Archives : MARKET RECOVERS, DESPITE GLOBAL UNCERTAINITIES - 06/04/2018

MARKET RECOVERS, DESPITE GLOBAL UNCERTAINITY - 06/04/2018.

 

INDICES CONQUER LONG TERM AVERAGE.

 

It was a week which the trading fraternity will not forget easily, for they had been clean bowled not by their mistakes but by the cross-fire being exchanged between the two Superpowers. It is clear that the Trade War between the US and China will not die down easily and is here to stay in the long run. One statement by the Chinese Premier on Wednesday and our market over-reacted on the downside, giving away the 200dma. But the very next day, the market realised its folly and overcame that by regaining the 200dma and closing above the bearish candlestick pattern, thereby negating that bearish pattern. The market is still in a Pull-back mode (10418-10562-10706) and once that is done with, the indices can have a revisit on the lower side.

 

 


MARKET RECOVERS, DESPITE GLOBAL UNCERTAINITY - 06/04/2018.

 

INDICES CONQUER LONG TERM AVERAGE.

 

It was a week which the trading fraternity will not forget easily, for they had been clean bowled not by their mistakes but by the cross-fire being exchanged between the two Superpowers. It is clear that the Trade War between the US and China will not die down easily and is here to stay in the long run. One statement by the Chinese Premier on Wednesday and our market over-reacted on the downside, giving away the 200dma. But the very next day, the market realised its folly and overcame that by regaining the 200dma and closing above the bearish candlestick pattern, thereby negating that bearish pattern. The market is still in a Pull-back mode (10418-10562-10706) and once that is done with, the indices can have a revisit on the lower side.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 33030, made a high of 33697, low of 32972 and closed the week at 33626. Thus it closed the week with a gain of 658 points. At the same time the Nifty opened the week at 10151, made a high of 10350, low of 10111 and closed the week at 10331. Thus the Nifty closed the week with a gain of 218 points.

 

On the daily charts, both the indices formed a Bearish Engulfing pattern on Wednesday. The next day saw a gap-up opening and formation of Opening White body Marubuzo which closed above the top of Bearish Engulfing pattern, thereby negating the Bearish Engulfing pattern itself. On Friday, both Sensex and Nifty have formed a small white body Spinning Top. On the weekly charts, both the indices have formed a Real White body candle. On the monthly charts, both the indices have formed a Bearish candle after the formation of Bearish Engulfing pattern last month. Thus candlestick analysis indicates bearishness across monthly timeframe but the daily as well as weekly timeframe portray a bullish bias.

 

Since the Sensex and Nifty managed to seek support on the very critical level of 50 WeeksMA (Sensex – 32498 & Nifty 10060), a Pull-back rally was expected. And a Pull-back rally happened. It is a Pull-back of the fall from 36443 to 32483 for the Sensex and 11171 to 9951 for the Nifty. The relevant Pull-back levels are placed at Sensex 33996-34463-34931 and Nifty 10418-10562-10706. As long as the indices continue to close above the 50 WeeksMA, there is little to worry about the downside.

 

Both the indices formed a Bearish Cup and Handle pattern on the daily charts and whose target falls at Sensex 30521 & 9381. On the weekly charts, both the indices have formed a Bearish Flag pattern with similar targets. The targets will be achieved as long as Sensex continues to stay below the failure point of 34610 & Nifty below 10631.

 

We are in the midst of a strong Correction of the intermediate 13 months rally from the 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 61.8% Retracement of the current fall (Sensex – 34931 and Nifty 10706). 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 captured and closed above the long term average of 200dma (Sensex – 32948 and Nifty – 10195) and even the short term average of 20dma (Sensex – 33293 and Nifty – 10222). Besides they continue to stay below the medium term average of 50dma (Sensex – 34077 and Nifty – 10464). Thus the trend in short term and long term has turned positive, whereas the trend in the medium term timeframe remains Bearish.

 

MACD and Price ROC are both in Buy mode. RSI (52) suggests bullish momentum. ADX is at 22 suggests that the Down Trend is losing strength. Directional Indicators are in Sell mode as +DI remains below –DI. MFI (47) suggests Negative Money Flow. OBV continues in Sell mode. Thus Oscillators suggests a mixed bias for the near term.

 

Options data for April series indicate highest Call Open Interest is now at the strike of 11000 whereas the highest Put build-up still remains at the strike of 10000. Thus Options data suggests a wide trading range with resistance at 11000 & support at 10000.

 

THIS WEEKS RECOMMENDATIONS:


STOCK

CMP

SL

Tgt-1

Tgt-2

Buy BajajFinserv

5484

5378

5645

5823

Buy JubiliantFood

2430

2378

2508

2591

Buy SRF

2042

2003

2107

2177

Buy ApolloTyres

294

287

305

317

Buy PNB

102

100

106

111

 

INDEX LEVELS:


 

S3

S2

S1

CLOSE

R

1

R2

R3

Nifty

10027

10111

10227

10331

10441

10566

10666

Sensex

32565

32917

33278

33626

34028

34535

34874

 

WATCH OUT FOR:

 

Apollo Tyres

 

 

 

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