Archives : NOT OUT OF THE WOODS - 19/06/2015.

NOT OUT OF THE WOODS - 19/06/2015. 

SHORT TERM TREND TURNS UP.

After making a new low at Sensex 26307 & Nifty 7940, market bounced back and recovered more than 1000 points on the Sensex and around 300 points on the Nifty. As a result the short term trend has turned bullish. Yet despite these factors, one cannot say for sure that we are out of the woods. The current rally can be termed as a pull-back rally which normally gets sold into; if the market harbours any further intention of moving southwards.

 


NOT OUT OF THE WOODS - 19/06/2015. 

SHORT TERM TREND TURNS UP.

After making a new low at Sensex 26307 & Nifty 7940, market bounced back and recovered more than 1000 points on the Sensex and around 300 points on the Nifty. As a result the short term trend has turned bullish. Yet despite these factors, one cannot say for sure that we are out of the woods. The current rally can be termed as a pull-back rally which normally gets sold into; if the market harbours any further intention of moving southwards.

TECHNICALLY SPEAKING.

Sensex opened the week at 26498, made a high of 27404, low of 26307 and closed the week at 27316. Thus it closed the week with a gain of 891 points. At the same time the Nifty opened the week at 7986, made a high of 8250, low of 7944 and closed the week at 8224. Thus the Nifty closed the week with a gain of 242 points.

On the daily charts, both the indices have formed a small white body candle after an upward gap, with a longer upper shadow. The upper shadow represents selling at higher levels. On the weekly charts both Sensex and Nifty have formed a big white body candle which represents recovery from lower levels. Thus daily as well as weekly candlestick pattern suggests a bullish bias in the near term.

The market is witnessing a pull-back of the fall from Sensex 30024 to 26307 and Nifty 9119 to 7940 and the relevant correction levels are 27727-28165-28604 for the Sensex and 8390-8529-8668 for the Nifty. Hence the long term uptrend will resume once Sensex manages to stay above 28604 and Nifty above 8668.

This week both the indices managed to close above the short term average of 20dma (Sensex – 27035 and Nifty – 8176). However, both Sensex and Nifty continue to remain below the long term average of 200dma (Sensex – 27744 and Nifty – 8359) as well as medium term average of 50dma (Sensex – 27426 and Nifty – 8301). Thus the trend in the short term timeframe has turned up whereas the trend in the medium term and long term timeframe continues to remain down. 

Bearish pattern formations still remain intact and hence one can still expect indices to achieve the target of Bearish Rising Wedge pattern which falls at 26049 for the Sensex and 7882 for the Nifty. Besides this, both the Sensex and Nifty had also completed an Ascending Broadening pattern and the target for that pattern is at Sensex 25034 and Nifty 7533. Coupled with this, both the indices have also completed a Head and Shoulders pattern and the target as per this pattern is at Sensex 24486 and Nifty 7425.

MACD and Price ROC continue with their Buy signal. RSI (54) has just crossed the equilibrium line, thereby suggesting bullish momentum. Stochastic Oscillator %K (42) has just gone above %D, thereby signaling a Buy. MFI (43) suggests negative money flow. OBV continues to make lower top lower bottom formation. ADX has decreased to 19, suggesting that the current downtrend has lost its entire strength. Directional Indicators have just signaled a Buy as +DI has gone above –DI. Thus majority of Oscillators are suggesting a bullish bias in the near term.

Options data indicates highest Call Open Interest buildup at the strike of 8500 and highest Put build-up is at the strike of 8000. Thus Option data suggests a trading range with support coming in at 8000 and resistance around 8500. Friday saw strong open interest being added to the 8200 Put and hence the level of 8200 will act as strong support in the near term.

Trendline Resistance for the Sensex is at 27420.

Trendline Resistance for the Nifty falls at 8288.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7940

8052

8144

8224

8326

8445

8516

Sensex

26307

26688

27000

27316

27670

27997

28384

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy JubFood

1823

1789

1875

1927

Buy BhartiAir

434

424

450

467

Buy IOC

382

375

394

407

Buy TVSMotors

239

234

247

256

Buy Havells

285

279

294

304

WATCH OUT FOR:

IOC

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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