Archives : BLOOD-BATH ON D-STREET - 08/01/2016.
BLOOD BATH ON D-STREET - 08/01/2016.

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GLOBAL CRACK DUE TO CHINESE CONCERNS.

China sparked off a global scare when the trading in Chinese stock market was halted twice this week. The New Year 2016 could not have a worse start than this. The global meltdown has assured that majority of the world markets have entered or are entering a Bear phase. Thus this weeks low which is very near to the critical intermediate bottom i.e. Nifty 7539 levels, assumes tremendous significance. A break below this level will pave the way for Nifty targets of 7092 and 6741.


BLOOD BATH ON D-STREET - 08/01/2016.

GLOBAL CRACK DUE TO CHINESE CONCERNS.

China sparked off a global scare when the trading in Chinese stock market was halted twice this week. The New Year 2016 could not have a worse start than this. The global meltdown has assured that majority of the world markets have entered or are entering a Bear phase. Thus this weeks low which is very near to the critical intermediate bottom i.e. Nifty 7539 levels, assumes tremendous significance. A break below this level will pave the way for Nifty targets of 7092 and 6741.

TECHNICALLY SPEAKING.

Sensex opened the week at 26116, made a high of 26116, low of 24825 and closed the week at 24934. Thus it closed the week with a loss of 1226 points. At the same time the Nifty opened the week at 7924, made a high of 7937, low of 7556 and closed the week at 7601. Thus the Nifty closed the week with a loss of 362 points.

On the weekly charts, both the indices have formed a big black body candle which is like Fooling Three Soldiers. It is a bearish continuation pattern which has undone the bullish work of last three weeks with a single black body candle. On the daily charts both the indices have formed a small black body Spinning Top but when compared with last two days formation, it looks like a Homing Pigeon. This is a bullish reversal pattern but which requires confirmation. Thus weekly candlestick pattern suggests a bearish bias.

Both the indices fell with a gap on Thursday, which resulted in a Bearish Downward Gap from 25230-25357 for the Sensex and 7674-7721 for the Nifty. This Gap will not only act as strong Resistance zone but it also is a Measuring Gap. Thus as per Gap Theory, the target falls at Sensex 24390 and 7423 for the Nifty.

Both the indices are retracing the strong upward rally which started from Sensex 17448 and Nifty 5118. The relevant Correction levels are placed at Sensex 25220-23736-22252 and Nifty 7591-7119-6646.

On the lower side, the market is at a very crucial juncture, as the strong Support Zone between Sensex 24833-24867 and Nifty 7539-7551 is being tested again. This zone has supported the market twice before and hence a breach of this strong Support Zone will easily lead the Nifty to sub-7000 levels.

On the higher side, there lies a very strong Resistance zone between Sensex 26243-26256 and Nifty 7944-7979 which is a result of confluence of 50% Retracement (Sensex 26243 and Nifty 7944) and Intermediate Rally Top (Sensex 26256 and Nifty 7979). A close above this will make the medium term trend positive.

The Bearish Head and Shoulders is still intact for a target of Sensex 23276 and Nifty 7092, as long as Sensex remains below 26256 and Nifty below 7979. Besides this formation, both the indices remain on track to achieve the targets for Head and Shoulders pattern (Sensex 24486 and Nifty 7425) and also a higher degree Head and Shoulders, the target for which falls at Sensex 22552 and Nifty 6741.

MACD and Price ROC are both negative and continue in Sell mode. RSI (36) suggests continuation of bearish momentum. Stochastic Oscillator %K (7) continues below %D, hence in Sell mode. OBV continues to make lower top lower bottom formation and hence in Sell mode. MFI (57) indicates positive money flow in the market. ADX has increased slightly to 24; indicates that the downtrend is now gathering strength. The Directional Indicators continue in Sell mode as +DI remains below –DI. Thus Oscillators are suggesting a bearish bias in the near term.

This week, both the indices breached and closed below the short term average of 20dma (Sensex – 25604 and Nifty – 7790) and even medium term average of 50dma (Sensex – 25865 and Nifty – 7859). Also both Sensex and Nifty still remains below the long term average of 200dma (Sensex – 26955 and Nifty – 8172). Thus the trend in the short term timeframe and medium term timeframe has turned down, whereas the trend in the long term timeframe continues to remain bearish.

Options data for January series indicates highest Call Open Interest build-up at the strike of 8000 and highest Put build-up at the strike of 7500. Thus Option data suggests a trading range with resistance coming in at 8000 and support at 7500.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7206

7353

7504

7601

7715

7825

7940

Sensex

23729

24156

24587

24934

25287

25656

26130

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell HeroMoto

2490

2556

2391

2289

Sell M&M

1198

1220

1164

1129

Sell UltraTech

2705

2768

2609

2511

Sell Lupin

1713

1746

1662

1610

Sell Wipro

556

568

537

517

WATCH OUT FOR:

M&M

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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