Archives : STATUS QUO MAINTAINED; DIVERGENCE CONTINUES - 20/07/2018

STATUS QUO MAINTAINED; DIVERGENCE CONTINUES - 20/07/2018.

 

MID-CAP 50 SURVIVES.

 

The Divergence story continues and it is reaching unexpected proportions. Sensex continues its bullish journey by conquering the life-high level; Nifty is just short of 1% from its life-high level whereas the Mid-Cap 50 index continues to drop lower and is almost down by 19% from its life-high level. This week, Mid-Cap 50 gave a scare when it went below the critical level of 4787 but somehow managed to close the week above that. As long as Mid-Cap 50 continues to give a weekly close above 4787, there remains a hope that some catch-up with respect to the front-line indices will be a possibility. Nifty continues to trade in a small trading range between 11078-10925, and a bullish breakout this week can test the life-high levels of 11171, which may finally give a much required pull for the Mid-Caps and Small-Caps.

 


STATUS QUO MAINTAINED; DIVERGENCE CONTINUES - 20/07/2018.

 

MID-CAP 50 SURVIVES.

 

The Divergence story continues and it is reaching unexpected proportions. Sensex continues its bullish journey by conquering the life-high level; Nifty is just short of 1% from its life-high level whereas the Mid-Cap 50 index continues to drop lower and is almost down by 19% from its life-high level. This week, Mid-Cap 50 gave a scare when it went below the critical level of 4787 but somehow managed to close the week above that. As long as Mid-Cap 50 continues to give a weekly close above 4787, there remains a hope that some catch-up with respect to the front-line indices will be a possibility. Nifty continues to trade in a small trading range between 11078-10925, and a bullish breakout this week can test the life-high levels of 11171, which may finally give a much required pull for the Mid-Caps and Small-Caps.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 36658, made a high of 36747, low of 36261 and closed the week at 36496. Thus it closed the week with a loss of 45 points. At the same time the Nifty opened the week at 11018, made a high of 11076, low of 10925 and closed the week at 11010. Thus the Nifty closed the week with a loss of 8 points.

 

On the daily charts, both Sensex and Nifty has formed a white body candle. Sensex has formed a Bullish Harami, whereas Nifty has just fallen short of forming the pattern. On the weekly chart, Sensex has formed a small black body candle which is a neutral formation, whereas Nifty has formed a Bearish Doji which requires a bearish confirmation. Thus daily as well as weekly charts are suggesting a minor bullish bias.

 

Both the indices are in a small trading range between Sensex 36261-36747 and Nifty 11075-10925. A break on the upside will take Nifty to its all life-high level of 11171 and 11336, whereas Sensex can aim for a short term target of 37345. A break on the downside can test Bullish Gap support at 36019-35977 and Nifty 10876-10860.

 

Last week when Sensex closed above 35993 and Nifty above 10929, both completed a Bullish Cup and Handle pattern which has a target of Sensex 39503 and Nifty 11907. The handle itself has a Symmetrical Triangle within it and which has a target of Sensex 37345 and Nifty 11336. The above targets will be achieved as long as Sensex remains above 34937 and Nifty above 10557.

 

Bullish Gap between Sensex 36019-35977 and Nifty 10876-10860 will not only act as strong support but is also a Measuring Gap. Thus as per Gap Theory, the target for the Rally falls at Sensex – 37059 and Nifty – 11179.

 

This week, both the indices were above the short term average of 20dma (Sensex – 35887 and Nifty – 10841) as well as medium term average of 50dma (Sensex – 35493 and Nifty – 10756). However, both the indices still remain above the long term average of 200dma (Sensex – 34237 and Nifty – 10507). Thus the trend in short term, medium term as well as long term time-frame is Bullish.

 

MACD continues and Price ROC are both positive and in Buy mode. RSI (61) suggests bullish momentum. Stochastic Oscillator %K (79) is below %D and hence in Sell mode. ADX has increased to 21, suggesting uptrend getting developed. Directional Indicators are in Buy mode as +DI is above –DI. MFI (77) suggests Positive Money Flow. OBV is making higher top higher bottom formation. Thus Oscillators suggest a bullish bias.

 

Options data for July series indicate highest Call Open Interest is at the strike of 11100 whereas the highest Put build-up is at the strike of 10800. Thus Options data suggests a shrinking trading range with resistance at 11100 & support at 10800.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

10736

10837

10925

11010

11117

11229

11311

Sensex

35419

35806

36169

36496

36889

37219

37684

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Bajaj Finserv

6663

6533

6861

7077

Jubiliant Food

1481

1450

1528

1577

Buy RiL

1128

1108

1158

1189

Buy CeaT

1356

1328

1399

1443

Buy ExceL Crop

3977

3880

4128

4283


WATCH OUT FOR:

 

Excel Crop
 
 

 

 

 

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.

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