Archives : FIRST WEEKLY LOSS IN 2012 - 24/02/2012.

FIRST WEEKLY LOSS IN 2012 – 24/02/2012. 

A PULL-BACK IN AN UPTREND.

Finally the much awaited correction is here and it will only make the market healthier. After posting consistent weekly gains, this is the first time in the current year that the market has posted a weekly loss. One needs to understand that this is a Retracement of the entire rise from 15135 to 18523 for the Sensex and 4531 to 5629 for the Nifty and not a Reversal of Trend. The Uptrend will continue once the correction is over. Strong Support will emerge around Sensex 17229 – 17204 and Nifty 5210 – 5171 which is a confluence zone formed by the 38.2% Retracement of the current rise and the 200dma.


FIRST WEEKLY LOSS IN 2012.

A PULL-BACK IN AN UPTREND.

Finally the much awaited correction is here and it will only make the market healthier. After posting consistent weekly gains, this is the first time in the current year that the market has posted a weekly loss. One needs to understand that this is a Retracement of the entire rise from 15135 to 18523 for the Sensex and 4531 to 5629 for the Nifty and not a Reversal of Trend. The Uptrend will continue once the correction is over. Strong Support will emerge around Sensex 17229 – 17204 and Nifty 5210 – 5171 which is a confluence zone formed by the 38.2% Retracement of the current rise and the 200dma.

TECHNICALLY SPEAKING. 

Sensex opened the week at 18303, made a high of 18523, low of 17848 and closed the week at 17923. Thus it registered a weekly loss of 366 points. At the same time the Nifty opened the week at 5561, made a high of 5629, low of 5405 and closed the week at 5429. Thus the Nifty fell by 135 points on a weekly basis.

Both Sensex and Nifty have formed a Bearish Harami formation on the weekly charts. This pattern requires a black body candle to be formed in the next weeks candle formation to confirm a Bearish Reversal in price. This week’s bearish candle is a result of Eight New Price Lines formation which is a result of new price highs being set week after week for eight consecutive weeks. When such a formation occurs it is advised to take some profits as the market may correct or consolidate after such a big rally. On the daily charts, there was a Bearish Engulfing pattern completed on Wednesday. The market headed southwards after that formation. Both weekly and daily candlestick formations point to market movement with a negative bias for next week.

The indices are above the crucial level of 200dma (Sensex – 17204 and Nifty – 5171) which signals that the long term trend continues to be Bullish. Medium and Short term Trend are Bullish as the Sensex and Nifty continue to stay above their medium term average of 50dma (Sensex – 16711 and Nifty – 5036) and short term average of 20dma (Sensex – 17754 and Nifty – 5381). As a result, the trend in the Short term timeframe, Medium term timeframe and Long term timeframe, continue to be Bullish.

Both Sensex and Nifty registered an intermittent top on Wednesday. Sensex fell after making a high of 18523 and Nifty 5629. As a result the market is now correcting the entire rise from Sensex 15135 to 18523 and Nifty from 4531 to 5629 and the Correction levels are 17229-16829-16429 for the Sensex and 5210-5080-4950 for the Nifty.

A strong support is likely to emerge between Sensex 17229 – 17204 and Nifty 5210 – 5171 which is a result of confluence of 38.2% Retracement of the entire rise of the Sensex from 15135 to 18523 and Nifty 4531 to 5629 and the critical level of 200dma.

The market is likely to restart its upward journey post the correction. The overall bullish picture suggests that the target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

MACD has given a fresh Sell signal on Friday. ROC has moved lower but still in positive territory and hence continues with its Buy signal. After being in overbought zone for more than a month, both Stochastic and RSI have fallen. RSI has come down to a level of 60 while Stochastic Oscillator (%K) has moved lower down to 56. Stochastic Oscillator is in Sell mode as %K is below %D. ADX is still quite high at 41 suggesting that the uptrend is very strong but has matured. Directional Indicators continue in Buy mode as +DI is above –DI, but they are converging. Bollinger band continues with its Buy signal. MFI has moved lower at 57 after signaling a negative divergence on the daily charts. OBV continuous in buy mode as the higher top higher bottom formation is still intact.

Nifty O.I. PCR is now at a more reasonable 1.54. For the March series, highest open interest buildup is seen at 5300 Put. Very high Call writing is seen at the strike of 5500. Thus one can expect the market to move in a narrow range of 5300 on the lower side and 5500 on the higher side in the immediate future. 

Trendline Resistance for the Sensex is at 18296. Trendline Support for the Sensex is at 17395.

Trendline Resistance for the Nifty is at 5585. Trendline Support for the Nifty falls at 5279.

For the week ahead, Sensex will find Support at 17579-17258-16928 and will find Resistance at 18231-18523-18845.

For the week ahead, Nifty will find Support at 5322-5217-5109 and will find Resistance at 5531-5629-5740.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5109

5217

5322

5429

5531

5629

5740

Sensex

16928

17258

17579

17923

18231

18523

18845

LAST WEEKS RECOMMENDATIONS:

The Star Performer for the week was Thermax which went up by around 7%. While Siemens and Grasim failed to reach their targets. 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy Infosys

2947

2992

2994

125

Rs.5,875

Buy Siemens

821

845

839

250

Rs. 4,500

Buy Grasim

2878

2949

2928

125

Rs. 6,250

Buy Mphasis

398

421

422

500

Rs.12,000

Buy Thermax

533

554

569

500

Rs.18,000

Total

Rs.46,625

THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy CoLPaL

1056

1038

1081

1108

Buy GodrejInd

251

245

260

270

Buy PowerGrid

114

112

118

123

Buy ITC

209

206

215

222

Buy Videocon

188

184

195

202

WATCH OUT FOR:

Godrej Ind

ITC

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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