Archives : MARKET SHOWING SIGNS OF TIREDNESS - 23/10/2009

MARKET SHOWING SIGNS OF TIREDNESS – 23/10/2009. 

The way the market moved during the week showed that the market is looking tired. But at the same time the market is not violating the supports at lower levels. Even the true blue optimist will agree that the market will be better off if it consolidates some what, before embarking on the next leg of the rally. The Trendline joining the lows and which has been acting as a support to both the Sensex and Nifty is very steep. Such steep Trendline cannot be held on for longer duration, but the momentum in the market helped and the Trendline was not breached. Now the market is losing momentum and the chances are the Trendline will be breached which will trigger a short term correction.

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MARKET SHOWING SIGNS OF TIREDNESS – 23/10/2009. 

The way the market moved during the week showed that the market is looking tired. But at the same time the market is not violating the supports at lower levels. Even the true blue optimist will agree that the market will be better off if it consolidates some what, before embarking on the next leg of the rally. The Trendline joining the lows and which has been acting as a support to both the Sensex and Nifty is very steep. Such steep Trendline cannot be held on for longer duration, but the momentum in the market helped and the Trendline was not breached. Now the market is losing momentum and the chances are the Trendline will be breached which will trigger a short term correction.

STRONG SUPPORT ZONE.

Both Sensex and Nifty are very near to their strong support zones. There are number of supports for the Sensex in the range of 16500-16700 and for the Nifty the support zone is 4900-4940. These support zones have been tested atleast 4 to 5 times in the last 3 weeks and the market has invariably bounced back from there. Hence these support zones are very crucial for short term uptrend to survive.

SENSEX.

The Sensex opened the week at 17414, made a high of 17457, a low of 16721 and closed the week at 16810. The Sensex closed the week with a loss of 516 points.

 

The Sensex has formed a Bearish body black candle on the weekly charts. The Sensex was Bearish from the start of the week as it formed a Bearish Three Black Crows formation by Wednesday. As a result, the Sensex touched the low of 16721 on Thursday. A minor Bullish Reversal pattern called Bullish Harami was formed by Friday on the daily charts, but the point of concern is long upper shadow which shows selling pressure at higher levels. The Bearishness of the Three Black Crows formation will be negated only if the Sensex manages a close above 17493 till then, it will continue to face selling pressure at every higher level.

 

The Sensex took support at the 30dma which was coinciding with the minor Trendline support which was at 16721. The main test for the Sensex will come when the critical support of 16494 and 16119 will be tested.

 

The momentum indicators are losing strength and have given a sell signal. The RSI has given a Bearish Head & Shoulder breakout. Normally, the pattern formation on the oscillators like RSI precedes the pattern formation on the price charts. Hence it may be an advance indication of the lurking Bearish breakout on the price chart. The Money Flow Index along with RSI has been giving negative divergences for quite some time. The On Balance Volume (OBV) along with ROC & MACD has given a sell signal.

 

The Directional Indicators +DI & -DI, have given a Bearish negative crossover on Thursday, when the –DI crossed the +DI line from below.

 

The Sensex has breached the Trendline giving support in this entire upmove and hence if we consider the Sensex going through a minor correction then we have to take into consideration the immediate rise from 14684-17493, then the correction levels are 16420-16089-15757. If we consider the bigger rise from 13219-17493 then the correction levels are 15860-15336-14852.

 

Strong Trendline resistance for the Sensex is at 17084 and a minor Trendline support exists at 16596.

For the week ahead, Sensex will face resistance at 17068-17195-17350. Sensex will find support at 16721-16606-16494-16119. 

NIFTY.

The Nifty opened the week at 5145, made a high of 5181, a low of 4968 and closed the week at 4997. The Nifty closed the week with a loss of 144 points.

 

The Nifty has formed a Bearish body black candle on the weekly charts. The Nifty was Bearish from the start of the week as it confirmed a Bearish reversal pattern called Evening Star by Tuesday. The selling pressure confirmed the Three Black Crows formartion by Thursday on the daily charts. A minor Bullish Reversal pattern called Bullish Harami was formed by Friday on the daily charts, but the point of concern is long upper shadow which shows selling pressure at higher levels. The implication of the Bearish pattern formed on the Nifty will be reversed only when the Nifty manages a close above 5181; till then the Nifty will continue to face selling pressure at every higher levels.

 

The Nifty took support at the 30dma which was coinciding with the minor Trendline support which was at 4968. The main test for the Nifty will come when the critical support of 4904 and 4786 will be tested.

 

The momentum indicators are losing strength and have given a sell signal. The RSI has given a Bearish Head & Shoulder breakout. Normally, the pattern formation on the oscillators like RSI precedes the pattern formation on the price charts. Hence it may be an advance indication of the lurking Bearish breakout on the price chart. The Money Flow Index along with RSI has been giving negative divergences for quite some time. The On Balance Volume (OBV) along with ROC & MACD has given a sell signal.

 

The Directional Indicators +DI & -DI, have given a Bearish negative crossover on Thursday, when the –DI crossed the +DI line from below.

 

The Nifty has breached the Trendline giving support in this entire upmove and hence if we consider the Nifty going through a minor correction then we have to take into consideration the immediate rise from 4353-5181, then the correction levels are 4865-4767-4669. If we consider the bigger rise from 3918-5181 then the correction levels are 4699-4549-4400.

 

Strong Trendline resistance for the Nifty is at 5096 and a minor Trendline support exists at 4788.

 

The O.I.PCR is steady at 1.26. Strong CALL writing is seen at the strikes of 5100, which should act as resistance going forward. The 4900 PUT has shed some Open Interest, showing that the Put writers are not very confident of the support at 4900.

For the week ahead, Nifty will face resistance at 5070-5110-5181. Nifty will find support at 4968-4934-4904-4786. 

INDEX LEVELS:

 S3S2S1CLOSER1R2R3
Nifty4786490449344997507051105181
Sensex16119164941660616810170681719517350

LAST TIMES RECOMMENDATIONS:

Almost all the targets were achieved except for Essar Oil where the stop loss was triggered. 

STOCKReco. PriceTgtReachedLot SizeProfit
Buy SBI244625022500132Rs.7,128
Buy LITL559577579638Rs.12,760
Buy Sesa Goa3543653681500Rs.21,000
Buy JP Asso.2602702691125Rs.10,125
Buy Essar Oil1711821731412Rs.2,824
    ProfitRs.53,837

THIS WEEK’S RECOMMENDATIONS:

 

PAIR NO.

STOCKCMPSLTGT-1TGT-2
1SellRIL2047208719881943
BuyInfosys2260223322882314
2SellRel Cap.873899850829
BuyM&M927915941962
3SellTata Steel529542510484
BuyHind Zinc933903963983

  

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REL CAP

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