Archives : BULLS BACK IN BUSINESS - 02/04/2009.

Bulls back in business 02/04/2009.

Last time we had clearly mentioned in a midst of a classical bear market rally and Nifty had given a strong Trendline breakout and was headed towards 3225-3420. The first target of 3225 has already been conquered in this week itself! Readers rejoice.

  • More sustainable than previous rallies.

  • THE FOCUS SHIFTS ON ELECTION & RESULTS.

  • SENSEX.

  • NIFTY.

  • Strategy corner:

  • LAST WEEKS RECOMMENDATIONS:

  • this weeks recommendations:

  • WATCH OUT FOR:

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Bulls back in business 02/04/2009.

Last time we had clearly mentioned in a midst of a classical bear market rally and Nifty had given a strong Trendline breakout and was headed towards 3225-3420. The first target of 3225 has already been conquered in this week itself! Readers rejoice.

More sustainable than previous rallies.

 

This rally is one of the most powerful bear market rallies since the start of the bear market. This rally has started from Sensex - 8047 and is gathering steam as now it has closed at 10348, almost a rise of 30% from the lows. A bear market is characterized by powerful pull back rallies, which are so swift and deceptive that most of the traders are not able to get hold of it and benefit from it. Also these rallies are so fast and furious that many traders find it very difficult to catch. The stronger and deeper the bear market, the faster and stronger will be the reaction of the bear market rally. Here knowledge of technical analysis comes in very handy.

 

THE FOCUS SHIFTS ON ELECTION & RESULTS.

 

The focus in the coming few weeks will be on election and results. The market will be most happy if a single party or a single alliance led by either Congress or BJP comes to power. The best case scenario will be UPA coming to power with majority without any Left support. The market will be worried if the third front comes to power.

The results season begins next week with I.T. sector leading the charge. This time the expectations are going to be very muted and the market will be very happy if there are no unexpected shocks in the results season. For a change the focus will not be on the percentage of growth but more on transparency and the ability of the management weather the downturn in the economy no bad news will be good news for the market.

SENSEX.

Sensex opened the week at 9902, made a high of 10432, made a low of 9520, and closed on Thursday at 10348, thus registering a weekly gain of 300 points. 

The Sensex opened with a gap up on Thursday and closed near the highs. The weekly formation on the Sensex is a White Candle with a long lower shadow which indicates strong buying from the lower levels.The Sensex has given a Bullish pattern breakout and targets for which are 10734-11343.

The indicators are positive with RSI signaling further momentum. The ROC and MACD are in buying mode and are in the positive.

 

If we consider this rise to be a minor pull back of the fall from 15579 to 7697, then the correction levels are 10708-11638-12521.If we consider the entire fall from 21206-7697 then the retracement levels are 12857-14452-15965.

 

The Trendline Resistance is at 10760 and Trendline Support is at 10088.

 

For the week ahead the Resistance is at 10570-10750-10945-11343. Support is at 10088-9825-9520-9162.

NIFTY.

Nifty opened the week at 3108, made a high of 3228, low of 2962, and closed on Thursday at 3211. Thus the weekly was 103 points.

The Nifty has formed a Bullish Opening White Marubuzo on the daily charts, while on the weekly charts it has formed a White Candle with a long lower shadow which indicates strong buying from lower levels.

The indicators are positive with RSI signaling further momentum. The ROC and MACD are in buying mode and are in the positive. 

If we consider this rise to be a minor pull back of the fall from 4649 to 2252, then the correction levels are 3167-3450-3719. If we consider the entire fall from 6357-2252 then the retracement levels are 3820-4305-4764.

The Nifty has given a Bullish pattern breakout and targets for which are 3284-3399.

The Nifty has Trendline Resistance at 3390. The Trendline Support is at 3120-3016.

For the week ahead, the Resistance is at 3328-3390-3490. Support is at 3120-3016-2962-2914.

Strategy corner:

  • Bull Call Spread RNRL.
This Week Construct a Bull Spread for RNRL 49, which is expected to reach 60.

So Buy 50 CA at 4.25 and Sell 60 CA at 1.6. Max profit will be 7.35 (Rs. 52,567.20) and max loss will be the net premium outflow which will be 2.65 (Rs. 18,952.8)

LAST WEEKS RECOMMENDATIONS:

Last week we were once again at our Bullish best as all our targets were achieved. Just check the returns below.

  • BUY EDUCOMP 2141 TGT was 2350 Reached 2384.
  • BUY REL INFRA 564 TGT was 596 Reached 597.
  • BUY IFCI 19.60 TGT was 21.95 Reached 21.90.
  • BUY HINDALCO 52 TGT was 58 Reached 58.
  • BUY NEYVELLI LIG 80 TGT was 91 Reached 91.
this weeks recommendations:
  • BUY RIL 1661 SL 1633 TGT 1701-1765.
  • BUY BEL 909 SL 881 TGT 935-960-1027.
  • BUY FINTECH 680 SL 650 TGT 722-745.
  • BUY LITL 162 SL 156 TGT 171-178-187.
  • BUY EDUCOMP 2339 SL 2265 TGT 2428-2489.
  • BUY IBREAL 110 SL 104 TGT 118-134.
 

WATCH OUT FOR:

  • BULLISH INV. H&S BREAKOUT.

Buy IBREAL 110 SL 104 TGT 118-123-134.

  • WEDGE BREAKOUT.
BUY LITL 162 SL 156 TGT 171-178-187.
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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