Archives : FINALLY, A PULL -BACK - 11/02/2011.

FINALLY, A PULL-BACK – 11/02/2011. 

STRONG RESISTANCE BETWEEN 5556-5563.

After struggling for the past many days, the market finally managed to pull-back from lower levels. The market took support at the channel bottom, which was formed between October 2009 to August 2010. Friday was the first day of the pull-back and it will be interesting to see how far the prices move up. On the higher side, the Nifty will face strong resistance around 5556-5563. Similarly Sensex will face resistance around 18542-18582.



FINALLY, A PULL-BACK – 11/02/2011. 

STRONG RESISTANCE BETWEEN 5556-5563.

After struggling for the past many days, the market finally managed to pull-back from lower levels. The market took support at the channel bottom, which was formed between October 2009 to August 2010. Friday was the first day of the pull-back and it will be interesting to see how far the prices move up. On the higher side, the Nifty will face strong resistance around 5556-5563. Similarly Sensex will face resistance around 18542-18582.

 TECHNICALLY SPEAKING. 

The Sensex opened the week at 18135, made a high of 18180, a low of 17295 and closed the week at 17728. The Sensex lost 280 points on a weekly basis. Similarly Nifty opened the week at 5430, made a high of 5440, a low of 5177 and closed the week at 5310. The Nifty too closed with a loss of 85 points on a weekly basis.

Both the indices have formed a Black body candle on the weekly charts, with a long lower shadow and a very small upper shadow. The long lower shadow is due to some buying support emerging at lower levels. There is a Bullish Engulfing formation in the Nifty on the daily charts. Since this is a bullish reversal pattern, one can hope for the pull-back to continue in the short term.

 

If we assume that there is minor reversal in the very short term time-frame by assuming that the bottom formed on Friday is not breached and the market continues to move higher, then we have to find out resistance zone for this pull-back. For the very short term, we need to consider immediate fall from 18542 to 17295 for the Sensex and 5556 to 5177 for the Nifty. The retracement levels for the Sensex will be at 17771-17919-18066 and 5322-5367-5411 for the Nifty. If we consider slightly bigger fall from 19340 for the Sensex and 5801 for the Nifty, then the retracement levels for the Sensex will be at 18076-18318-18559 and 5415-5489-5563 for the Nifty. If we consider fall of greater magnitude from 20664 for the Sensex and 6181 for the Nifty, then the correction levels in that case will be 18582-18980-19377 for the Sensex and 5561-5679-5798 for the Nifty. Hence in the short term, Sensex is likely to face resistance around 18066-18076 and 5411-5415 for the Nifty. In case the indices cross the above resistance area, the next cluster of resistance is likely to be between 18542-18582 for the Sensex and 5556-5563 for the Nifty.

 

The market is trading well below all the major moving averages. Market is below the 200dma (Sensex – 18745 and Nifty – 5627) and as a result the long term trend is down. The short term as well as the medium term trend continues to be down as the market is well below the 20dma (Sensex – 18428 and Nifty – 5522) and 50dma (Sensex – 19309 and Nifty – 5786) respectively.

The market has formed lower top and lower bottom formation and as a result the medium term trend is down. The long term trend has turned down as 17819 on the Sensex and 5348 for the Nifty has been breached.

 

If we consider the medium term rise from 13219-21108 for the Sensex and 3918 to 6338 for the Nifty then the retracement levels will be 18094-17163-16233 and 5414-5128-4842 for the Nifty. If we consider the entire rise from 7697 to 21108 for the Sensex and 2252 to 6338 for the Nifty, then the correction levels for the Sensex will be at 15985-14402-12820 and 4777-4295-3813 for the Nifty. Since we are witnessing a pull-back from oversold levels, it is likely that after the bounce-back is over, the market may retest the bottom support of the Sensex at 17395 and Nifty at 5177. If these levels are taken out, Sensex is likely to test the next cluster of supports emerging between 16233-15985 and Nifty between 4842-4777. 

 

Majority of the oscillators are in Sell mode. The MACD and ROC continue to be in Sell mode while being in negative territory. The RSI has just moved above 33 moving up from the oversold zone. OBV and Money Flow Index continue with their sell mode. MFI is at 20, just above the oversold zone. The Stochastic Oscillator has signaled a Buy as %K has cut %D from below and at the same time %K is still in oversold zone. The ADX is at 36 suggesting that the downtrend is strong. The Directional Indicators continue to be in Sell mode as +DI is below -DI.

The OI PCR has fallen and is at a low level of 0.82. Strong Put writing is witnessed at the strikes of 5200 and 5100. Call writing is seen at 5400. Thus options activity suggests 5200 to act as support and 5400 to act as resistance.

 

The Trendline Resistance for the Sensex is at 18681. The Trendline Support is at 16896.

 

The Trendline Resistance for the Nifty is at 5587. The Trendline Support is at 5074.

For the week ahead, Sensex will find Support at 17373-16994-16684 and will find Resistance at 18047-18355-18681.

For the week ahead, Nifty will find Support at 5210-5120-5001 and will find Resistance at 5402-5492-5587.

 

  INDEX LEVELS: 

 

 

 S3S2S1CLOSER1R2R3
Nifty5001512052105310540254925587
Sensex16684169941737317728180471835518681

 

 

 LAST WEEKS RECOMMENDATIONS: 

Once again we hit Bull’s eye as all the targets were achieved with ease. The star performers for the week were Cipla and PNB. 

STOCKReco. PriceTgtReachedLot SizeProfit
Sell HCLTech480462451500Rs.14,500
Sell SunPhar416404393625Rs.14,375
Sell PNB10591000970250Rs.22,250
Sell NTPC1771711701000Rs.7,000
Sell Cipla3243042961000Rs.28,000
    TotalRs.86,125

 

 

 

 THIS WEEKS RECOMMENDATIONS: 

 

 

 

STOCKCMPSLTgt-1Tgt-2
Buy BajajAuto1255123212861319
Buy Sintex161156169178
Buy OBC333327344356
Buy HindOil167163175184
Buy JindalSW9429209781017

  

 

 

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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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