Archives : NOT WHAT IT SEEMS - 01/06/2018.

NOT WHAT IT SEEMS - 01/06/2018.

DEJA-VU? WILL JANUARY REPEAT?.

If one happens to look at the frontline indices, then everything looks to be in place and a bullish bias seems prevalent. But on closer inspection, the scenario is not what it seems. In fact, market seems to be in a similar situation as that observed in January. The Divergence seems to be playing out again as Nifty continues its march towards its all time highs and Mid-cap indices are down in the doldrums. Nifty is around 2% away from its previous intermittent peak of last month, whereas Mid-cap index is around 10% away from its intermittent top of last month. A similar situation occurred in January where the Divergence led to the fall in the frontline indices. This time too, it seems to be following in the same track i.e. either the Indices fall and correct or Mid-caps start playing catch up; with the latter scenario seems more optimistic than real.

 


NOT WHAT IT SEEMS - 01/06/2018.

DEJA-VU? WILL JANUARY REPEAT?.

If one happens to look at the frontline indices, then everything looks to be in place and a bullish bias seems prevalent. But on closer inspection, the scenario is not what it seems. In fact, market seems to be in a similar situation as that observed in January. The Divergence seems to be playing out again as Nifty continues its march towards its all time highs and Mid-cap indices are down in the doldrums. Nifty is around 2% away from its previous intermittent peak of last month, whereas Mid-cap index is around 10% away from its intermittent top of last month. A similar situation occurred in January where the Divergence led to the fall in the frontline indices. This time too, it seems to be following in the same track i.e. either the Indices fall and correct or Mid-caps start playing catch up; with the latter scenario seems more optimistic than real.

TECHNICALLY SPEAKING.

Sensex opened the week at 35074, made a high of 35438, low of 34735 and closed the week at 35227. Thus it closed the week with a gain of 303 points. At the same time the Nifty opened the week at 10648, made a high of 10764, low of 10538 and closed the week at 10696. Thus the Nifty closed the week with a gain of 91 points.

On the daily charts, both the indices have formed a small black body candle which can be considered to be a part of the bullish set-up. On the weekly charts, both the indices have formed a small white body Spinning Top big which can be considered as neutral. Thus daily as well as weekly candlestick pattern formation suggests a bullish bias in the near term.

Few weeks back, both the indices completed a Bullish Rounding Bottom pattern on the daily charts. It is a Bullish pattern and the target as per that falls at Sensex 36737 and Nifty 11311.

Nifty has left behind a Bullish Rising Gap between 10647-10628. In the recent consolidation, Nifty took support in this gap before resuming its upward trajectory. Besides this Gap is also a Measuring Gap, which gives a target of 11324 for the Nifty.

Current Upward rally started as a Pull-back of the fall from 36443 to 32483 for the Sensex and 11171 to 9951 for the Nifty. The relevant Retracement levels were at Sensex 33996-34463-34931 and Nifty 10418-10562-10706. This week, Sensex has closed above the relevant Retracement level but Nifty failed to close above the Reversal level of 10706. Thus if both the indices overcome and remain above the 61.8% levels, then it can be considered a Reversal and both Sensex and Nifty can then test the previous highs.

Both the indices had a Weekly Bearish Gap between Sensex 34874-35006 and Nifty 10702-10736. This Gap was aided by 61.8% Retracement of the current fall (Sensex – 34931 and Nifty 10706), which is a Reversal level. This week, Sensex has managed a close above that Reversal zone whereas Nifty is just below that.

This week, both the indices continue to stay above the short term average of 20dma (Sensex – 35089 and Nifty 10664), medium term average of 50dma (Sensex – 34439 and Nifty – 10518) and even the long term average of 200dma (Sensex – 33545 and Nifty – 10352). Thus the trend in short term, medium term as well as in the long term timeframe continues to remain Bullish.

MACD and Price ROC are both in Sell mode. RSI (54) suggests bullish momentum. Stochastic Oscillator %K (51) is above %D and hence in Buy mode. ADX has fallen to 16, suggesting no strength in trend. Directional Indicators are in Buy mode as +DI is above –DI. MFI (42) suggests Negative Money Flow. OBV continues in sideways mode. Thus Oscillators suggest a mixed bias for the near term.

Options data for June series indicate highest Call Open Interest is at the strike of 11000 whereas the highest Put build-up is at the strike of 10200. Thus Options data suggests a wide trading range with resistance at 11000 & support at 10200.

INDEX LEVELS:

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10398

10499

10592

10696

10764

10878

10975

Sensex

34167

34535

34874

35227

35542

35863

36256

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Nestle

9898

9750

10126

10368

Buy BajajFinserv

5882

5776

6048

6217

Buy Pfizer

2565

2405

2659

2762

Buy TorrentPh

1454

1424

1499

1547

Buy GodrejCP

1161

1135

1201

1245

 

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