Archives : BULLISH MOMENTUM CONTINUES - 17/02/2012.

BULLISH MOMENTUM CONTINUES – 17/02/2012.

CORRECTION : HEALTHY FOR THE MARKET. 

The market is going from strength to strength which can be seen in the way the market is taking out different resistances. The market managed to overcome the strong Resistance zone as mentioned last week (Nifty 5435-5450) quite easily. Majority of the oscillators are now in overbought territory and are suggesting a consolidation which may be in the form of a correction or a sideways movement for sometime. Hence any dip in the market should be viewed as a buying opportunity which will make the market healthier because the trend continues to remain Bullish in short term, medium term and long term timeframe.

 

 


BULLISH MOMENTUM CONTINUES.

CORRECTION : HEALTHY FOR THE MARKET. 

The market is going from strength to strength which can be seen in the way the market is taking out different resistances. The market managed to overcome the strong Resistance zone as mentioned last week (Nifty 5435-5450) quite easily. Majority of the oscillators are now in overbought territory and are suggesting a consolidation which may be in the form of a correction or a sideways movement for sometime. Hence any dip in the market should be viewed as a buying opportunity which will make the market healthier because the trend continues to remain Bullish in short term, medium term and long term timeframe.

TECHNICALLY SPEAKING. 

Sensex opened the week at 17761, made a high of 18423, low of 17665 and closed the week at 18289. Thus it registered a weekly gain of 541 points. At the same time the Nifty opened the week at 5382, made a high of 5606, low of 5351 and closed the week at 5564. Thus the Nifty went up by 183 points on a weekly basis.

 

Both Sensex and Nifty have formed a Spinning Top formation on the daily charts. It is a neutral formation but has formed at the top, while the market is in a strong uptrend. Hence this pattern will have bearish implications but only if we get a confirmatory black candle on Monday. On the weekly charts, a strong big white body candle has been formed. This suggests continuation of uptrend. Candlestick analysis suggests that in the very short term there might be some profit booking but the higher timeframe chart shows that the rally is likely to continue and hence a retracement will present a buying opportunity.

 

The indices are now way above the crucial level of 200dma (Sensex – 17210 and Nifty – 5172) which signals that the long term trend continues to be Bullish. Medium and Short term Trend are Bullish as the Sensex and Nifty continue to stay above their medium term average of 50dma (Sensex – 16531 and Nifty – 4977) and short term average of 20dma (Sensex – 17503 and Nifty – 5299). As a result, the trend in the Short term timeframe, Medium term timeframe and Long term timeframe, continue to be Bullish.

 

After consolidating in a Falling Channel pattern for more than 15 months, both Sensex and Nifty gave a Bullish breakout, when it closed above Sensex 17355 and Nifty 5254. The target as per this formation is Sensex 20383 and Nifty 6148.

 

Both Sensex and Nifty have closed well above the 50% Retracement of the entire fall from Sensex 21108 to 15135 and Nifty from 6338 to 4531 and i.e. at Sensex 18122 and Nifty 5435. Now the indices are proceeding to test the 61.8% Retracement and that level is Sensex 18826 and Nifty 5648. Any close above the 61.8% Retracement level can be taken as a confirmation that the correction has ended and the market will proceed towards the previous top.

 

If both the indices form a bearish candlestick pattern on Monday, then we can take the liberty of considering the high registered on Friday as an intermittent top. If the market corrects a bit then the correction levels will have to be of the current rise from Sensex 15135 to 18423 and Nifty from 4531 to 5606 and those levels are 17167-16779-16391 for the Sensex and 5195-5068-4942 for the Nifty.

 

MACD and ROC are in positive territory and continue with their Buy signals. RSI (78) and Stochastic Oscillator (%K at 95) have been overbought for sometime now. The RSI has been overbought for more than 3 weeks now, while the Stochastic Oscillator has been overbought for more than 5 weeks. Last time the oscillators were in overbought zone for so long was way back in October 2010 and that time the Nifty went on to touch levels nearing 6338. Directional Indicators continue in Buy mode as +DI continues to remain above –DI. ADX has moved up sharply and is at 44 suggesting that the uptrend is very strong and now matured. Bollinger band has been in a Buy mode for almost a month now. MFI continues to be overbought and is at 86. OBV continuous in buy mode as it makes a higher top higher bottom formation. Majority of Oscillators, even though in Buy mode, are overbought and hence some pull-back will be healthy for the market.

 

Nifty O.I. PCR has increased and is at 2.21. It is an indication that the market is now overbought and a pull-back cannot be ruled out. For the next month series, highest open interest buildup is seen at 5200 Put. High Call writing is seen at the strike of 5700. Thus one can expect the market to move in a range of 5200 on the lower side and 5700 on the higher side.

 

Trendline Resistance for the Sensex is at 18728. Trendline Support for the Sensex is at 17972.

Trendline Resistance for the Nifty is at 5638. Trendline Support for the Nifty falls at 5448.

For the week ahead, Sensex will find Support at 17940-17579-17246 and will find Resistance at 18552-18841-19131.

For the week ahead, Nifty will find Support at 5444-5322-5201 and will find Resistance at 5653-5740-5827.

INDEX LEVELS:  

 S3S2S1CLOSER1R2R3
Nifty5201532254445564565357405827
Sensex17246175791794018289185521884119131

LAST WEEKS RECOMMENDATIONS:

The Star Performer for the week was Crompton Greaves which went by almost 10%!!! At the same time, Sun TV and LiC Housing failed to reach their targets. 

STOCKReco. PriceTgtReachedLot SizeProfit
Buy NTPC1801901902000Rs.20,000
Buy SunTV340351340500Rs. -
Buy LiC2752832811000Rs. 6,000
IndusInd3193293331000Rs.14,000
Crompton1511621671000Rs.16,000
    TotalRs.56,000

THIS WEEKS RECOMMENDATIONS: 

STOCKCMPSLTgt-1Tgt-2
Buy Infosys2947291629923040
Buy Siemens821809845869
Buy Grasim2878284129493021
Buy Mphasis398392409421
Buy Thermax533519554575

WATCH OUT FOR:

INFOSYS

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