Archives : TYPICAL BULL MARKET RECOVERY - 17/04/2014.

TYPICAL BULL MARKET RECOVERY –  17/04/2014.

STRONG SUPPORT AT NIFTY 6665 - 6650.

.

Market bounced back from just above the intermediate low of Sensex 22197 and Nifty 6650, on the back of good results being posted by IT majors Infosys, TCS and HCL Tech. Bull market Corrections and Recoveries are so sharp and fast that they leave little reaction time and that was evident in Thursday’s sharp pull-back. In the process a strong support has been formed between Sensex 22247-22197 and Nifty 6665-6650. Correction will start only if this support zone is taken out.

 

 


TYPICAL BULL MARKET RECOVERY –  17/04/2014.

STRONG SUPPORT AT NIFTY 6665 - 6650.

. 

Market bounced back from just above the intermediate low of Sensex 22197 and Nifty 6650, on the back of good results being posted by IT majors Infosys, TCS and HCL Tech. Bull market Corrections and Recoveries are so sharp and fast that they leave little reaction time and that was evident in Thursday’s sharp pull-back. In the process a strong support has been formed between Sensex 22247-22197 and Nifty 6665-6650. Correction will start only if this support zone is taken out.

TECHNICALLY SPEAKING.

Sensex opened the week at 22698, made a high of 22737, low of 22247 and closed the week at 22628. Thus it was a flat week with no gains or losses. At the same time the Nifty opened the week at 6792, made a high of 6813, low of 6665 and closed the week at 6779. Thus the Nifty closed the week with a minor gain of just 3 points.

On the daily charts both Sensex and Nifty have formed a big white body candle almost like a big White body Marubuzo.  This has recovered almost everything of what was lost on the first two days of the week. On the weekly charts, both the indices have formed a small black body candle with a long lower shadow and a small upper shadow. The long lower shadow indicates buying witnessed at lower levels. Thus both daily as well as weekly charts suggest continuation of bullishness.

The market has now formed a strong Support Zone between Sensex 22247-22197 and Nifty 6665-6650. Only if this support zone is taken out, the market will restart the correction. If this were to happen, Sensex will correct the rise from 19963 to 22792 and Nifty 5933 to 6819. The corresponding Correction levels will be at Sensex 21711-21377-21043 and Nifty 6480-6376-6271.

Both the indices completed a Bullish Flag pattern when Sensex closed above 22023 and Nifty 6562. The pattern has a potential target of atleast Sensex 23126 and Nifty 6912 and on the higher side Sensex 24083 and Nifty 7191. These targets are likely to be achieved as long as Sensex remains above 21573 and Nifty above 6432.

The market has left behind a Bullish Upward Gap (Sensex 21539-21525 and Nifty 6413-6403). This Bullish Gap is acting as a strong support which got validated when the Sensex reversed from a low of 21573 and Nifty from 6432. Also the Bullish Gap mentioned above is also a Measuring Gap and as per Gap theory the target falls at Sensex 23101 and Nifty 6886.

Pattern formation is a dynamic process the indices have witnessed completion of Rising Wedge formation in weekly line chart. Rising Wedge has a natural tendency to give a bearish breakout but here it has given a bullish breakout and hence one can expect a strong upmove towards a potential target of Sensex 24429 and Nifty 7326.

When the indices closed above the previous top, both the indices completed a Bullish pattern in the intermediate term and the targets as per that falls at Sensex 23003 and Nifty 6897.

Thus as per Gap theory and Pattern analysis, Sensex seems headed towards a target of 23003-23126 and Nifty 6886-6912 in the intermediate term.

When the market overcame the previous top and made fresh lifetime highs, it marked the end of six year consolidation. On the weekly charts both Sensex and Nifty have completed a Bullish Saucer formation and the targets as per that will fall at Sensex 24799 and Nifty 7454 on the lower side and Sensex 27081 and Nifty 8145 on the higher side. The targets are likely to be achieved over a period of next 20 months.

Current rally has started from a low of Sensex 19963 and Nifty 5933. Hence it becomes imperative that this support level holds so that the indices can move towards higher targets. Thus a breach of Sensex 19963 and Nifty 5933 will derail the current bullish rally.

This week, both Sensex and Nifty managed to take support and bounce back from the short term average of 20dma (Sensex – 22302 and Nifty – 6672). Both the indices continue to remain above the medium term average of 50dma (Sensex – 21509 and Nifty – 6413) and the long term average of 200dma (Sensex – 20495 and Nifty – 6096). Thus the trend in the short term, medium term and the long term timeframe continues to remain bullish.

MACD is in Sell mode even though it is in positive zone. ROC is still positive and continues with its Buy signal. RSI (65) suggests Bullish momentum. MFI (57) has dropped lower but still suggests positive money flow for the market. Stochastic Oscillator %K (63) is in Sell mode as it is below %D. ADX (40) has reduced slightly but the uptrend remains very strong. The Directional Indicators continue in Buy mode as +DI continues to remain above -DI. OBV continues in Buy mode making higher top higher bottom formation. Both the indices continue with their Buy signal on Bollinger Band. Majority of the Oscillators still suggests bullish bias and hence one should use any weakness in the market as an opportunity to buy.

Open Interest Put Call Ratio O.I.PCR for the current month is at a level of 1.40 which indicates a bullish bias. Highest Open interest build up is seen at 6700 Put and 6800 Call. This suggests that the market expects a small trading range with support coming in at 6700 levels and resistance around 6800 levels. For the next month series, highest open interest buildup is at 7000 CE and 6500 PE. Hence one can expect a wide trading range with resistance coming in at the level of 7000 and support at 6500.

The Trendline Support for the Sensex is at 22196.

The Trendline Support for the Nifty is at 6622.

For the week ahead, Sensex will find Support at 22326-22040-21704 and will find Resistance at 22956-23236-23534.

For the week ahead, Nifty will find Support at 6665-6575-6473 and will find Resistance at 6865-6941-7068.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

6473

6575

6665

6779

6865

6941

7068

Sensex

21704

22040

22326

22628

22956

23236

23534

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy Biocon

438

452

459

500

Rs.10,500

Hexaware

170

180

175

2000

Rs.10,000

Buy IDBI

68

72

69

4000

Rs. 4,000

Buy Atul

485

508

511

500

Rs.13,000

GMRInfra

25

28

26

16000

Rs.16,000

Total

Rs.53,500

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy ICICI

1262

1241

1297

1323

Buy ReLInfra

522

513

538

555

Buy TataGlobal

157

154

162

167

Buy Arvind

191

187

198

205

Buy MuthootFin

178

173

188

199

WATCH OUT FOR:

Tata Global

Tata Comm

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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