Archives : THIRD - TIME LUCKY - 24/07/2009.
THIRD – TIME LUCKY – 24/07/2009.
The market has been experiencing great choppiness in the past three weeks. Two weeks back, it gave a Buy Signal only to reverse and go down. The next week it gave a Sell signal and then went up throughout the week. Last week it once again gave a Buy Signal. But it turned out to be third time lucky for the market as the market went from strength to strength throughout the week and ended the week with strong gains. Thank God for the traders who have been going through hell in the past three weeks and at last they can heave a sigh of relief as the market closed the week on a strong positive note.
Two Scenarios For the Market.
I want to present two diverse scenarios for the market as the market enters its most critical phase, a phase which will be a decision time for the market and where it will make its mind whether it wants to continue to move ahead with scorching pace or it finally wants to take a breather and consolidate in the short to medium term. Given below are the two scenarios:
A very Bullish formation is on the anvil and is about to get completed. On the weekly charts, both the indices are on the verge of completing a strong Bullish Head & Shoulders Pattern and the target for which will be very high. The formation will be complete only if the Sensex closes the next week above 15600 and Nifty above 4700. In that case the minimum target for the Sensex will be 18314 and for the Nifty the minimum target will be 5298. Please note this is a medium term view and don’t misinterpret as the very short term view.
In this case the market undergoes lots of whipsaws as the Volatility will only increase more and more. The market will go down after giving a Buy signal and go up after giving a Sell signal. The traders will lose lot of money in such a scenario. Such an event happened when the market formed a bottom between November 08 and Feb 09. If that scenario were to repeat then the market will form a temporary top and a short to medium term trend reversal will be in place. Also the 61.8% retracement of the entire fall, of the Sensex from 21206-7697, is at 16045 and for the Nifty 4789. Thus the market will find strong resistance around Sensex 15600-16045 and Nifty 4693-4789 and may reverse from there.
One of the above two scenarios will be played out in the market and we will know in matter of week or two about the mood of the market. It seems that the market will like to move up somewhat and correct and fill some fuel for the next rally upwards.
Sensex opened the week at 14854, made a high of 15418, made a low of 14786, and closed at 15378, thus registering a weekly gain of 634 points.
Sensex has formed a Bullish White Marubuzo on the weekly charts, which is likely to have bullish implications on the Sensex.
The Sensex has given Bullish Falling Wedge breakout on the daily charts and the target for which is 17181, provided Sensex does not breach the support of 14500 on closing basis.
If the Sensex manages a weekly closing above 15600 then the markets will have strong momentum going forward and without sounding very optimistic the doors for Sensex reaching 18300 will be thrown open.
The indicator like RSI is at 63 and is moving up indicating strong momentum. The ROC is in positive and continues to move up. Even the MACD which has given a Buy signal is now in positive territory and is moving up.
For the week ahead the Resistance is at 15600-16045-16457. Support is at 15168-14786-14526.
Nifty opened the week at 4377, made a high of 4578, low of 4377, and closed at 4568. Thus the weekly gain was 194 points.
Nifty has formed a Bullish White Marubuzo on the weekly charts, which is likely to have bullish implications on the Nifty.
The Nifty has given Bullish Falling Wedge breakout on the daily charts and the target for which is 5126, provided Nifty does not breach the support of 4319 on closing basis.
If the Nifty manages a weekly closing above 4693 then the markets will have strong momentum going forward and without sounding very optimistic the doors for Nifty reaching 5200 will be thrown open.
The indicator like RSI is at 62 and is moving up indicating strong momentum. The ROC is in positive and continues to move up. Even the MACD which has given a Buy signal is now in positive territory and is moving up.
Strong PUT writing is visible at the strike price of 4500 and 4400 indicating a very bullish mood of the market. In the immediate future, 4500 and 4400 will prove strong support.
For the week ahead, the Resistance is at 4636-4693-4803. Support is at 4504-4448-4365.
LAST WEEKS RECOMMENDATIONS.
Once again all the targets were achieved with ease. The star performers of the week were Tech Mah and LITL which rose by 14% and 12% respectively.
|STOCK||Reco. Price||Tgt||Reached||Lot Size ||Profit|
|Buy Tech Mah.||734||779||839||600||Rs.63,000|
|Buy JSW Steel||600||635||637||1650||Rs.61,050|
| || || || ||PROFIT||Rs.2,84,275|
THIS WEEK’S RECOMMENDATIONS:
|Buy Guj. Alkali||107||103||114||120|
|Buy JSW Steel||631||618||656||695|
WATCH OUT FOR: