Archives : SEARCHING FOR DIRECTION - 20/07/2012.

SEARCHING FOR DIRECTION – 20/07/2012.

CHOPPINESS IN THE SHORT-TERM.

As pointed out in the last week’s article, market continued to trade in a small range which has been defined by two gaps. Downward Gap between Nifty 5300-5261, acted as a resistance as the Nifty retraced after making a high of 5257 for the week. Similarly, Upward Gap between 5189-5159, acted as a support as the Nifty bounced back from 5169, after taking support in the above mentioned gap. Infact this sideways move is welcome from the markets point of view, especially after such a strong and fast upward price movement. This sideways move has induced choppiness in the short term but on a larger timeframe the overall trend looks intact.

 

  


SEARCHING FOR DIRECTION – 20/07/2012.

CHOPPINESS IN THE SHORT-TERM.

As pointed out in the last week’s article, market continued to trade in a small range which has been defined by two gaps. Downward Gap between Nifty 5300-5261, acted as a resistance as the Nifty retraced after making a high of 5257 for the week. Similarly, Upward Gap between 5189-5159, acted as a support as the Nifty bounced back from 5169, after taking support in the above mentioned gap. Infact this sideways move is welcome from the markets point of view, especially after such a strong and fast upward price movement. This sideways move has induced choppiness in the short term but on a larger timeframe the overall trend looks intact.

TECHNICALLY SPEAKING. 

Sensex opened the week at 17241, made a high of 17318, low of 17038 and closed the week at 17158. Thus it registered a weekly loss of 55 points. At the same time the Nifty opened the week at 5232, made a high of 5257, low of 5169 and closed the week at 5205. Thus the Nifty went down by 22 points on a weekly basis.

Both Sensex and Nifty have formed a small black body Spinning Top on the weekly charts. This is a neutral formation which only suggests a pause in the short term bearishness. On the daily charts both the indices have formed a formation which looks similar to Evening Star but is not. Evening Star occurs in an uptrend, but here the pattern has occurred while moving lower. Also the first and third days candles need to be big but that is not the case here. Hence on the daily charts the pattern formation indicates a sideways move.

Both Sensex and Nifty continued to move between two gaps as pointed out last week. Indices have left behind a Downward Bearish Gap between Sensex 17582-17329 and Nifty 5300-5261 which acted as a strong Resistance for this week. On the downside, both Sensex and Nifty have left behind a Bullish Rising Gap between Sensex 17134-17033 and Nifty 5189-5159 which has acted as a strong support. Thus further journey of the market will be determined by which gap gets filled first.

Currently the markets are undergoing correction in a very short term time frame i.e. correction of the rise from Sensex 15748 to 17361 and Nifty 4770 to 5348. The correction levels are thus placed at 16912-16690-16469 for the Sensex and 5127-5059-4991 for the Nifty.

On a longer time frame both Sensex and Nifty are undergoing a pull-back of the entire fall from Sensex 21108 to 15135 and Nifty from 6338 to 4531. This pull-back will resume once the Sensex closes above 17631 and Nifty 5348. The pull-back levels are 17417-18122-18827 for the Sensex and 5221-5434-5648 for the Nifty.

Both Sensex and Nifty are comfortably above the long term average of 200dma (Sensex – 16869 and Nifty – 5099) and medium term average of 50dma (Sensex – 16767 and Nifty – 5085). The short term average of 20dma (Sensex – 17265 and Nifty – 5238) is constantly being tested but currently the indices are below the short term average. As a result, the trend in the Long term timeframe and Medium term timeframe continue to be Bullish but the Short term trend remains down.

Market is now well above the level of the Falling Channel Top which comes in at Sensex 16036 and Nifty 4855. These levels should now provide Support 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.

There is a strong Support zone between Sensex 16869 – 16799 and Nifty 5099 – 5093, formed by the confluence of the critical long term average i.e. the 200dma and minor intermediate bottoms almost like Tweezers around Sensex 16799 to 16815 and Nifty 5093 to 5095.

MACD continues with its Sell signal despite being in positive territory. ROC is negative and continues in Sell mode. RSI has dropped to 50, suggesting the momentum has been disturbed. Stochastic Oscillator is in Sell mode, as %K continues to be below %D. MFI is in Sell mode and has moved lower at 39. The Directional Indicators continue to remain in Buy mode as +DI is above –DI. ADX has dropped to 24 which suggest that the trend is getting weaker. OBV has started making lower top, lower bottom formation. The Buy signal in Bollinger Band was cancelled when the mean i.e. the 20dma was breached this week. Oscillators are suggesting a negative bias in the short term timeframe.

The Nifty O.I. PCR has reduced and is at 1.14. For the July series, highest open interest buildup has shifted to 5300 Call. A strong build up is seen at 5000 Put. Thus the range of the Nifty has shifted to 5000 on the lower side to 5300 on the higher side. Interestingly on Friday the 5200 Call has seen a strong addition in Open Interest, which suggests that in the immediate near term, the market expects strong resistance to come in around 5200 levels.

Trendline Resistance for the Sensex is at 17671. The Trendline Support for the Sensex is at 17084.

Trendline Resistance for the Nifty is at 5396. The Trendline Support for the Nifty falls at 5182.

For the week ahead, Sensex will find Support at 16828-16544-16257 and will find Resistance at 17432-17731-18040.

For the week ahead, Nifty will find Support at 5113-5020-4921 and will find Resistance at 5300-5392-5499.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

4921

5020

5113

5205

5300

5392

5499

Sensex

16257

16544

16828

17158

17432

17731

18040

LAST WEEKS RECOMMENDATIONS:

Majority of the recommendations did well. Only Aban and DCB failed to reach their respective targets. But the Star Performer of the week was Godrej Industries which went up by around 6%. 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy Aban

428

441

433

500

Rs. 2,500

Buy Lupin

554

568

578

500

Rs. 12,000

Buy Godrej

251

259

264

1000

Rs. 13,000

Buy Havells

588

601

614

500

Rs. 13,000

Buy DCB

47

50

48

8000

Rs. 8,000

Total

Rs. 48,500

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy JubFood

1263

1236

1306

1354

Buy Orchid

127

123

134

142

Buy Havells

606

595

621

637

Buy ABNuvo

809

794

831

855

Buy SRF

239

234

247

256

WATCH OUT FOR:

Jubiliant Food

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.

Copyright © 2000 - 2018 Jatin Sanghavi. All rights reserved.
No part of the material on this website may be reproduced or distributed in any forms or by any means, electronics or mechanical without the written permission of the author.
Sitemap