Archives : 200DMA TO THE RESCUE - 30/03/2012

200 DMA TO THE RESCUE – 30/03/2012.

SHORT TERM TREND UP.

For the second time in this month the market successfully tested the support zone formed by the 200dma and the Falling Channel Top. It is quite common for the prices to test the support level after a breakout and the market did exactly that. Since the market managed to stay above the 200dma, the long term outlook for the market remains positive. The rally on Friday was responsible for turning the short term trend of the market up.

 

 


200 DMA TO THE RESCUE – 30/03/2012.

SHORT TERM TREND UP.

For the second time in this month the market successfully tested the support zone formed by the 200dma and the Falling Channel Top. It is quite common for the prices to test the support level after a breakout and the market did exactly that. Since the market managed to stay above the 200dma, the long term outlook for the market remains positive. The rally on Friday was responsible for turning the short term trend of the market up.

TECHNICALLY SPEAKING. 

Sensex opened the week at 17377, made a high of 17439, low of 16920 and closed the week at 17404. Thus it registered a small weekly gain of 43 points. At the same time the Nifty opened the week at 5274, made a high of 5307, low of 5135 and closed the week at 5295. Thus the Nifty went up by just 17 points on a weekly basis.

Friday saw the Nifty opening with a gap up and then moving higher through out the day and in the process forming a big Opening White Body Marubuzo. On the weekly charts, there is Hammer formation with a small white body. The small upper shadow is within acceptable limits for a Hammer formation. The long lower shadow is due to the pull-back witnessed from lower levels. The formation is a Takuri Line formation because of the very long lower shadow. Both the weekly and daily candlestick formations promise more bullishness.

It was an interesting week where the indices tested and took support at the long term average of 200dma (Sensex – 17096 and Nifty – 5148) and managed to conquer the short term average of 20dma (Sensex – 17396 and Nifty – 5293) during Friday’s rally. Both Sensex and Nifty have closed just below the medium term average of 50dma (Sensex – 17507 and Nifty – 5312). As a result, the trend in the Short term timeframe has turned Bullish whereas the Medium term timeframe trend remains Bearish. The trend in the Long term timeframe continues to be Bullish.

On Friday the Nifty went up leaving behind a Bullish Rising Gap between 5203 - 5194. This gap will act as a Support for the market. This gap can be classified as a Bullish Breakaway Gap marking the beginning of a new rally.

The market recovered after making an intermediate bottom at Sensex 16920 and Nifty 5135. Only if this intermediate bottom is breached, the correction will resume. The market will once again correct the entire rise from Sensex 15135 to 18523 and Nifty from 4531 to 5629 and the Correction levels will be 17229-16829-16429 for the Sensex and 5210-5080-4950 for the Nifty.

This week the market went down upto the level of the Falling Channel Top and it once again acted as a support. This level has provided strong support to the market for the second time in this month. Currently the Falling Channel Top falls at Sensex 16964 and Nifty 5120. The overall bullish target for Falling Channel pattern breakout remains intact. The targets as per this formation are Sensex 20383 and Nifty 6148.

A strong support is likely to emerge between Sensex 17096 – 16920 and Nifty 5148-5120 which is a result of confluence of immediate current bottom, critical level of 200dma and the Falling Channel Top.

MACD and ROC continue with their Sell signals and also both are negative. RSI (50) has just gone above the centerline and given a fresh buy signal. Stochastic Oscillator (21) has also given a fresh buy signal as %K has moved above %D. ADX has now reduced further to 16 suggesting that the market is trendless. Directional Indicators are in Sell mode but have converged at the same level. MFI is in Sell mode as it is below the centerline at 36. OBV is in Sell mode and has made a lower top formation but is yet to make a lower bottom.

Nifty O.I. PCR is at a reasonable level of 1.21. Highest open interest buildup for this month is seen at 5000 Put. But on Friday there was heavy Put writing at the level of 5200. Thus in the immediate future, Nifty will find support at 5200. High Call writing is seen at the strike of 5400 followed by 5600. So in the near term, the level of 5400 will act as a Resistance. Thus expect a Trading range between 5200-5400 in the short term. 

Trendline Resistance for the Sensex is at 17592. The Trendline Support for the Sensex is at 16964.

Trendline Resistance for the Nifty is at 5383. The Trendline Support for the Nifty falls at 5120.

For the week ahead, Sensex will find Support at 17096-16788-16432 and will find Resistance at 17786-18160-18523.

For the week ahead, Nifty will find Support at 5198-5099-4991 and will find Resistance at 5399-5512-5629.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

4991

5099

5198

5295

5399

5512

5629

Sensex

16432

16788

17096

17404

17786

18160

18523

LAST WEEKS RECOMMENDATIONS:

Almost all the recommendations did well with the exception of STFC which just failed to reach its target. The Star Performer for the last week was IVRCL Infra which went up by an astonishing 17%!!! 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

ABNuvo

950

965

964

250

Rs. 3,500

McLeod

266

274

279

1000

Rs. 13,000

Buy STFC

599

612

605

500

Rs. 3,000

Buy HuL

403

419

419

1000

Rs. 16,000

Buy IVRCL

58

66

68

8000

Rs. 80,000

Total

Rs.1,15,500

THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy TataStL

471

464

483

496

Buy Bhushan

416

410

428

441

Buy IGL

379

373

388

398

Buy Raymond

424

416

437

452

Buy Rolta

93

91

96

100

WATCH OUT FOR:

Bhushan Steel

Raymond

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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