Archives : PULL-BACK COMPLETED; DOWNTREND RESUMES - 02/12/2016.

PULL-BACK COMPLETED; DOWNTREND RESUMES - 02/12/2016.

Please note that there will not be any article update for next week. Next update will be on 16/12/2016.

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RECENT BOTTOM TO BE TESTED.

As was mentioned in the previous article, Nifty breached the 8000 level mark and took support at the 50% Correction level (Nifty – 7897). The stage was set for a Pull-back and the Pull-back happened. The Pull-back got completed after the indices grappled with the 200dma for the entire of last week, but sadly for the Bulls, closing for the week was below the 200dma. A Bearish Gap (Nifty 8159-8185) was created when the market opened with a big gap down on Friday, which will act as strong hurdle going forward. Only a close above this Bearish Gap will restart the Pull-back; else expect the recent bottom of Nifty 7916 to be tested.


PULL-BACK COMPLETED; DOWNTREND RESUMES - 02/12/2016.

Please note that there will not be any article update for next week. Next update will be on 16/12/2016. 

RECENT BOTTOM TO BE TESTED.

As was mentioned in the previous article, Nifty breached the 8000 level mark and took support at the 50% Correction level (Nifty – 7897). The stage was set for a Pull-back and the Pull-back happened. The Pull-back got completed after the indices grappled with the 200dma for the entire of last week, but sadly for the Bulls, closing for the week was below the 200dma. A Bearish Gap (Nifty 8159-8185) was created when the market opened with a big gap down on Friday, which will act as strong hurdle going forward. Only a close above this Bearish Gap will restart the Pull-back; else expect the recent bottom of Nifty 7916 to be tested.

TECHNICALLY SPEAKING.

Sensex opened the week at 26303, made a high of 26769, low of 26182 and closed the week at 26230. Thus it closed the week with a loss of 86 points. At the same time the Nifty opened the week at 8080, made a high of 8250, low of 8066 and closed the week at 8086. Thus the Nifty closed the week with a loss of 28 points.

On the weekly charts, both Sensex and Nifty have formed a Shooting Star, but this pattern cannot be given significance as it has occurred in a downtrend. On the daily charts, both the indices formed a Black body candle after forming a big bearish gap. Thus daily candlestick study indicates a bearish bias in the near term.

Last week, both the indices have left behind a Bearish Gap between Sensex 26463-26540 and Nifty 8159-8185 which will act as strong hurdle going forward. Only if the indices manage a close above this level, can we expect the Pull-back to resume.

As per Pattern analysis, both the indices have formed a Bearish Rising Wedge formation and the extended target as per that formation falls at Sensex 25073 and Nifty 7656.

The current fall is a Retracement of the entire rise from Sensex 22494 to 29077 and Nifty from 6825 to 8968. Thus, the relevant Correction levels are placed at Sensex 26562-25786-25009 and Nifty 8150-7897-7644.

MACD is negative but continues in Buy mode. Price ROC has turned negative, suggesting bearish momentum. RSI (39) suggests continuation of bearish momentum. Stochastic Oscillator %K (47) is above %D, indicating a continuation in Buy mode. Sell signal on Bollinger band continues. ADX has improved to 40 which suggest that downward trend has become very strong. Directional Indicators continue in Sell mode as +DI remains below –DI. MFI (48) suggests Negative Money Flow. OBV continues in Sell mode, making lower Top, lower Bottom formation. Thus majority of Oscillators are suggesting a bearish bias in the near term.

This week, both the indices tested both the short term average of 20dma (Sensex – 26551 and Nifty – 8196) and the long term average of 200dma (Sensex – 26601 and Nifty – 8169); but could not close above these levels. However, both the indices continued to remain below the medium term average of 50dma (Sensex – 27447 and Nifty – 8481). Thus the trend in the short term and long term timeframe remains down whereas the trend in the medium term timeframe remains Bearish.

Options data for November series indicate highest Call Open Interest build-up shifted to the strike of 8300 and highest Put build-up remains at 8000. Thus Options data suggests a wide trading range with resistance coming in at 8300 and support at 8000.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7777

7882

7992

8086

8169

8251

8353

Sensex

25180

25549

25902

26230

26601

27008

27358

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell HDFC

1237

1268

1191

1144

Sell M&M

1146

1172

1107

1065

Sell ContCorp

1136

1167

1189

1141

Sell HPCL

436

445

422

407

Sell IndusInd

1057

1081

1021

984

WATCH OUT FOR:

HPCL

Kotak Mah Bank

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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