Archives : PULL-BACK GATHERS MOMENTUM - 13/01/2017.

PULL-BACK GATHERS MOMENTUM - 13/01/2017.

INDICES CROSS 200DMA.

The Pull-back which started three weeks back from the low of Nifty 7900, gathered momentum this week when both Sensex overcame the strong hurdle posed by the critical level of 200dma. As a result the outlook has turned positive and resulted in a sort of Pre-Budget Rally. Market participants still need to keep in mind that it still remains a Pull-back rally and not a trend reversal. Nifty is likely to face strong resistance near the zone of 8460-8510.


PULL-BACK GATHERS MOMENTUM - 13/01/2017.

INDICES CROSS 200DMA.

The Pull-back which started three weeks back from the low of Nifty 7900, gathered momentum this week when both Sensex overcame the strong hurdle posed by the critical level of 200dma. As a result the outlook has turned positive and resulted in a sort of Pre-Budget Rally. Market participants still need to keep in mind that it still remains a Pull-back rally and not a trend reversal. Nifty is likely to face strong resistance near the zone of 8460-8510.

                                                                                                 

TECHNICALLY SPEAKING.

Sensex opened the week at 26860, made a high of 27459, low of 26701 and closed the week at 27238. Thus it closed the week with a gain of 479 points. At the same time the Nifty opened the week at 8259, made a high of 8461, low of 8227 and closed the week at 8400. Thus the Nifty closed the week with a gain of 157 points.

On the weekly charts, both Sensex and Nifty have formed a Real white body candle. On the daily chart, both the indices have formed a Bearish Meeting Lines formation, only hitch being previous day candle body is small. Thus daily formations are suggesting a slight bearish bias whereas weekly formation is positive.

This week both the indices crossed and closed above the Resistance zone of Sensex 26922-27001 and Nifty 8279-8304 which was due to confluence of 200dma and a Fibonacci Retracement level. As a result the Pull-back rally has gathered momentum and is headed further up but still it cannot be termed as a reversal of the prior trend. The Pull-back levels are placed at Sensex 27001-27397-27794 and Nifty 8304-8431-8558.

On the near front, both the indices will face strong hurdle in the form of a Bearish Gap between Sensex 27344-27457 and Nifty 8460-8510.

The indices have made an intermediate bottom at Sensex 25700 and Nifty 7900. Only a break below this level will spell trouble for the Bulls as it will complete a strongly bearish pattern. Till the indices remain above this level, one can expect the Pull-back to continue. A Trend Reversal can occur only if Sensex closes above 27794 and Nifty above 8558.

MACD and Price ROC are both positive and continue in Buy mode. RSI (66) suggests bullish momentum. Stochastic Oscillator %K (94) is above %D, indicating a continuation in Buy mode. ADX is at 27 which suggest that the trend is gathering strength. Directional Indicators continue in Buy mode as +DI remains above –DI. MFI (93) suggests Positive Money Flow, but is in overbought territory. OBV continues in sideways mode. Thus majority of Oscillators are suggesting a bullish bias in the near term.

This week, both the indices tested and managed to close above the long term average of 200dma (Sensex – 26970 and Nifty – 8296). Already, both Sensex and Nifty were above the medium and short term average of 50dma (Sensex – 26544 and Nifty – 8178) and 20dma (Sensex – 26546 and Nifty – 8163). Thus the trend in the short term, medium term and even the long term timeframe continues to remain upwards.

Options data for January series indicate highest Call Open Interest build-up at the strike of 8400 and highest Put build-up remains at 8000. Thus Options data suggests a trading range with resistance coming in at 8400 and support at 8000.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8111

8218

8306

8400

8510

8614

8736

Sensex

26166

26540

26914

27238

27618

28010

28417

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy BemL

993

1061

1243

600

Rs.1,50,000

Siemens

1164

1202

1189

500

Rs.12,500

Buy MoiL

401

416

429

1000

Rs.28,000

AtlasCycle

450

493

644

1000

Rs.1,94,000

Buy RCF

54

58

58

10000

Rs.40,000

Total

Rs.4,24,500.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy TataComm

672

655

698

725

Buy GaiL

452

441

469

486

Buy CESC

674

658

698

723

Buy PowerGrid

197

193

203

210

Buy NMDC

143

139

149

156

WATCH OUT FOR:

CESC

REC

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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