Archives : WEEK OF CONSOLIDATION - 08/07/2016.

WEEK OF CONSOLIDATION - 08/07/2016.

CONSOLIDATION AUGURS WELL FOR BULLS.

In a Bull market, it is normal to have a consolidation after a sharp upward move (more than 450 points on Nifty in 6 trading sessions). The current consolidation augurs well for the Bulls, as it will provide adequate strength to the Bulls to challenge the immediate short term top (Nifty 8398) and then continue with its upward journey. One positive aspect for the week was the Sensex closing above the strong Retracement level of 61.8% i.e. 27148 for three trading sessions. As long as it trades above this level, one can expect the indices to challenge their life time highs.


WEEK OF CONSOLIDATION - 08/07/2016.

CONSOLIDATION AUGURS WELL FOR BULLS.

In a Bull market, it is normal to have a consolidation after a sharp upward move (more than 450 points on Nifty in 6 trading sessions). The current consolidation augurs well for the Bulls, as it will provide adequate strength to the Bulls to challenge the immediate short term top (Nifty 8398) and then continue with its upward journey. One positive aspect for the week was the Sensex closing above the strong Retracement level of 61.8% i.e. 27148 for three trading sessions. As long as it trades above this level, one can expect the indices to challenge their life time highs.

TECHNICALLY SPEAKING.

Sensex opened the week at 27314, made a high of 27385, low of 27034 and closed the week at 27126. Thus it closed the week with a minor loss of 18 points. At the same time the Nifty opened the week at 8376, made a high of 8398, low of 8287 and closed the week at 8323. Thus the Nifty closed the week with a small loss of 5 points.

On the weekly charts, both Sensex and Nifty have made a small black body Star which is a neutral formation. It will be treated as Bearish if next week forms a real Black body candle. On the daily charts both the indices have formed a small black body candle with a lower shadow which indicates some buying at lower levels. Thus daily and weekly candlestick pattern suggest a pause in the upward rally.

Sensex is now facing immediate short term resistance in the form of Bearish Gap which is placed at 27296-27318. The corresponding gap on the Nifty has been overcome, but Nifty is facing an equally strong hurdle in the form of different but a relevant Bearish Gap between 8322-8359. Thus for the current upward move to extend it is necessary both Sensex and Nifty over come their strong hurdles and stay above them.

Last week, both the indices had left behind a Bullish Upward Gap which is between Sensex 26872-26776 and Nifty 8242-8212. This Gap will act as strong Support for the week ahead. In case the above mentioned Gaps are overcome, then one can expect strong Support at the Bullish Gap between Sensex 25941-25897 and Nifty 7948-7941.

Both the indices are undergoing a Retracement of the entire fall from Sensex 30024 to 22494 and Nifty 9119 to 6825. Market is facing strong hurdle in the form of 61.8% Retracement level for the Sensex which is at 27148. Sensex has closed for three days above this critical level but failed to do so on Friday. Sensex needs to remain above this critical level, which will mark the end of Correction phase and will signal a move towards testing life highs of Sensex 30024 and Nifty 9119.

MACD and Price ROC both are positive and continue with their Buy signals. RSI (60) suggests bullish momentum. Stochastic Oscillator %K (85) is in Sell mode as it is below %D. ADX has dropped to 16, which suggests the trend is still in consolidation. Directional Indicators continue in Buy mode as +DI is above –DI. MFI (60) suggests Positive Money Flow. Thus majority of Oscillators are suggesting a bullish bias in the near term.

This week, both the indices continued to remain above the short term average of 20dma (Sensex – 26786 and Nifty – 8216), medium term average of 50dma (Sensex – 26291 and Nifty – 8058) and even the long term average of 200dma (Sensex – 25598 and Nifty – 7799). Thus the trend in the short term, medium term and the long term timeframe continues to remain Bullish.

Options data for July series indicate highest Call Open Interest build-up remains at the strike of 8500 and highest Put build-up still remains at 8200. Thus Option data suggests a small trading range with resistance coming in at 8500 and support at 8200.

LAST WEEKS RECOMMENDATIONS: 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

BajajFin

8167

8424

8281

250

Rs.28,500

BEML

876

902

921

500

Rs.22,500

Havells

366

377

372

2000

Rs.12,000

ONGC

225

233

236

2500

Rs.27,500

Buy BoB

156

163

162

3500

Rs.21,000

Total

Rs.1,11,500.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7992

8107

8213

8323

8408

8530

8621

Sensex

25941

26314

26752

27126

27442

27866

28335

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy AjantaPh

1630

1591

1689

1750

Buy ConCorp

1465

1444

1497

1530

Buy PidiliteInd

729

710

759

790

Buy ReLInfra

562

548

583

605

Buy BFUtilities

568

554

590

613

WATCH OUT FOR:

AjantaPh

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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