Archives : BULL MARCH CONTINUES - 21/09/2012.

BULL MARCH CONTINUES – 21/09/2012.

REASON TO BE MORE OPTIMISTIC.

Once again this week, it was the Bulls which dominated the Bears. After lying quiet for three days of the week, the Bulls came back with a bang on Friday, which was after Mr. Mulayam Singh announced his support to the Government. From the events of last two weeks, it can be concluded that the present Government will not shy away from taking tough decisions and will continue with the Reform process. This augurs well for the market and now there is every reason for Bulls to become more optimistic. Short term indicators are overbought and minor dips can be expected, but those will be buying opportunities for the Bulls.

 


BULL MARCH CONTINUES – 21/09/2012.

REASON TO BE MORE OPTIMISTIC.

Once again this week, it was the Bulls which dominated the Bears. After lying quiet for three days of the week, the Bulls came back with a bang on Friday, which was after Mr. Mulayam Singh announced his support to the Government. From the events of last two weeks, it can be concluded that the present Government will not shy away from taking tough decisions and will continue with the Reform process. This augurs well for the market and now there is every reason for Bulls to become more optimistic. Short term indicators are overbought and minor dips can be expected, but those will be buying opportunities for the Bulls.

TECHNICALLY SPEAKING. 

Sensex opened the week at 18619, made a high of 18866, low of 18291 and closed the week at 18752. Thus it registered a weekly gain of 288 points. At the same time the Nifty opened the week at 5631, made a high of 5720, low of 5534 and closed the week at 5691. Thus the Nifty went up by 114 points on a weekly basis.

For the second week running both the indices opened with a gap up on Friday and formed a big Opening White body Marubuzo on the daily charts. If we consider the last five days candle then it looks almost like Mat Hold which is a Bullish Continuation pattern, but the first days candle is comparatively smaller. On the weekly charts, both the indices have formed a white body candle with a slightly longer lower shadow, which shows buying strength at lower levels. Thus both the weekly as well as daily formations are in favour of continuation of bullishness.

As mentioned last week that a Bullish Rising Gap had been created between Sensex 18062-18284 and Nifty 5447-5526, which was likely to act as a support. Both the indices took support at the Gap before bouncing back. Sensex bounced back from a low 18291 and Nifty 5534. Thus this gap holds more significance now than before. This gap is also a Measuring Gap and the target according to Measuring Gap theory falls at Sensex 19096 and Nifty 5758.

Both Sensex and Nifty have closed above their previous intermittent top i.e. Sensex has closed above 18523 and Nifty above 5629. This has ensured a higher top, higher bottom formation for the first time on the weekly charts.

Both Sensex and Nifty needed to close above their 61.8% Retracement of the entire fall from Sensex 21108 to 15135 and Nifty 6338 to 4531, which was at Sensex 18827 and Nifty 5648. Sensex needs to close above 18827 for the long term correction to get completed whereas the Nifty has already closed above 5648.

On the weekly charts, both Sensex and Nifty have formed a Bullish Diamond pattern and the target as per this formation is Sensex 20171 and Nifty 6192. The targets will be achieved as long as the market stays above Sensex 15748 and Nifty 4770.

This week both Sensex and Nifty have traded well above their short term average of 20dma (Sensex – 17844 and Nifty – 5394), medium term average of 50dma (Sensex – 17543 and Nifty – 5314) and the long term average of 200dma (Sensex – 17050 and Nifty – 5162). Thus the trend in the short term, medium term and the long term timeframe are all up.

Market had tested the Falling Channel Top and bounced back from there. Hence the overall long term target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

MACD and ROC continue with their buy signals and both are in positive territory. RSI (74) continues in overbought zone and same is the case with Stochastic Oscillator which too has entered overbought zone as %K is at 87. ADX has gone up to 30 which suggest that the current trend which is upwards is now very strong. Also the Directional Indicators continue in buy mode as +DI is way above –DI. MFI has moved higher and is at 69 which suggest that money is flowing into the market. The OBV indicator continues to move higher and hence Buy signal continues. Buy signal generated by Bollinger Band last week, continues this week.

The Nifty O.I. PCR has increased further to 1.71. Highest Open interest build up is seen at 5500 Put which suggests that the market expects strong support at this level. Friday saw very high Put writing at the strike of 5700 and 5800 which means that the market is likely to move above that level. 5600 Call and 5700 Call have seen short covering by Call writers. Life is becoming increasingly difficult for Call writers as the market continues its upward journey. However Call writers are quite active at the strike of 5900 in the October series. 5500 Put has seen strong Put writing in the October series. This suggests that 5900 is likely to act as resistance and 5500 as support.

Trendline Support for the Sensex is at 17958. Trendline Resistance for the Sensex is at 18908.

Trendline Support for the Nifty falls at 5438. Trendline Resistance for the Nifty falls at 5851.

For the week ahead, Sensex will find Support at 18411-18062-17677 and will find Resistance at 19071-19357-19697.

For the week ahead, Nifty will find Support at 5575-5447-5332 and will find Resistance at 5774-5857-5944.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5332

5447

5575

5691

5774

5857

5944

Sensex

17677

18062

18411

18752

19071

19357

19697

LAST WEEKS RECOMMENDATIONS:

Once again it was a fantastic week as all the recommendations reached their targets with ease. But the star performer of the week was Allahabad Bank which went up by more than 18%!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Grasim

3111

3217

3264

125

Rs. 19,125

BajAuto

1744

1809

1809

125

Rs. 8,125

AllahBk

124

134

147

2000

Rs. 46,000

Buy IDBI

90

99

99

2000

Rs. 18,000

Buy Adani

188

204

204

1000

Rs. 16,000

Total

Rs.1,07,250

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy JsWSt

730

717

751

774

Buy JPAss

83

81

87

92

Buy LiCHsg

267

263

275

284

Buy Educomp

163

159

170

178

Buy PunjLyd

52

50

55

59

. 
WATCH OUT FOR:
.
JP Associates
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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