Archives : BEARS IN COMMAND - 01/06/2012.

BEARS IN COMMAND – 01/06/2012.

SOUTHWARD JOURNEY RESUMES.

Nifty just about managed to hold on to the support zone mentioned in the last weeks article i.e. between 4843 – 4777. This is the third consecutive week the support zone was tested. The last two times, the Nifty bounced after successfully testing the support zone, but this time it has closed down with a strong bearish candle without any hint of a bounce. This simply shows that the dead cat bounce is now over and the journey towards lower targets (Nifty 4742 – 4531) resume.

 

 


BEARS IN COMMAND – 01/06/2012.

SOUTHWARD JOURNEY RESUMES.

Nifty just about managed to hold on to the support zone mentioned in the last weeks article i.e. between 4843 – 4777. This is the third consecutive week the support zone was tested. The last two times, the Nifty bounced after successfully testing the support zone, but this time it has closed down with a strong bearish candle without any hint of a bounce. This simply shows that the dead cat bounce is now over and the journey towards lower targets (Nifty 4742 – 4531) resume.

TECHNICALLY SPEAKING. 

Sensex opened the week at 16289, made a high of 16544, low of 15933 and closed the week at 15965. Thus it registered a weekly loss of 252 points. At the same time the Nifty opened the week at 4931, made a high of 5020, low of 4831 and closed the week at 4841. Thus the Nifty went down by 79 points on a weekly basis.

On the daily charts on Friday, both Sensex and Nifty have formed a big black body candle which reasserts the strength of the bears. On the weekly charts, both the indices have managed a big black body candle with a long upper shadow. The upper shadow is a reminder of the resistance encountered at higher levels. If we consider the last weeks candle then we have a Bearish Engulfing pattern but surprisingly it has occurred in a downtrend. Is it a Selling Climax or whether it simply shows the growing strength of the bears, will be answered only by the next weeks candle formation.

If the market breaches the intermittent low of Sensex 15809 and Nifty 4788, then the long term downtrend will resume. The above levels are at the 61.8% of the current rise and close below these levels will lead the market to the starting point of the rally and i.e. at Sensex 15135 and Nifty 4530.

Both Sensex and Nifty tested the short term average of 20dma (Sensex – 16269 and Nifty – 4929) and closed below it. Also the indices continue to remain below the medium term average of 50dma (Sensex – 16855 and Nifty – 5115) and the critical long term average of 200dma (Sensex – 16790 and Nifty – 5066). As a result, the trend in the Long term timeframe, Medium term timeframe and the Short term timeframe continue to be Bearish. For the past three weeks both the indices have managed to stage a recovery after taking support at the 200 Weeks Moving Average (Sensex 16045 and Nifty 4824). Hence the level of 200 Weeks Moving Average assumes great significance.

Both Sensex and Nifty have given a bearish breakout for the Falling Wedge pattern. The target as per this breakout falls at Sensex 15728 and Nifty 4742. But more often than not, a bearish breakout in a Falling Wedge is likely to result in the indices moving towards the point from where the rally has started and i.e. Sensex15135andNifty4531.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

Market has now gone below the level of the Falling Channel Top which comes in at Sensex 16448 and Nifty 4973. These levels should now provide Resistance for the market. The overall bullish long term target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

Market for the third consecutive week running took support at the Support zone formed by the confluence of 38.2% Retracement of the entire rise (Sensex from 7697 to 21108 and Nifty from 2252 to 6338), 61.8% Retracement of the intermediate rise (Sensex from 13219 to 21108 and Nifty from 3918 to 6338) and the 200 Weeks Moving Average (Sensex – 16039 and Nifty 4822). Thus the Support zone between Nifty 4843-4777 is a critical support zone and needs to hold.

MACD is still in Buy mode but in negative terrain. ROC too is negative and hence continues with its Sell signal. RSI (35) continues to be below the centerline and hence in Sell mode. While Stochastic Oscillator (%K at 48) has just signaled a Sell as %K has gone below %D. MFI (47) is moving below the centerline and hence continues with its Sell signal. ADX is at 31, which suggests that the downtrend is still strong. Directional Indicators continue in Sell mode as -DI is above +DI. The OBV continue in its Sell mode.

Since it is the beginning of the June series, the Nifty O.I. PCR is higher at 1.46. For the June series, highest open interest buildup is seen at 4500 Put and 5000 Call. On Friday the 4200 Put has added significant open interest which cannot be ignored. Thus for the short term, Nifty range is likely to range between 4500 on the lower side to 5000 on the higher side. 

Trendline Resistance for the Sensex is at 16501. The Trendline Support for the Sensex is at 15493.

Trendline Resistance for the Nifty is at 5013. The Trendline Support for the Nifty falls at 4647.

For the week ahead, Sensex will find Support at 15664-15358-15097 and will find Resistance at 16277-16544-16828.

For the week ahead, Nifty will find Support at 4754-4645-4531 and will find Resistance at 4949-5034-5135.

INDEX LEVELS:  

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

4531

4645

4754

4841

4949

5034

5135

Sensex

15097

15358

15664

15965

16277

16544

16828

LAST WEEKS RECOMMENDATIONS:

All the Recommendations did well. Reliance Capital and Chambal Fertiliser just missed out on their targets. But the Star performer for the week was Jubiliant Foodworks which went up by an astonishing 9%!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

 JubFood

1246

1318

1354

250

Rs.27,000

 ReLCap

320

333

326

500

Rs. 3,000

Buy CanBk

396

407

410

500

Rs. 7,000

Buy UBI

205

210

211

1000

Rs. 6,000

Chambal

73

76

75

2000

Rs. 4,000

Total

Rs.47,000

THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell Grasim

2246

2269

2205

2162

Sell Hexaware

115

118

110

104

Sell L&T

1134

1147

1114

1092

Sell BhartForg

302

306

294

285

Sell APiL

339

344

331

322

WATCH OUT FOR:

Hexaware

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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