Archives : DOUBLE LOVERS SUICIDE - 30/01/2015.

DOUBLE LOVERS SUICIDE - 30/01/2015.

SHARP, SWIFT & SEVERE.

It had to happen and it did happen; yes the one way upward rally was too good to last as it came to a halt on Friday when the Nifty stopped shy of 9000 levels and reversed. It was pointed out in the previous week’s article that the indices are approaching a major target zone (Nifty 8893-9030) which will prove to be a strong resistance for the market and it did as shown by the formation of big Opening Black body Marubuzo on Friday. The question now is whether it is a Trend Reversal or another sharp Correction. The answer will be given by the market in the coming weeks but till then we will consider this as another Bull market correction. We need to keep in mind that this is a very strong Bull market and Bull market corrections are sharp, swift and severe and it will not be any different this time around.

 

 


DOUBLE LOVERS SUICIDE - 30/01/2015.

SHARP, SWIFT & SEVERE.

It had to happen and it did happen; yes the one way upward rally was too good to last as it came to a halt on Friday when the Nifty stopped shy of 9000 levels and reversed. It was pointed out in the previous week’s article that the indices are approaching a major target zone (Nifty 8893-9030) which will prove to be a strong resistance for the market and it did as shown by the formation of big Opening Black body Marubuzo on Friday. The question now is whether it is a Trend Reversal or another sharp Correction. The answer will be given by the market in the coming weeks but till then we will consider this as another Bull market correction. We need to keep in mind that this is a very strong Bull market and Bull market corrections are sharp, swift and severe and it will not be any different this time around.

TECHNICALLY SPEAKING.

Sensex opened the week at 29451, made a high of 29844, low of 29070 and closed the week at 29182. Thus it closed the week with a loss of 96 points. At the same time the Nifty opened the week at 8871, made a high of 8996, low of 8775 and closed the week at 8808. Thus the Nifty closed the week with a loss of 27 points.

On the daily charts, both Sensex and Nifty formed a big Opening Black body Marubuzo which completely engulfed previous four days candle. This resulted in Bearish Engulfing pattern on the daily charts. On the weekly chart, both the indices have formed a small black body candle with a longer upper shadow. The upper shadow indicates selling seen at higher levels. Thus daily candlestick pattern points towards bearishness in the near term whereas the weekly study is not as bearish as the daily study.

On the monthly chart, both the indices have registered a candlestick pattern which is like Bullish Engulfing pattern. But it is not; in fact it is the Double Lovers Suicide pattern which is a bearish pattern. It requires a confirmation in the form of a black body candle in the next month. But if the February month candle closes above the high of this pattern i.e. above Sensex 29844 and Nifty 8996 then the above pattern will stand negated.

Last week we mentioned target levels for the Sensex as 29554-30076 and Nifty 8893-9030 and it was expected to provide resistance to the indices in the near term. Sensex and Nifty both reversed from the target zone and are now heading lower to test the Correction levels. The relevant Retracement levels are placed at 28555-28156-27758 for the Sensex and 8601-8478-8356 for the Nifty. Also the Target zone between Sensex 29554-30076 and Nifty 8893-9030 will continue to act as Resistance zone in the near term.

The weekly Upward Gap between Sensex 28197-28194 and Nifty 8531-8530 which is not only a Measuring Gap but will now also act as strong support. The target as per the Gap hypothesis comes at Sensex 29922 and Nifty 9100, provided both the indices continue to stay above this weekly gap.

MACD and Price ROC are both positive and continue with their Buy signal. RSI has just moved lower from being overbought whereas the Stochastic Oscillator %K (87) and MFI (84) are still overbought. ADX has moved higher to 31, suggesting uptrend is gaining strength. Directional Indicators continue in Buy mode as +DI remains above –DI. OBV and Bollinger Band continue in Buy mode. Thus certain Oscillators are overbought suggesting one has to be cautious in the near term. 

Both the indices continue to remain above the short term average of 20dma (Sensex – 28256 and Nifty – 8529), medium term average of 50dma (Sensex – 27996 and Nifty – 8422) and also the long term average of 200dma (Sensex – 26148 and Nifty – 7828). Thus the trend in the short term, medium term and long term timeframe continue to remain bullish.

The Volatility Index, India VIX gained over 13% for the week and has finally managed to close above the level of 20. The VIX is now well on its way towards a target of 28. Option data suggest highest Put Open Interest is at 8000 followed by 8500, whereas the highest Call build-up is at the strike of 9000. Thus Option data suggests a wide trading range with immediate support coming in at 8500 and resistance around 9000.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8445

8570

8689

8808

8893

8996

9100

Sensex

28064

28370

28822

29182

29554

29844

30076

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy Cipla

677

699

711

500

Rs.17,000

AdaniPort

346

359

352

1000

Rs. 6,000

RPower

64

68

66

4000

Rs. 8,000

Buy Sintex

106

113

120

2000

Rs.28,000

Edelweiss

70

77

82

4000

Rs.48,000

Total

Rs.1,07,000.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Bhel

291

284

302

315

Buy IOC

347

339

360

374

Buy ApolloTyres

242

234

255

269

Buy JindalSteel

158

154

165

173

Buy NTPC

143

140

148

154

WATCH OUT FOR:

BHEL

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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