overcome critical resistance zone. On the weekly charts, Sensex has formed a big Opening White body Marubuzo whereas Nifty has formed a big white body candle. Thus daily as well as weekly candlestick pattern formation suggests a bullish bias in the near term.

 

Two weeks back, both the indices completed a Bullish Rounding Bottom pattern on the daily charts. It is a Bullish pattern and the target as per that falls at Sensex 36737 and Nifty 11311.

 

Nifty has left behind a Bullish Rising Gap between 10647-10628. In the recent consolidation, Nifty took support in this gap before resuming its upward trajectory. Besides this Gap is also a Measuring Gap, which gives a target of 11324 for the Nifty.

 

Current Upward rally started as a Pull-back of the fall from 36443 to 32483 for the Sensex and 11171 to 9951 for the Nifty. The relevant Retracement levels were at Sensex 33996-34463-34931 and Nifty 10418-10562-10706. This week, both the indices overcame the 61.8% levels, and closed the week above that. Hence it is a Reversal and both Sensex and Nifty seem poised to test the previous highs.

 

Both the indices had a Weekly Bearish Gap between Sensex 34874-35006 and Nifty 10702-10736. This Gap was aided by 61.8% Retracement of the current fall (Sensex – 34931 and Nifty 10706), which is a Reversal level. This week, both Sensex and Nifty tested the Reversal zone and overcame that on Friday, thereby giving a weekly closing above it. Thus the trend has reversed.

 

This week, both the indices continue to stay above the short term average of 20dma (Sensex – 34810 and Nifty 10637), medium term average of 50dma (Sensex – 34009 and Nifty – 10422) and even the long term average of 200dma (Sensex – 33336 and Nifty – 10304). Thus the trend in short term, medium term as well as in the long term timeframe continues to remain Bullish.

 

MACD and Price ROC are both positive and in Buy mode. RSI (67) suggests strong bullish momentum. Stochastic Oscillator %K (85) is above %D and hence in Buy mode. ADX is at 20 suggests up trend is gaining strength. Directional Indicators are in Buy mode as +DI is above –DI. MFI (69) suggests Positive Money Flow. OBV continues in Buy mode, making higher top higher bottom. Thus Oscillators suggest a bullish bias for the near term.

 

Options data for May series indicate highest Call Open Interest is at the strike of 11000 whereas the highest Put build-up is now at the strike of 10500. Thus Options data suggests a trading range with resistance at 11000 & support at 10500.


INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10514

10601

10702

10806

10923

11009

11117

Sensex

34259

34700

35134

35535

35863

36256

36662

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy HDFC Bank

2011

1978

2063

2117

Asian Paints

1286

1261

1325

1367

Buy Bharat Fin

1165

1145

1196

1229

Buy Pidilite Ind

1103

1080

1139

1177

Buy Axis Bank

553

539

575

598

 

WATCH OUT FOR:

 

Asian Paints
 

 

 

 

 

Disclaimer : The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness.

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