Archives : BULLS RULE THE MARKET - 17/09/2010
BULLS RULE THE MARKET - 17/09/2010. 

BULLS IN TOTAL COMMAND.

If ever there was any doubt about who is the king of the market, then such doubts were laid to rest as the Bulls took complete control of the market. Such was the power of the Bulls that the Bears had to run to cover their shorts. The news of RBI increasing the Repo Rate by 25bps and Reverse Repo Rate by 50bps had the potential to provide a bearish trigger. But that news was simply discounted by the Bulls and once the policy was out of the way, it was business as usual. Thus fresh buying by the FIIs and short covering by the Bears provided the booster shot that the market needed and it got one. The ease, with which the resistances were crossed, was unbelievable especially after trading in a range for more than a year. The market is now headed towards the Rising Channel breakout target of Sensex 20627 and Nifty 6180.

TECHNICALLY SPEAKING.


BULLS RULE THE MARKET - 17/09/2010.

BULLS IN TOTAL COMMAND.

 

If ever there was any doubt about who is the king of the market, then such doubts were laid to rest as the Bulls took complete control of the market. Such was the power of the Bulls that the Bears had to run to cover their shorts. The news of RBI increasing the Repo Rate by 25bps and Reverse Repo Rate by 50bps had the potential to provide a bearish trigger. But that news was simply discounted by the Bulls and once the policy was out of the way, it was business as usual. Thus fresh buying by the FIIs and short covering by the Bears provided the booster shot that the market needed and it got one. The ease, with which the resistances were crossed, was unbelievable especially after trading in a range for more than a year. The market is now headed towards the Rising Channel breakout target of Sensex 20627 and Nifty 6180.

TECHNICALLY SPEAKING.

The Sensex opened the week at 18845, made a high of 19639, a low of 18845 and closed the week at 19594. The Sensex gained a whopping 795 points on a weekly basis. Similarly Nifty opened the week at 5639, made a high of 5901, a low of 5639 and closed the week at 5884. The Nifty too closed with the week with a solid gain of 244 points.

 

On the weekly charts both Sensex and Nifty have formed a complete White body Marubuzo for the second consecutive week. This is a Bullish candlestick pattern and its bullish implications will be seen once again in the next week. On Friday, as per the daily charts, both the indices have formed an Opening White Body Marubuzo which is also a strongly bullish formation.

 

Since last October, the market is moving in a Rising Channel and the channel top had provided strong resistance to the market and that supply trendline top was breached in the week before last. As a result both the indices have closed above their respective Trendline tops and hence a bullish breakout is in place. Due to this Rising Channel Breakout, the target for the Sensex will be at 20627 and Nifty 6180. The short term Broadening pattern target for Sensex 19283 and Nifty 5790 has already been achieved.

 

Let us consider the Bullish Inverted Head and Shoulders formed on the weekly charts. Sensex fell from 15579 in Aug 08 to 7697 in Oct 08. The target for this fall according to the Golden Ratio is at Sensex 20450. Similarly Nifty fell from 4649 in Aug 08 to 2252 in Oct 08 and the target according to the Golden Ratio falls at Nifty 6130.

 

If we check the above two points for target determination, then one can safely assume that the short term target for the Sensex will be anywhere between 20450-20627. On a similar basis, Nifty will have a target between 6130-6180.

 

In the current upmove both the indices have rebounded from Sensex 17819 and Nifty 5348 and in the process have registered higher bottoms. Sensex has formed higher bottoms at 17819-17373 and Nifty has formed higher bottoms at 5348-5210. The uptrend will be in danger only if both the indices close below their higher bottoms i.e. Sensex – 17819 and Nifty – 5348.

 

On the moving averages front, both the indices are well above their 20dma (Sensex – 18596 and Nifty – 5587) and 50dma (Sensex – 18275 and Nifty – 5488) hence the short and medium term trend are positive.

 

Majority of the oscillators are showing strength and continue in Buy mode. MACD and ROC continue with their Buy signals besides being in positive territory. The momentum oscillators like the RSI (78) and the Stochastic oscillator (88) are in overbought territory and are signaling that the market may enter a short term consolidation phase. Here one needs to remember that the market may or can remain in overbought territory for days together. Also the momentum is the highest when in overbought zone. The ADX has increased and is currently at 34 which indicate that the current trend is gaining strength. The Directional Indicators are already in Buy mode. The MFI is in Buy mode and so is the OBV.

 

The O.I.PCR for the current month is above 2.3 and is now in overbought territory. It shows that the call writers have lost confidence and put writing is gaining strength. For the next month, strong build up is seen at the 5500 Put and 5600 Put. Some Call writing is also seen at 6000 strike. One can expect the Nifty to move in a short term range of 5600 to 6000.

For the week ahead, Sensex will find Support at 19424-19255-18930 and will find Resistance at 19855-20079-20323.

 

For the week ahead, Nifty will find Support at 5815-5749-5676 and will find Resistance at 5966-6040-6130.

INDEX LEVELS:  

 S3S2S1CLOSER1R2R3
Nifty5676574958155884596660406130
Sensex18930192551942419594198552007920323

LAST WEEKS RECOMMENDATIONS:

All the recommendations reached their targets with ease and we achieved 100% success. The star performers for the week were UBI, OBC and IDFC which can be seen as per the table given below. 

STOCKReco. PriceTgtReachedLot SizeProfit
Buy JainIrrig124412631279250Rs.8,750
Buy OBC4554744771000Rs.22,000
Buy ABNuvo871887897250Rs.6,500
Buy UBI3553733851000Rs.30,000
Buy IDFC1891952012000Rs.24,000
    TotalRs.91,250

THIS WEEKS RECOMMENDATIONS:  

STOCKCMPSLTgt-1Tgt-2
Buy JindalS-W1799177818451897
Buy LiC Hsg1317130213391363
Buy ReLMedia215212221228
Buy L&T1963194919882013
Buy JsW Stl1256124312801307

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.

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