Archives : Every Pull-Back - A Shorting Opportunity - 09/03/2018

EVERY PULL-BACK - A SHORTING OPPORTUNITY - 09/03/2018.

 

BEAR STORM HITS MARKET - 200DMA TESTED.

 

As warned in the previous week’s article, Bear storm hit the market and as a result, Nifty breached all supports and went down to test the 200dma. The long term Support of 200dma came to the rescue and as a result the market bounced back from these lower levels. We are in midst of a minor Pull-back which is to be expected after such a sharp decline. One should not mistake this Pull-back for Trend Reversal. Every Pull-back will be shorting opportunity for the Bears. A Rally towards Nifty 10347-10400 should be used to create short positions. Once the Pull-back rally is done, Nifty will be back to test the 200dma and possibly break that critical level.

                                                                                            


EVERY PULL-BACK - A SHORTING OPPORTUNITY - 09/03/2018.

 

BEAR STORM HITS MARKET - 200DMA TESTED.

 

As warned in the previous week’s article, Bear storm hit the market and as a result, Nifty breached all supports and went down to test the 200dma. The long term Support of 200dma came to the rescue and as a result the market bounced back from these lower levels. We are in midst of a minor Pull-back which is to be expected after such a sharp decline. One should not mistake this Pull-back for Trend Reversal. Every Pull-back will be shorting opportunity for the Bears. A Rally towards Nifty 10347-10400 should be used to create short positions. Once the Pull-back rally is done, Nifty will be back to test the 200dma and possibly break that critical level.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

TECHNICALLY SPEAKING.

 

Sensex opened the week at 34034, made a high of 34060, low of 32991 and closed the week at 33307. Thus it closed the week with a loss of 739 points. At the same time the Nifty opened the week at 10428, made a high of 10441, low of 10141 and closed the week at 10226. Thus the Nifty closed the week with a loss of 232 points.

 

On the daily charts, both Sensex and Nifty have formed a small black body candle in a minor pull-back. On the weekly charts, both the indices have formed a big Opening Black body Marubuzo, which is a strong Bearish pattern. On the monthly charts, Nifty has formed a Bearish Engulfing pattern. This is a Bearish Reversal pattern which can induce bearishness for the next few months. Thus candlestick analysis indicates bearishness across daily, weekly as well as monthly timeframes.

 

Last week the market managed to break the critical Trendline support and as a result the indices fell to test the 200dma. After taking support at the 200dma, market has bounced back and now it will find Resistance at the Trendline which is at Sensex – 33678 and Nifty – 10347.

 

We are in midst of a strong Correction of the intermediate 13 months rally from low of Sensex 25717 and Nifty 7893. The Retracement levels for that are placed at Sensex 32347-31081-29815 and Nifty 9919-9533-9146. We also need to consider the last two years rally which started from a low Sensex 22494 and Nifty 6825. The relevant Correction levels are placed at Sensex 31115-29469-27823 and Nifty 9511-8999-8486. Strong confluence zone is formed between Sensex 31081-31115 and Nifty 9533-9511, which can possibly act as Target for the market.

 

Both the indices have formed 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.

 

This week, both the indices were well below the short term average of 20dma (Sensex – 33912 and Nifty - 10420) as well as medium term average of 50dma (Sensex – 34476 and Nifty – 10605). But both the indices tested and took support at the long term average of 200dma (Sensex – 32746 and Nifty – 10139).  Thus the trend in short term and medium term timeframe remains 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 is at 29 suggests that the Down Trend is getting stronger. Directional Indicators are in Sell mode as +DI remains below –DI. MFI (42) suggests Negative Money Flow. OBV continues in Sell mode. Thus Oscillators are suggesting a bearish bias for the near term.

 

Options data for March series indicate highest Call Open Interest is now at the strike of 10500 whereas the highest Put build-up is at the strike of 10000. Thus Options data suggests a trading range with resistance at 10500 & support at 10000.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9944

10033

10137

10226

10340

10447

10537

Sensex

32209

32565

32886

33307

33707

34060

34314

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell UltraTech

4080

4155

3963

3839

Sell JindaLSteeL

222

227

214

205

Sell YesBank

303

311

290

276

Sell PetronetLNG

231

236

223

214

Sell Hindalco

220

226

211

201

 

WATCH OUT FOR:

 

Yes Bank
 
PetronetLNG
 
 
 
 

 

 

 

 

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