Archives : MARKET TANKS ON GLOBAL CUES - 09/02/2018.

MARKET TANKS ON GLOBAL CUES - 09/02/2018.

 

SELL-OFF CONTINUES.

 

The market Sell-off from the peak, formed two weeks ago, gathered momentum this week following global cues. Global markets including the US market are down by more than 11% off from their peaks, whereas our markets are comparatively better off, as we are down by just about 6%. Selling pressure is so intense that the Trend has reversed for the Short and Medium term timeframe and we seem well poised to test the long term average of 200dma (Nifty 10047). Due to sharp falls in past 2 weeks, we might witness some pull-backs, which should be used to create short positions. The Correction will be deemed over only when Nifty starts trading above 10830.



MARKET TANKS ON GLOBAL CUES - 09/02/2018.

 

SELL-OFF CONTINUES.

 

The market Sell-off from the peak, formed two weeks ago, gathered momentum this week following global cues. Global markets including the US market are down by more than 11% off from their peaks, whereas our markets are comparatively better off, as we are down by just about 6%. Selling pressure is so intense that the Trend has reversed for the Short and Medium term timeframe and we seem well poised to test the long term average of 200dma (Nifty 10047). Due to sharp falls in past 2 weeks, we might witness some pull-backs, which should be used to create short positions. The Correction will be deemed over only when Nifty starts trading above 10830.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 34718, made a high of 34874, low of 33482 and closed the week at 34005. Thus it closed the week with a loss of 1061 points. At the same time the Nifty opened the week at 10604, made a high of 10702, low of 10276 and closed the week at 10454. Thus the Nifty closed the week with a loss of 306 points.

 

On the weekly charts, both the indices opened with a Gap down and have formed a big black body candle which is in line with the ongoing downtrend. On the daily charts, Nifty has formed a small white body, whereas Sensex has formed a Doji. Thus more than daily, weekly charts are suggesting strong bearishness in the near term.

 

On Tuesday, the global markets were in turmoil and as a result our market also collapsed. Both Sensex and Nifty took support arising from the Support Trendline (Sensex 33641 and Nifty 10341). A breach of this Trendline will pave the way for both Sensex and Nifty to test the 200dma.

 

This week, the indices formed an intermediate bottom at Sensex 33482 and Nifty 10276. Considering the bounce back from this level, we found the Retracement levels which are at Sensex 34613-34963-35313 and Nifty 10618-10724-10830. The Correction will be over only when indices overcome and stay above Sensex 35313 and Nifty 10830.

 

This week, both the indices opened with a gap down and sustained on the lower side to form a Weekly Bearish Gap between Sensex 34874-35006 and Nifty 10702-10736. This Gap is aided by 50% Retracement of the current fall (Sensex – 34963 and Nifty 10724) and also the 50% Retracement of Intermediate Rise from low of Nifty 10033 i.e. at Sensex 34962 and Nifty 10737. Thus as seen, the weekly Bearish Gap is aided by strong Resistances which will make the confluence zone into a strong Resistance zone.

 

When the first Bullish Upward Gap between Sensex 35683-35827 and Nifty 10994-10975 was filled two weeks back, we stated that 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. This week, all the three Gaps are filled and we have closed below all of them.

 

Both the indices are in Correction mode. Intermediate Correction levels are at Sensex 34395-33763-33130 and Nifty 10605-10429-10254.

 

This week, both the indices breached and closed below the short term average of 20dma (Sensex – 35246 and Nifty - 10824) as well as medium term average of 50dma (Sensex – 34276 and Nifty – 10561). But still both the indices are above the long term average of 200dma (Sensex – 32415 and Nifty – 10047).  Thus the trend in short term and medium term timeframe has turned bearish, whereas the trend in the long term timeframe continues to remain Bullish.

 

MACD and Price ROC are both negative and in Sell mode. RSI (36) suggests bearish momentum. ADX has moved higher at 33 suggesting that the Down Trend has gathered some strength. Directional Indicators are in Sell mode +DI remains below –DI. MFI (40) suggests Negative Money Flow. OBV continues in Sell mode. Thus Oscillators are suggesting a bearish bias for the near term.

 

Volatility has shot through the roof as India VIX gained over 60% in a week. Volatility is a measure of Fear in the market and it clearly shows that the fear factor is on the rise. Usually Trend Reversals are accompanied by sharp increase in Volatility, which is now threatening even the Long Term Trend of the market. Short Volatility and Short Theta traders suffered this week because of big Gap Down openings.

 

Open Interest PCR has dropped and is at a low of 0.86, which indicates strong bearishness. Option Put writers suffered heavily as the markets underwent a sharp fall. Put writers faced losses and shifted their positions lower. Options data for February series indicate highest Call Open Interest is now at the strike of 11100 whereas the highest Put build-up has shifted lower at the strike of 10000. Thus Options data suggests a wide trading range with resistance at 11100 & support at 10000.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10123

10232

10340

10454

10566

10666

10782

Sensex

32992

33340

33703

34005

34342

34687

35006

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell Hero Moto

3546

3641

3403

3253

Sell HDFC Bank

1850

1889

1789

1725

Sell IndusInd Bank

1650

1686

1595

1537

Sell Tata Motors

369

378

355

340

Sell PNB

157

160

152

146

 

WATCH OUT FOR:

 

 

 

 

 

 

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