ANOTHER LIFE-HIGH; BUT MOMENTUM REDUCES - 21/11/2014. 

EVERY DIP BEING BOUGHT.

There is not an iota of doubt regarding the direction of the existing market trend in any time-frame but the concern remains as the market seems to be making new highs on a reduced breadth. This is not a sign of reversal but a definite sign of tiredness, which suggests that the current move resembles more of index management rally than a broad based rally. Still the fact remains that every dip is being bought and the Nifty seems to surging higher towards a short term target of 8656.

 ANOTHER LIFE-HIGH; BUT MOMENTUM REDUCES - 21/11/2014. 

EVERY DIP BEING BOUGHT.

There is not an iota of doubt regarding the direction of the existing market trend in any time-frame but the concern remains as the market seems to be making new highs on a reduced breadth. This is not a sign of reversal but a definite sign of tiredness, which suggests that the current move resembles more of index management rally than a broad based rally. Still the fact remains that every dip is being bought and the Nifty seems to surging higher towards a short term target of 8656.

TECHNICALLY SPEAKING. 

Sensex opened the week at 28018, made a high of 28360, low of 27915 and closed the week at 28334. Thus it closed the week with a gain of 288 points. At the same time the Nifty opened the week at 8378, made a high of 8489, low of 8349 and closed the week at 8477. Thus the Nifty closed the week with a gain of 88 points.

After a series of small body candles, both the indices have formed a real white body candle on Friday which augurs well for the bulls. As far as the weekly formation goes, the story is quite similar. After two small body formations in the previous two weeks, both Sensex and Nifty have formed a real white body candle this week. Thus both daily and weekly candles suggest continuation of bullishness.

Both the indices are rallying upwards chasing a rising Trendline which is currently placed at Sensex 28564 and Nifty 8561. A rising trendline has the ability to attract prices towards it but it requires lot of strength to achieve a bullish breakout. A bullish breakout will signal a potential move towards 8656 which will be a first stop and then 8893 which is the intermediate rally target.

Both the indices have left behind a Bullish Rising Gap between Sensex 27438-27390 and Nifty 8198-8181. This gap will not only act as a support but it can also be interpreted as a Measuring Gap and the target as per Gap Theory falls at Sensex 28918 and Nifty 8656.

Both the indices continue to remain above the short term average of 20dma (Sensex – 27689 and Nifty – 8278), medium term average of 50dma (Sensex – 27093 and Nifty – 8101) and even above the long term average of 200dma (Sensex – 24517 and Nifty – 7321). Thus the trend in the short term, medium term and the long term timeframe remains bullish.

MACD and Price ROC are both positive and continue with their buy signals. RSI @ 72 and Stochastic oscillator %K (86) continue to remain overbought for the last three weeks. However MFI (71) suggests positive money flow in the market but continues to play with the overbought zone. ADX has further increased to 31, which indicates that the uptrend is getting stronger. Direction Indicators continue in buy mode as +DI remains above –DI. Bollinger Band continues in Buy mode. Except for certain Oscillators which are overbought, majority of the Oscillators are suggesting bullishness in the short term.

Option data for the current series, shows highest Put Open Interest continues at the strike of 8300 and highest Call build-up at the strike of 8500. Thus Option data suggests a small trading range with support coming in at 8300 and resistance around 8500. On Friday, 8650 Call has seen strong Open Interest buildup which suggests that the market might find resistance at the level of 8650.

Trendline Resistance for the Sensex falls at 28564.

Trendline Resistance for the Nifty is at 8561.

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