Archives : PULL - BACK FROM 200DMA - 11/02/2010

PULL-BACK FROM 200DMA - 11/02/2010.

200 DMA Holds For Now.  

PIGS Tremble, Eurozone Nervous, Another Bailout. 

TECHNICALLY SPEAKING.

INDEX LEVELS: 

LAST WEEK’S RECOMMENDATIONS: 

THIS WEEKS RECOMMENDATIONS:


 

  

PULL-BACK FROM 200DMA - 11/02/2010.

200 DMA Holds For Now. 

After a fall of more than 600 points at a stretch, some sort of technical bounce back was expected. The market almost went near the 200 DMA and bounced back from just above that level. Last week, the Nifty fell leaving behind a falling gap between 4832-4827 and this gap was supposed to act as a resistance for any sort of pull back. When the market bounced back on Wednesday the Nifty went almost till 4827 before selling off, but it finally managed to close out that gap on Thursday. The stage is now set for the Union Budget.

PIGS Tremble, Eurozone Nervous, Another Bailout. 

The Eurozone is under threat due to the financial crisis emerging from the four PIGS: Portugal, Italy, Greece and Spain. However, Greece and Portugal comprise only 2.6% and 1.8% respectively of Eurozone GDP while Spain and Italy are larger at more than 11% of their GDP. The Europe situation seems bad, it can be managed. Bigger scare will be when problems start occurring in the bigger economies like US, UK and Japan which run similar deficits as Greece. There is no need to worry as another bailout looks certain. The Greece issue looks almost resolved and other EU countries facing debt crisis will get support from stronger EU countries like Germany and France.

TECHNICALLY SPEAKING. 

The Sensex opened the week at 15931, made a high of 16202, a low of 15651 and closed the week at 16152. The Sensex closed the week with gain of 237 points. Similarly Nifty opened the week at 4755, made a high of 4843, a low of 4675 and closed the week at 4826. The Nifty too closed with the week with a gain of 69 points.

 

Both the indices managed to register a Bullish Harami pattern on the weekly charts. On Friday, the indices went from strength to strength and formed an Opening white Marubuzo which completely engulfs previous days black body. Such a formation is indication of the pull-back the market is currently witnessing.

 

Nifty filled the Falling gap between 4832-4827 which was filled on Thursday, confirming a pull-back rally. For the Sensex the pull-back levels are 16468-16721-16973 and for the Nifty, the pull-back levels are placed at 4918-4993-5067.

 

Both the indices have taken support at just above the 200dma and currently the 200dma is now coinciding with recent low made by both the indices. Currently the 200dma for the Sensex is at 15682 and for the Nifty, it is at 4678. Sensex rebounded after taking support at 15651 and the Nifty from 4675. Hence the lows made by both the indices should not be breached for the current pull-back to continue.

 

The Money Flow Index was oversold and has given a buy signal, besides the RSI which too has moved up from the oversold region. There seems to be small positive divergence visible in the MFI and the RSI.

 

Both Sensex and Nifty were held by the Trendline joining the higher bottoms of Sensex 13219-15330 and Nifty 3918-4538. This Trendline got breached and as a result we are correcting the rise of Sensex from 13219-17790 on an immediate basis, and the correction levels are 16044-15505-14965. The Nifty is correcting the rise from 3918-5310 and the correction levels are 4778-4614-4450. If we consider entire rise from Sensex 7697-17790 and Nifty 2252-5310, then the correction levels are Sensex 13935-12743-11553 and those for the Nifty 4142-3781-3420.

 

Both Sensex and Nifty had given a Bearish Rising wedge breakout and the targets for the Sensex are 15714-15373 and Nifty 4684-4587. The first target has already been achieved. Both Sensex and Nifty have formed a Bearish Flag pattern and the targets for that pattern are Sensex – 14822 and Nifty – 4425 which is almost coinciding with the 61.8% retracement of the current rise.

 

Interestingly the lower target for the Bearish wedge (Sensex – 15373 and Nifty – 4587) almost coincide with the higher bottom (Sensex – 15330 and Nifty – 4538), besides the 50% retracement of the immediate rise (Sensex – 15505 and Nifty – 4614) and the current bottom (Sensex – 15651 and Nifty – 4675). There seems to be a confluence of supports between Sensex 15651-15330 and Nifty 4675-4538 and hence one can expect strong support coming in at those levels in case of further downfall.

 

 

Nifty OI PCR is around 1.02, which is indicative of the bearish mood of the market. Put writing is seen at 4800 and 4700 strike price, which is where the market can be expected to take support in case of a fall.

 

For the week ahead, Sensex will find Support at 15931-15651-15330 and will find Resistance at 16434-16635-16943.

 

For the week ahead, Nifty will find Support at 4766-4675-4576 and will find Resistance at 4889-4951-5016.


INDEX LEVELS:

 S3S2S1CLOSER1R2R3
Nifty4576467547664826488949515016
Sensex15330156511593116152164341663516943

LAST WEEK’S RECOMMENDATIONS: 

STOCKReco. PriceTgtReached
Sell M & M976954950
Sell SBI189718431883
Sell BHEL229522662270
Sell IBReal163152163
Sell IVRCL311296304

THIS WEEKS RECOMMENDATIONS: 

STOCKCMPSLTgt-1Tgt-2
Buy AuroPharm934922952979
Buy Mphasis728716742755
Buy Bhushan St1592157916321660
Buy Maruti1356133213851419
Buy Kalindee206201216229

  

WATCH OUT FOR:

 

 

    
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.

Copyright © 2000 - 2018 Jatin Sanghavi. All rights reserved.
No part of the material on this website may be reproduced or distributed in any forms or by any means, electronics or mechanical without the written permission of the author.
Sitemap