Archives : MELTDOWN ON D-STREET - 02/02/2018.

MELTDOWN ON D-STREET - 02/02/2018.

 

BLACK FRIDAY REVISITED.

 

The Sell-off witnessed on Friday was not only due to the disappointment in the Union Budget but also because of weakness in global markets. The introduction of Long Term Capital Gains Tax did not go down well with the market and the worst fear played out as the Nifty cracked. As a result the Short term Trend has reversed and turned Bearish. This time the bearish force seems to be very powerful and it looks likely to test not only the 50dma but also the 200dma. In the near term, any pull-back should be used to create short positions.

 


MELTDOWN ON D-STREET - 02/02/2018.

 

BLACK FRIDAY REVISITED.

 

The Sell-off witnessed on Friday was not only due to the disappointment in the Union Budget but also because of weakness in global markets. The introduction of Long Term Capital Gains Tax did not go down well with the market and the worst fear played out as the Nifty cracked. As a result the Short term Trend has reversed and turned Bearish. This time the bearish force seems to be very powerful and it looks likely to test not only the 50dma but also the 200dma. In the near term, any pull-back should be used to create short positions.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 36106, made a high of 36443, low of 35006 and closed the week at 35066. Thus it closed the week with a loss of 984 points. At the same time the Nifty opened the week at 11079, made a high of 11171, low of 10736 and closed the week at 10760. Thus the Nifty closed the week with a loss of 309 points.

 

On the weekly charts, both the indices have formed a big black body candle which is completing a Bearish Engulfing pattern. On the daily charts, both the indices have formed a big Closing Black body Marubuzo. Thus daily as well as weekly charts suggest strong bearishness in the near term.

 

This week, the first Bullish Upward Gap between Sensex 35683-35827 and Nifty 10994-10975 has been filled. Also the Bullish Weekly Gap on Sensex at 34687-34638 has been filled. Thus as per the theory of Three, the filling of first gap is an indication that the next two gaps will be filled i.e. between 34687-34638 and 34216-34188. Till then, these Gaps will act as strong Support.

 

Both the indices are in Correction mode. Immediate Correction levels are placed at Sensex 34962-34505-34047 and Nifty 10737-10602-10468. Intermediate Correction levels are at Sensex 34395-33763-33130 and Nifty 10605-10429-10254. There is a Confluence thus formed between Sensex 34505-34395 and Nifty 10605-10602 which should act as Support.

 

This week, both the indices breached and closed below the short term average of 20dma (Sensex – 35267 and Nifty - 10845). But still both Sensex and Nifty remain not only above the medium term average of 50dma (Sensex – 34211 and Nifty – 10545) but also well above the long term average of 200dma (Sensex – 32296 and Nifty – 10013).  Thus the trend in short term timeframe has turned bearish, whereas the trend in the medium term as well as long term timeframe continues to remain Bullish.

 

MACD has given a fresh Sell signal. RSI (48) suggests that the momentum has turned bearish. Stochastic Oscillator %K (57) is in Sell mode. ADX has moved lower at 29 suggesting that the trend has lost some strength. Directional Indicators have given a fresh Sell signal as +DI has gone below –DI. MFI (56) suggests Positive Money Flow. OBV continues in Buy mode. Buy signal has been negated in Bollinger Band as both the indices closed below the mean of 20dma. Thus Oscillators are suggesting a bearish bias for the near term.

 

Options data for February series indicate highest Call Open Interest is at the strike of 11500 whereas the highest Put build-up is at the strike of 10500. Thus Options data suggests a wide trading range with resistance at 11500 & support at 10500.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10404

10552

10659

10760

10884

10994

11117

Sensex

33956

34311

34687

35066

35507

35823

36256

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell UltraTech

4179

4275

4031

3882

Sell Bajaj Fin

1629

1667

1571

1511

Sell PVR

1302

1332

1257

1210

Sell Voltas

573

586

553

532

Sell Bata

690

707

664

637

 

WATCH OUT FOR:

 

 

Bajaj Finance
 
 

 

 

 

 

 

 

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.

Copyright © 2000 - 2018 Jatin Sanghavi. All rights reserved.
No part of the material on this website may be reproduced or distributed in any forms or by any means, electronics or mechanical without the written permission of the author.
Sitemap