Archives : ONE MORE SLUGGISH WEEK - 30/07/2010
ONE MORE SLUGGISH WEEK – 30/07/2010. 

It was the week after the breakout but once again disappointment awaited the market as it managed to close near the lower support level, primarily due to lack of follow up buying. The market lacks strength on the upside and as a result sluggishness is visible at higher levels. On Friday the market went lower and just managed to take support at the trendline which was at 5347 for the Nifty. In case the Nifty breaches and closes below the higher bottom at Nifty 5353 and Sensex closes below the higher bottom at 17848, a short term down trend will be triggered. Market will then head towards next major higher bottom which is at Sensex 17373 and Nifty 5210.

 


ONE MORE SLUGGISH WEEK – 30/07/2010. 

It was the week after the breakout but once again disappointment awaited the market as it managed to close near the lower support level, primarily due to lack of follow up buying. The market lacks strength on the upside and as a result sluggishness is visible at higher levels. On Friday the market went lower and just managed to take support at the trendline which was at 5347 for the Nifty. In case the Nifty breaches and closes below the higher bottom at Nifty 5353 and Sensex closes below the higher bottom at 17848, a short term down trend will be triggered. Market will then head towards next major higher bottom which is at Sensex 17373 and Nifty 5210.

TECHNICALLY SPEAKING.

The Sensex opened the week at 18056, made a high of 18194, a low of 17838 and closed the week at 17868. The Sensex lost 262 points on a weekly basis. Similarly Nifty opened the week at 5446, made a high of 5468, a low of 5349 and closed the week at 5367. The Nifty too closed with the week with a loss of 82 points. As a result both Sensex and Nifty have formed a black body candle on the weekly charts.

 

The short term trend will be in danger only if the Sensex closes below the immediate higher bottom of 17848 and Nifty below 5353. In such a case a short term down trend will be triggered and the market will then head towards next major higher bottom which is at Sensex 17373 and Nifty 5210. One need not worry about the medium term as long as the level of 17373 for the Sensex and 5210 for the Nifty remains intact. This support is closely aided by the 50dma which falls at Sensex 17451 and Nifty 5237.

 

Momentum oscillators like the MACD and ROC have given sell signals. The RSI (52) even though above 50, is moving lower. The Stochastic oscillator has given a sell signal but % K is in oversold zone. The ADX at 27 continues to maintain the strength of uptrend. The Directional Indicators even though in buy mode, are converging towards each other which is a negative. The MFI has moved lower indicating the selling pressure at higher levels. The OBV continues with its buy mode.

 

A short term uptrend will be reclaimed once the high of Sensex - 18237 and Nifty – 5478 is crossed.

 

Both Sensex and Nifty have given a bullish pattern breakout and as a result minimum target for that will be Sensex - 18465 and Nifty – 5522. Besides that one more pattern i.e. bullish flag formation has been completed, and the target for that will be Sensex – 18732 and Nifty – 5609.

 

If we look at broader 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. Nifty has managed to reach 5478 in the week before last.

 

Since last October, the market is moving in a rising channel and the channel top has provided strong resistance to the market and that supply trendline top falls at Sensex 18393 and Nifty 5519. Both the rising channel trendline top and the 78.6% retracement levels are very near to each other and hence Sensex and Nifty are likely to find difficulty in crossing over 18315-18393 and 5478-5519 respectively.

 

The O.I.PCR is quite healthy at 1.40. Highest Open Interest build up is seen at 5300 strike Put and hence it is expected to provide strong support in the short term. Strong Call writing is visible at the strike of 5600, followed by 5500. As a result the level of 5600 will act as strong resistance. As a result of the Call writing at 5600 and Put writing at 5300, the data clearly suggests that the Nifty is likely to move in a trading range from 5300 on the lower side to 5600 on the higher side for the August series.

 

Sensex has strong trendline resistance which is also the rising channel top at 18393. The trendline support for the Sensex is at 17790.

 

Nifty has strong trendline resistance which is also the rising channel top at 5319. The trendline support for the Nifty is at 5315.

 

For the week ahead, Sensex will find Support at 17712-17546-17373 and will find Resistance at 18047-18200-18393.

 

For the week ahead, Nifty will find Support at 5314-5269-5210 and will find Resistance at 5416-5478-5519.

 

INDEX LEVELS:

 S3S2S1CLOSER1R2R3
Nifty5210526953145367541654785519
Sensex17373175461771217868180471820018393

LAST WEEKS RECOMMENDATIONS:

Except for SBi and BEL most of the stocks managed to reach their targets. The star performers were Bank of Baroda and SKF.

STOCKReco. PriceTgtReachedLot SizeProfit
Buy SBI249625322522125Rs.3,250
Buy BoB725754764500Rs.19,500
Buy BeL184818791875125Rs.3,375
Buy Bharti3133213241000Rs.11,000
Buy SKF529544557500Rs.14,000
    TotalRs.51,125

THIS WEEKS RECOMMENDATIONS:

  

STOCKCMPSLTgt-1Tgt-2
Buy BoB752742768785
Buy BoI410403419428
Buy M&M661651675692
Buy JainIrrig1235122212531272
Buy SpiceJet62606671

WATCH OUT FOR:

   
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