Archives : 200DMA TO BE TESTED - 05/02/2010

200 DMA TO BE TESTED - 05/02/2010.

GLOBAL MELTDOWN. 

TESTING OF 200 DMA ON THE CARDS. 

TECHNICALLY SPEAKING.  

INDEX LEVELS:

LAST WEEK’S RECOMMENDATIONS:

THIS WEEKS RECOMMENDATIONS:


 200 DMA TO BE TESTED - 05/02/2010.

GLOBAL MELTDOWN. 

The global markets tanked on concern due to the financial crisis emerging in Spain, Portugal and Greece. There is a growing concern that these markets will struggle to fund their budget deficits. The nervousness was visible in the way the global markets cracked. Emerging markets like ours had to face the brunt of FII selling, which continued unabated throughout the last week. In fact the selling spree of the FIIs is on since past 15days, but the acceleration occurred in the last week, leaving our market battered and bruised.

TESTING OF 200 DMA ON THE CARDS. 

The market breached the low of the Hammer formed last Friday and as a result the downward selling intensified forcing the market to go into a tailspin. The market is now well on its way to test the 200dma. Normally the market retraces back to the 200dma twice in a year and it has been long time the market went and tested that support. The short as well as medium term trend continues to be down as we are already below the 50dma and 100dma. The long term trend will be challenged when the market tests the 200dma. The momentum is with the bears and is gathering further momentum, so lets keep our fingers crossed.

TECHNICALLY SPEAKING. 

The Sensex opened the week at 16339, made a high of 16552, a low of 15725 and closed the week at 15790. The Sensex closed the week with loss of 567 points. Similarly Nifty opened the week at 4882, made a high of 4951, a low of 4692 and closed the week at 4718. The Nifty too closed with the week with a loss of 164 points.

 

Both the indices managed to register a weekly big black body candle. In the process a bearish reversal pattern called 3 Black Crows has been formed on the weekly charts. This is a strong reversal pattern from the medium term point of view.

 

The Darryl Guppy indicator does not give signal quite often, but whenever it does, it gives a very powerful signal from the medium to long term point of view. Last signal given by it was a Buy signal way back in March 2009 when the Sensex was around 9200. After that it has generated a Bearish Sell signal last week.

 

Surprisingly, the Nifty fell leaving behind a falling gap between 4832-4827 on Friday. Normally it is the Sensex that registers a gap, but the Nifty hardly does it. This gap should act as a resistance for the Nifty in case of any pull-back.

 

Both Sensex and Nifty have formed a Bearish Flag pattern and the targets for that pattern are Sensex – 14822 and Nifty – 4425 which is almost coinciding with the 61.8% retracement of the current rise.

 

Both the indices are on their way to test the 200dma (Sensex – 15556 and Nifty – 4643) for support. The testing of the 200dma is now expected but the question remains whether that support will hold good considering the downward bearish momentum.

 

Both Sensex and Nifty were held by the Trendline joining the higher bottoms of Sensex 13219-15330 and Nifty 3918-4538. This Trendline got breached and as a result we are correcting the rise of Sensex from 13219-17790 on an immediate basis, and the correction levels are 16044-15505-14965. The Nifty is correcting the rise from 3918-5310 and the correction levels are 4778-4614-4450. If we consider entire rise from Sensex 7697-17790 and Nifty 2252-5310, then the correction levels are Sensex 13935-12743-11553 and those for the Nifty 4142-3781-3420.

 

Both Sensex and Nifty had given a Bearish Rising wedge breakout and the targets for the Sensex are 15714-15373 and Nifty 4684-4587. The first target has already been achieved and now the market is on its way to test the second target.

 

Interestingly the lower target for the Bearish wedge (Sensex – 15373 and Nifty – 4587) almost coincide with the higher bottom (Sensex – 15330 and Nifty – 4538), besides the 50% retracement of the immediate rise (Sensex – 15505 and Nifty – 4614) and the 200dma (Sensex – 15556 and Nifty – 4643). There seems to be a confluence of supports between Sensex 15556-15330 and Nifty 4643-4538 and hence one can expect strong support coming in at those levels in case of further downfall.

The Money Flow Index is oversold and has dipped below18 and even the RSI is oversold at 28. ROC and MACD continue with their sell signal. So may a minor pull back may be expected from the oversold levels.

 

Nifty OI PCR has dipped below 1 and is at 0.98, which is not yet oversold but certainly indicative of the bearish mood of the market. Put writers have been mercilessly butchered and as a result Call writing is visible at 4800 and some Put writing is seen at 4400.

For the week ahead, Sensex will find Support at 15556-15330-14965 and will find Resistance at 16002-16210-16577. 

For the week ahead, Nifty will find Support at 4643-4538-4420 and will find Resistance at 4806-4904-4954.

INDEX LEVELS: 

 S3S2S1CLOSER1R2R3
Nifty4420453846434718480649044954
Sensex14965153301555615790160021621016577

LAST WEEK’S RECOMMENDATIONS:

Despite such a bearish week almost all our targets were achieved except may be for IDFC which missed by just a couple of rupees. The stars for the past week were Bank of Baroda and Torrent Pharma.  

STOCKReco. PriceTgt ReachedLot SizeProfit
Buy OBC2652782891200Rs.28,800
Buy BoB575587597700Rs.15,400
Buy IDFC1511571552950Rs.11,800
Buy TorPhar4434694811000Rs.38,000
Buy HMT8694933000Rs.21,000
    TotalRs.1,15,000

THIS WEEKS RECOMMENDATIONS: 

STOCKCMPSLTgt-1Tgt-2
Sell M&M976990954926
Sell SBI1897194018431800
Sell Bhel2295232122662236
Sell IBReal163169152144
Sell IVRCL311325296282

WATCH OUT FOR:

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