Archives : MARKET AIMING HIGHER - 18/06/2010

MARKET AIMING HIGHER – 18/06/2010.

GUNNING FOR HIGHER TARGET. 

Last week we had said that both Sensex and Nifty were on the verge of giving a bullish inverted head and shoulders pattern breakout. On Monday both the indices managed a close above their respective resistance zones i.e. for Sensex 17150-17250 and Nifty 5147-5165 as they confirmed a bullish inverted head and shoulders breakout and the pattern targets were Sensex 17650-18483 and Nifty 5301-5548. Both Sensex and Nifty reached their first target when Sensex reached a high of 17721 and Nifty 5302 during the course of the week. Now the indices will consolidate before staging next move upwards towards the higher target of Sensex 18483 and Nifty 5548.

 

 

 


MARKET AIMING HIGHER – 18/06/2010.

GUNNING FOR HIGHER TARGET. 

Last week we had said that both Sensex and Nifty were on the verge of giving a bullish inverted head and shoulders pattern breakout. On Monday both the indices managed a close above their respective resistance zones i.e. for Sensex 17150-17250 and Nifty 5147-5165 as they confirmed a bullish inverted head and shoulders breakout and the pattern targets were Sensex 17650-18483 and Nifty 5301-5548. Both Sensex and Nifty reached their first target when Sensex reached a high of 17721 and Nifty 5302 during the course of the week. Now the indices will consolidate before staging next move upwards towards the higher target of Sensex 18483 and Nifty 5548.

TECHNICALLY SPEAKING.

The Sensex opened the week at 17118, made a high of 17721, a low of 17118 and closed the week at 17570. The Sensex gained a whopping 506 points on a weekly basis. Similarly Nifty opened the week at 5120, made a high of 5302, a low of 5120 and closed the week at 5262. The Nifty too closed with the week with a strong gain of 143 points.

 

Both Sensex and Nifty have formed a Bullish Opening white Marubuzo on the weekly charts. This formation will have a positive bullish impact on the market next week. On the daily charts both Sensex and Nifty have formed a spinning top formation which is a neutral formation. This formation is suggestive that the market after running so hard is now taking a pause before resuming its upward trajectory.

 

Majority of the oscillators like the ROC, MACD, OBV and MFI continue with their Buy signals. The MACD has now entered positive territory. The RSI which is at 61 is in a buy mode too and is signaling further possibility of an upmove continuing.  The Directional Indicators have signaled a fresh buy this week when the +DI had a bullish crossover over –DI. The ADX is still hanging in at 21. The Darryl Guppy Indicator, which is a very useful indicator from a medium to long term perspective, too has signaled a buy. Only the Stochastic oscillator has given a Sell signal while still being in overbought zone.

 

Both Sensex and Nifty managed a bullish inverted head and shoulders breakout when they managed a close above their respective resistance zones i.e. Sensex 17150 – 17250 and Nifty 5147-5165. As a result the target for the Sensex is 17650-18483 and Nifty 5301-5548. The first target has been achieved in the last week itself as Sensex managed a high of 17721 and Nifty 5302. Now both the indices are consolidating before launching a further upmove towards higher target of Sensex 18483 and Nifty 5548.

 

The resistance zone for the Sensex and Nifty was formed due to the convergence of various resistances around that levels like the 61.8% retracement level followed by the previous intermittent top and then the critical 50dma. When the resistance zone was overcome, the intermediatory trend too turned up in line with the long term and short term trend. This intermediatory trend will continue to remain up as long as the market stays above the 50dma (Sensex 17139 and Nifty 5139) and till then traders will do well to adopt a buy on declines strategy.

 

If we are looking at a very broad term picture then we are still correcting the fall of the Sensex from 21206 to 7697 and Nifty from 6357 to 2252. Since both the indices have managed a close above their 61.8% retracement levels, the next possible target will be Sensex 18315 and Nifty 5478 which are the 78.6% retracement levels of the entire previous fall.

 

Since last October, the market is moving in a rising channel and the market has tried crossing over the higher end of the channel many times, but has been unsuccessful every time. This time the higher end of the channel will once again provide resistance to the market and that level for the Sensex will be at 18268 and for the Nifty 5475.

 

Both the rising channel target and the 78.6% retracement levels are almost coinciding and hence Sensex and Nifty are likely to find difficulty in crossing over 18268-18315 and 5475-5478 respectively.

 

The long term trend of the market remains intact as long as the Sensex and Nifty continue to trade above their 200dmas (Sensex 16900 and Nifty 5045).

 

To take advantage of the time decay, lots of Strangles are being written between the Nifty strikes of 5200 and 5300 for the June series. For the July series, strong Put writing is seen at the strike of 5000, which should act as strong support in case of a downfall and Call writing is seen at 5400 strike which should act as a resistance.

 

Sensex has strong channel top Trendline resistance at 18268.

Nifty has strong channel top Trendline resistance at 5475.

 

For the week ahead, Sensex will find Support at 17394-17150-16921 and will find Resistance at 17790-18047-18268.

 

For the week ahead, Nifty will find Support at 5206-5147-5084 and will find Resistance at 5342-5399-5475.

INDEX LEVELS:

 S3S2S1CLOSER1R2R3
Nifty5084514752065262534253995475
Sensex16921171501739417570177901804718268

LAST WEEKS RECOMMENDATIONS:

We hit Bulls Eye, as all the recommendations reached their targets with ease. The star performers were HDFC and Jain Irrigation along with Escorts.

STOCKReco. PriceTgtReachedLot SizeProfit
Buy HDFC280828672956150Rs.22,200
Buy JainIrrig108011491160250Rs.20,000
Buy Siemens717735737752Rs.15,040
Buy TechMah727756756600Rs.17,400
Buy Escorts1902032032000Rs.26,000
    TotalRs.1,00,640

THIS WEEKS RECOMMENDATIONS:

STOCKCMPSLTgt-1Tgt-2
Buy FinTech1345132013741410
Buy  MundraPort714708728743
Buy NeyvelliLig156154162168
Buy ExideInd128125135142
Buy IDFC169167174179

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