Archives : BEARS DOMINATE THE WEEK - 11/05/2012.

BEARS DOMINATE THE WEEK – 11/05/2012.

FALLING WEDGE - BEARISH BREAKOUT.

Tuesday witnessed the Market giving a bearish breakout to the Falling Wedge pattern   losing basis. It does not augur well for the Bulls. A Falling Wedge pattern has a natural tendency for giving Bullish breakout, but the Bearish breakout indicates that the market is headed to the point from where the rally had started. Target on the downside for the Nifty is 4742 and the overall target is at 4531. Some Pull-back can be expected since certain oscillators are oversold, but that Pull-back will not reverse the Bearish trend.

   


BEARS DOMINATE THE WEEK – 11/05/2012.

FALLING WEDGE - BEARISH BREAKOUT.

Tuesday witnessed the Market giving a bearish breakout to the Falling Wedge pattern   losing basis. It does not augur well for the Bulls. A Falling Wedge pattern has a natural tendency for giving Bullish breakout, but the Bearish breakout indicates that the market is headed to the point from where the rally had started. Target on the downside for the Nifty is 4742 and the overall target is at 4531. Some Pull-back can be expected since certain oscillators are oversold, but that Pull-back will not reverse the Bearish trend.

TECHNICALLY SPEAKING. 

Sensex opened the week at 16620, made a high of 16944, low of 16233 and closed the week at 16292. Thus it registered a weekly loss of 539 points. At the same time the Nifty opened the week at 5017, made a high of 5124, low of 4906 and closed the week at 4928. Thus the Nifty went down by 158 points on a weekly basis.

On the daily charts on Friday, both Sensex and Nifty have formed a small black body Spinning Top in a downtrend. This is a neutral candlestick formation which raises doubts regarding the existing downtrend. Hence for a reversal, a white body candle will act as a confirmation. On the weekly charts both Sensex and Nifty have formed a big black body candle with long upper shadow. The upper shadow indicates selling pressure witnessed at higher levels. Thus there is a glimmer of hope on the daily charts but the weekly charts suggest continuation of bearishness.

Both Sensex and Nifty continue to remain below the critical level of 200dma (Sensex – 16918 and Nifty – 5102). Also the indices continue to remain below the short term average of 20dma (Sensex – 17046 and Nifty – 5169) and the medium term average of 50dma (Sensex – 17254 and Nifty – 5243). As a result, the trend in the Long term timeframe, Medium term timeframe and the Short term timeframe continue to be Bearish.

The market is 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. Both Sensex and Nifty have closed below the 61.8% retracement level and hence one can say that Sensex is probably headed towards 15135 and Nifty 4531.

Both Sensex and Nifty gave a bearish breakout for Falling Wedge pattern last week. The target as per this breakout falls at Sensex 15728 and Nifty 4742. But more often than not, a bearish breakout in a Falling Wedge is likely to result in the indices moving towards the point from where the rally has started and i.e. Sensex 15135 and Nifty 4531.

Market has now gone below the level of the Falling Channel Top which comes in at Sensex 16659 and Nifty 5023. These levels should now provide resistance for the market. The overall bullish long term 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 at Sensex 16017 and Nifty 4815 which is the level where the 200 Weeks Moving Average reside.

MACD and ROC continue with their Sell signals and are both negative. RSI (29) and Stochastic Oscillator (%K at 4) are both in oversold zone and so is the MFI (14), which suggest there may be some sort of pull-back in the near term, but that will not affect the overall trend of the market. ADX has improved and is at 26, which suggest that the downtrend is now gathering strength. Directional Indicators continue in Sell mode as -DI is above +DI. The OBV has gone below the previous bottom and is under Sell mode. Bollinger band continues with its Sell signal given last Friday.

Nifty O.I. PCR has fallen further to 0.90 which suggests that the bears have been dominating in the past week. Highest open interest buildup is seen at 5200 Call and 4900 Put. This suggests that the current range for the Nifty is likely to be 4900 on the lower side and 5200 on the higher side. This suggests that support will be witnessed at the level of 4900.

Trendline Resistance for the Sensex is at 16742. The Trendline Support for the Sensex is at 15782.

Trendline Resistance for the Nifty is at 5063. The Trendline Support for the Nifty falls at 4654.

For the week ahead, Sensex will find Support at 15962-15664-15358 and will find Resistance at 16610-16920-17258.

For the week ahead, Nifty will find Support at 4827-4728-4639 and will find Resistance at 5039-5135-5229.

INDEX LEVELS: 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

4639

4728

4827

4928

5039

5135

5229

Sensex

15358

15664

15962

16292

16610

16920

17258

LAST WEEKS RECOMMENDATIONS:

All the Recommendations did well and achieved their targets. But the Star performer for the week was Bombay Dyeing which went down by almost 12%. 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

BomDyeing

498

467

439

500

Rs.29,500

Sell M&M

687

656

642

500

Rs.22,500

Siemens

749

709

701

250

Rs.12,000

Jubiliant

1097

1062

1026

250

Rs.17,750

Sell ONGC

259

252

252

1000

Rs.7,000

Total

Rs.88,750

THIS WEEKS RECOMMENDATIONS: 

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell SunPh

571

580

556

540

Sell TataPwr

93

95

89

84

Sell Orchid

160

163

154

147

Sell HOEC

103

106

98

92

Sell Dr.Reddy

1660

1677

1628

1592

WATCH OUT FOR:

HOEC

Tata Power

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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