Archives : KEY SUPPORT AT 19338 - 19/11/2010.
KEY SUPPORT AT 19338 -19/11/2010. 

MEDIUM TERM DOWNTREND.

 

This week the market closed below the 50dma (Sensex – 20145 and Nifty – 6058) and as a result the medium term trend turned bearish. The short term trend was already down as the market was trading below the 20dma. As a result any pullback on the index was met with stiff resistance. This explains why our market was jittery despite the global markets being comparatively stable. The medium term trend will turn up once the indices move above their 50dma. The main reason playing on markets mind besides China and Ireland, was the Raja factor. The 2G scam is taking mammoth proportions and is making life increasingly difficult for the ruling Congress party. Even as the market moves lower, both the indices will be testing critical support levels at Sensex at 19338 and Nifty at 5810-5752.

 

KEY SUPPORT AT 19338 -19/11/2010. 

MEDIUM TERM DOWNTREND.

 

This week the market closed below the 50dma (Sensex – 20145 and Nifty – 6058) and as a result the medium term trend turned bearish. The short term trend was already down as the market was trading below the 20dma. As a result any pullback on the index was met with stiff resistance. This explains why our market was jittery despite the global markets being comparatively stable. The medium term trend will turn up once the indices move above their 50dma. The main reason playing on markets mind besides China and Ireland, was the Raja factor. The 2G scam is taking mammoth proportions and is making life increasingly difficult for the ruling Congress party. Even as the market moves lower, both the indices will be testing critical support levels at Sensex at 19338 and Nifty at 5810-5752.

 
TECHNICALLY SPEAKING. 

The Sensex opened the week at 20167, made a high of 20386, a low of 19504 and closed the week at 19585. The Sensex lost a whopping 571 points on a weekly basis. Similarly Nifty opened the week at 6079, made a high of 6144, a low of 5863 and closed the week at 5890. The Nifty too closed with a loss of 181 points on a weekly basis.

 

Both the indices have formed a big Black Body candle on the weekly charts which is in continuation of the bearish trend after the Bearish Engulfing last week. On the daily charts, both Sensex and Nifty have formed a Bearish Opening Black Body Marubuzo. The pattern aids the Bearish Reversal witnessed last week.

 

The market was already trading below the 20dma (Sensex – 20341 and Nifty – 6118) and now it has closed below the 50dma (Sensex – 20145 and Nifty – 6058) and as a result both the short term trend and medium term trend have turned down. At the same time both the indices are still above their 200dma (Sensex – 18100 and Nifty – 5431) and hence the long term trend still continues to remain positive.

 

In the current upmove both the indices have formed higher bottoms at Sensex 19768 -17819 and Nifty 5937 – 5348. The short term trend has turned down as both the indices have closed below their recent higher bottoms i.e. Sensex – 19768 and Nifty – 5937. The long term trend will remain intact as long as Sensex 17819 and Nifty 5348 remains intact.

 Considering the medium term, the trendline support falls at Sensex 19338 and Nifty 5810. If one has to take slightly long term view, then the trendline joining the lows made in March 2009 to June 2010, then that trendline support comes in at Sensex 19338 and Nifty at 5752. Hence the medium term and long term trendline support 19338 coincides for the Sensex and as a result it forms a key support. For the Nifty, there is a strong support zone between 5810-5752. 

Both Sensex and Nifty are undergoing a correction of the rise from Sensex 17819 to 21108 and Nifty 5348 to 6338. The correction levels for the Sensex are at 19852-19463-19075 and Nifty 5960-5843-5726. If medium term view is considered, then the Sensex will undergo a correction of the rise from 15960 to 21108 and Nifty from 4786 to 6338. In that case the correction levels are 19141-18534-17927 for the Sensex and 5745-5562-5379 for the Nifty.

 

Short term oscillators are oversold while the majority of other oscillators continue to be in their Sell mode. The MACD which was already in Sell mode has turned negative. The RSI continues to be in Sell mode. The ROC too has given a Sell signal as it is in negative territory. The Bollinger Band has given a fresh Sell signal on Friday. Stochastic oscillator (12) is in oversold zone and one can expect some short term bounce. The Directional Indicators are in Sell mode as +DI has cut –DI from above. MFI and OBV are in Sell mode but interestingly, are not moving lower.

 

The OI PCR is quite low at 1.02 for the Dec series, which is suggestive of the Bear grip over the market. Highest Open Interest is seen at 6000 Call and 5600 Put for the Dec series which suggests a trading range between 6000 on the higher side and 5600 on the lower side.

 

Sensex has Trendline Support at 19336 – 19028.

 

Nifty has Trendline Support at 5858 - 5752.

 

For the week ahead, Sensex will find Support at 19354-19028-18845 and will find Resistance at 19771-19987-20145.

 

For the week ahead, Nifty will find Support at 5823-5749-5676 and will find Resistance at 5963-6037-6118.

  
INDEX LEVELS:
 
 S3S2S1CLOSER1R2R3
Nifty5676574958235890596360376118
Sensex18845190281935419585197711998720145
  
LAST WEEKS RECOMMENDATIONS: All the targets were achieved with ease. However, the star performers of the week were Alstom Proj and HindZinc.
 
STOCKReco. PriceTgtReachedLot SizeProfit
Sell AlstomProj731697680500Rs.25,500
Sell JainIrrig2142011981250Rs.20,000
Sell Bhel238923392230125Rs.19,875
Sell Infosys299729682940125Rs.7,125
Sell HindZinc123711941155250Rs.20,500
    TotalRs.93,000
  
THIS WEEKS RECOMMENDATIONS:
  
STOCKCMPSLTgt-1Tgt-2
Sell BGR Energy718730694667
Sell Aban772786758744
Sell Siemens789802772753
Sell LiCHsg1293130912691243
Sell HCLTech377385363348
     

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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