Archives : BEWARE; BEAR ATTACK TO INTENSIFY - 15/01/2016.

BEWARE; BEAR ATTACK TO INTENSIFY - 15/01/2016.

NOW ITS TURN OF MID & SMALL CAPS.

This week saw the market capitulate and reach the intermediate Head and Shoulders target of Sensex 24486 and Nifty 7425 with ease. This was just the target of second degree pattern, but we remain well on course to achieve lower targets for patterns of higher degree which are at Nifty 7092 and 6741. But the scary part is till now the small and mid-cap stocks were more or less insulated from the fall, which will not be the case henceforth. This week both the small-cap and mid-cap indices have signalled a fresh bearish breakout. Hence one should not be surprised, if the small and mid-cap stocks experience a sharper fall as compared to the Nifty.


BEWARE; BEAR ATTACK TO INTENSIFY - 15/01/2016.

NOW ITS TURN OF MID & SMALL CAPS.

This week saw the market capitulate and reach the intermediate Head and Shoulders target of Sensex 24486 and Nifty 7425 with ease. This was just the target of second degree pattern, but we remain well on course to achieve lower targets for patterns of higher degree which are at Nifty 7092 and 6741. But the scary part is till now the small and mid-cap stocks were more or less insulated from the fall, which will not be the case henceforth. This week both the small-cap and mid-cap indices have signalled a fresh bearish breakout. Hence one should not be surprised, if the small and mid-cap stocks experience a sharper fall as compared to the Nifty.

TECHNICALLY SPEAKING.

Sensex opened the week at 24787, made a high of 25018, low of 24387 and closed the week at 24455. Thus it closed the week with a loss of 479 points. At the same time the Nifty opened the week at 7527, made a high of 7605, low of 7425 and closed the week at 7437. Thus the Nifty closed the week with a loss of 164 points.

On the weekly charts, both the indices have formed a Black body candle in line with the downtrend after the formation of Fooling Three Soldiers last week. On the daily charts both the indices have formed a big Black body candle. Thus daily and weekly candlestick studies indicate continuation of bearishness.

Last week both the indices fell with a Bearish Downward Gap from 25230-25357 for the Sensex and 7674-7721 for the Nifty which was a Measuring Gap and its target were Sensex 24390 and Nifty 7423. These were easily achieved this week as the lows of Sensex (24387) and Nifty (7425) coincide with the targets. This Gap will now act as a very strong Resistance zone and any close above this gap will reverse the short term trend.

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.

This week both the indices breached the strong support zone between Sensex 24833-24867 and Nifty 7539-7551 and as a result the Nifty is on its way to sub-7000 levels soon.

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.

This week, both the Sensex and Nifty achieved the intermediate pattern Head and Shoulders target of Sensex 24486 and Nifty 7425. However the recent Bearish Head and Shoulders is still intact for a target of Sensex 23276 and Nifty 7092. Also the higher degree Head and Shoulders remains on course, the target for which falls at Sensex 22552 and Nifty 6741.

MACD and Price ROC are both negative and continue in Sell mode. RSI (31) suggests continuation of bearish momentum. OBV continues to make lower top lower bottom formation and hence in Sell mode. MFI (31) indicates negative money flow in the market. ADX has increased to 34; indicates that the downtrend is very strong. The Directional Indicators continue in Sell mode as +DI remains below –DI. Thus majority of Oscillators are suggesting a bearish bias in the near term.

This week, both the indices remained well below the short term average of 20dma (Sensex – 25443 and Nifty – 7743), the medium term average of 50dma (Sensex – 25650 and Nifty – 7789). Also both Sensex and Nifty continues to remain below the long term average of 200dma (Sensex – 26867 and Nifty – 8142). Thus the trend in the short term timeframe, medium term timeframe and even 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 7700 and highest Put build-up at the strike of 7300. Thus Option data suggests a trading range with resistance coming in at 7700 and support at 7300.

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

HeroMoto

2490

2391

2410

200

Rs.16,000

Sell M&M

1198

1164

1152

400

Rs.18,400

UltraTech

2705

2609

2581

200

Rs.24,800

Sell Lupin

1713

1662

1636

300

Rs.23,100

Sell Wipro

556

537

531

1000

Rs.25,000

Total

Rs.1,07,300.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7067

7206

7353

7437

7551

7674

7771

Sensex

23572

23873

24163

24455

24833

25230

25656

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell MRF

37688

38501

36425

35136

Sell EicherMot

16240

16674

15586

14927

Sell HDFC

1150

1169

1127

1093

Sell TorntPharma

1324

1349

1286

1247

Sell STFC

765

781

739

712

WATCH OUT FOR:

Nifty Junior

MRF

Tornt Pharma

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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