Archives : BULLISH START TO NOVEMBER SERIES - 02/11/2012.

BULLISH START TO NOVEMBER SERIES – 02/11/2012.

SHORT TERM TREND TURNS POSITIVE.

After giving a bearish breakout on Tuesday, the market started to move higher on the remaining days of the week. The bearish breakout will be classified as a bear trap, once we have a closing above Nifty 5730. This week both the indices have taken support at the 38.2% Retracement (Sensex - 18416 and Nifty - 5586) of the immediate rise of the Sensex from 17250 to 19137 and Nifty from 5215 to a high of 5815. Sensex closing above the level of 18850 and Nifty above 5730 will lead the market to not only the intermittent top, but higher. Friday’s price action has turned the short term trend bullish.

   


BULLISH START TO NOVEMBER SERIES – 02/11/2012.

SHORT TERM TREND TURNS POSITIVE.

After giving a bearish breakout on Tuesday, the market started to move higher on the remaining days of the week. The bearish breakout will be classified as a bear trap, once we have a closing above Nifty 5730. This week both the indices have taken support at the 38.2% Retracement (Sensex - 18416 and Nifty - 5586) of the immediate rise of the Sensex from 17250 to 19137 and Nifty from 5215 to a high of 5815. Sensex closing above the level of 18850 and Nifty above 5730 will lead the market to not only the intermittent top, but higher. Friday’s price action has turned the short term trend bullish.

TECHNICALLY SPEAKING. 

Sensex opened the week at 18656, made a high of 18793, low of 18393 and closed the week at 18755. Thus it registered a weekly gain of 130 points. At the same time the Nifty opened the week at 5665, made a high of 5711, low of 5583 and closed the week at 5697. Thus the Nifty went up by 33 points on a weekly basis.

Both the indices opened with a big gap up on Friday and closed higher. Sensex has formed a small Opening White body Marubuzo, whereas Nifty has formed a Doji. The Doji cannot be classified as a Bearish Doji as it has formed in a sideways trend. On the weekly charts both Sensex and Nifty have formed a small white body candle with a long lower shadow and a small upper shadow. The long lower shadow is due to buying seen at lower levels. Overall the weekly charts are showing more promise than before.

Currently both Sensex and Nifty are undergoing a correction of the immediate rise of Sensex from 17250 to 19137 and 5215 to 5815 for the Nifty. The Retracement levels for the Sensex are at 18416-18193-17971 and 5586-5515-5444 for the Nifty. This week the Sensex bounced from a low of 18393 and Nifty 5583. Thus the 38.2% Retracement level for the indices has provided support to the market. A breach below the low of the week, will resume the correction.

A Bullish Rising Gap between Sensex 18062-18284 and Nifty 5447-5526 has acted as a strong support for the market before as the Sensex had bounced back from a low 18291 and Nifty 5534. This gap holds more significance because the 50% Retracement of the immediate rise from 17250 to 19137 for the Sensex and 5215 to 5815 for the Nifty (which is at 18193 and 5515) is also within the Gap mentioned above.

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.

The indices finally managed to close above the short term average of 20dma (Sensex – 18685 and Nifty – 5678), after remaining below it for major part of the week. Also the market continues to be well above its medium term average of 50dma (Sensex – 18326 and Nifty – 5557) and the long term average of 200dma (Sensex – 17452 and Nifty – 5294). Thus the trend in the short term has turned up, while the medium term and the long term timeframe continue to be bullish.

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 continues with its Sell signal even though positive. ROC has just moved above the centerline and signaled a Buy. RSI and Money Flow have given a fresh Buy as they have crossed the equilibrium line from below. Stochastic Oscillator is in Buy mode as %K (50) is above %D. ADX has dropped to around 29 indicating that the uptrend has lost some strength. The Directional Indicators i.e. +DI and –DI continue with their buy signal. OBV has moved above the previous top and has signaled a fresh Buy. The Bollinger Bands had given a Sell signal as on Tuesday, but the stop loss has been triggered on Friday when the indices effectively closed above the mean line i.e. 20dma.

The Nifty O.I. PCR is at 1.12. The highest Open interest build up for the November series is seen at 5900 Call and 5600 Put. This suggests that the market expects a trading range with strong support coming in at around 5600 and resistance at around 5900 levels.

Trendline Support for the Sensex is at 18410.

Trendline Support for the Nifty falls at 5588.

For the week ahead, Sensex will find Support at 18469-18182-17884 and will find Resistance at 19058-19340-19636.

For the week ahead, Nifty will find Support at 5596-5499-5393 and will find Resistance at 5787-5874-5966.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5393

5499

5596

5697

5787

5874

5966

Sensex

17884

18182

18469

18755

19058

19340

19636

LAST WEEKS RECOMMENDATIONS:

The star performer of the week was Reliance Infra which went down by around 5%. 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Siemens

680

665

675

500

Rs. 2,500

Sell ReLInf

490

465

465

500

Rs.12,500

Sell REC

209

202

205

1000

Rs. 4,000

Sell Polaris

122

117

118

2000

Rs. 8,000

Sell AllBnk

134

130

128

2000

Rs.12,000

Total

Rs.39,000

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy FinTech

1030

1014

1054

1079

Buy BajAuto

1897

1875

1933

1971

Buy Petronet

172

169

177

183

Buy Lupin

579

571

592

605

Buy HindZinc

136

134

140

144

WATCH OUT FOR:

PetronetLNG

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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