Archives : SHOW OF STRENGTH BY THE BULLS - 10/05/2013.

SHOW OF STRENGTH BY THE BULLS – 10/05/2013.

SENSEX RECLAIMS 20000.

Market went from strength to strength and put to rest all doubts regarding the continuation of uptrend. Last week we once again pointed out the market needs to stay above Sensex 19754 and Nifty 5971, to negate the Bearish Head and Shoulders pattern and it happened this week. Both the indices rallied sharply as soon as the above mentioned levels were taken off. In the process, both Sensex and Nifty have formed a pattern which has a target of Sensex 21364 and Nifty 6465. It implies that the Sensex and Nifty seem to be on course to register new highs in the time to come.

Please Note: There won’t be any article released next week i.e. 17/05/2013.  Normal weekly article will resume from 24/05/2013.


SHOW OF STRENGTH BY THE BULLS – 10/05/2013.

SENSEX RECLAIMS 20000.

Market went from strength to strength and put to rest all doubts regarding the continuation of uptrend. Last week we once again pointed out the market needs to stay above Sensex 19754 and Nifty 5971, to negate the Bearish Head and Shoulders pattern and it happened this week. Both the indices rallied sharply as soon as the above mentioned levels were taken off. In the process, both Sensex and Nifty have formed a pattern which has a target of Sensex 21364 and Nifty 6465. It implies that the Sensex and Nifty seem to be on course to register new highs in the time to come.

TECHNICALLY SPEAKING. 

Sensex opened the week at 19571, made a high of 20119, low of 19554 and closed the week at 20082. Thus it registered a strong weekly gain of 507 points. At the same time the Nifty opened the week at 5944, made a high of 6105, low of 5928 and closed the week at 6094. Thus the Nifty went up by 150 points on a weekly basis.

This week both the indices have formed a big White body Marubuzo. On the daily charts too, both Sensex and Nifty have formed an Opening White body Marubuzo. If we look at the previous two days candle, then the formation is like a Bullish Engulfing. But one has to remember that Bullish Engulfing occurs at the bottom and that is not the case here. If we have a Bearish candle formation on Monday, then we will have a Bearish formation known as Last Engulfing Top. Till then we can safely say that the candle-stick formations suggest bullishness to continue.

As soon as the market started trading above the levels of Sensex 19754 and Nifty 5971, two things happened. First the Bearish Head and Shoulders pattern got negated. Second the formation which got completed is a cross between a Saucer formation and a V-shape formation. The target for this formation is at Sensex 21364 and Nifty 6465. In the process of achieving the above mentioned targets, both Sensex and Nifty will test the all time highs of Sensex 21206 and Nifty 6357.

This week again both the indices continued to stay well above the short term average of 20dma (Sensex – 19243 and Nifty – 5843), medium term average of 50dma (Sensex – 19116 and Nifty – 5782) and even the long term average of 200dma (Sensex – 18811 and Nifty – 5706). Thus the trend in the short term, medium term and the long term timeframe remains upwards.

The Bullish Rising Gap between Sensex 18284-18062 and Nifty 5526-5447 was tested many times in the last month and the gap has proved to be a strong support for the market. In fact this gap has consistently provided support to the market. This gap holds more significance because a breach of this gap will signal the end of the current rally.

MACD and ROC continue with their Buy signals besides being positive. RSI (69) indicates that the bullish momentum is very high. Stochastic Oscillator has just given a Sell signal as %K (95) has gone below %D. Interestingly Stochastic Oscillator has been in overbought zone since mid April. MFI (85) is also in overbought zone since last one week. ADX has increased to a higher level of 35, suggesting strong uptrend. The Directional Indicators continue with its Buy signal as +DI maintains itself above -DI. OBV is in Buy mode and has been making higher top and higher bottom formation. Bollinger Band continues with Buy signal given two weeks back. Thus, majority of the Oscillators point towards continuation of bullishness in the short term.

The Nifty O.I. PCR has improved and is at level of 1.38. For the current series, highest Open interest build up is seen at 5800 Put and 6200 Call. This suggests that the market expects a trading range for the Nifty with support coming in at 5800 and resistance around 6200 levels. Lot of Call writing was seen at the strike of 6200 on Friday, which suggests an immediate resistance at that level.

Trendline Support for the Sensex is at 19790. Trendline Resistance for the Sensex is at 21020.

Trendline Support for the Nifty is at 5971. Trendline Resistance for the Nifty falls at 6321.

For the week ahead, Sensex will find Support at 19754-19378-19060 and will find Resistance at 20426-20762-21108.

For the week ahead, Nifty will find Support at 5982-5867-5754 and will find Resistance at 6181-6260-6357.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5754

5867

5982

6094

6181

6260

6357

Sensex

19060

19378

19754

20082

20426

20762

21108

LAST WEEKS RECOMMENDATIONS:

Majority of the recommendations reached their targets with ease except for Adani Ports. However the Star performer of the week was Bata which went up by more than 6%. 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

TataStL

311

320

327

1000

Rs.16,000

Buy AdniPrt

155

162

157

2000

Rs. 4,000

Buy Bata

771

808

819

250

Rs.12,000

Crompton

94

98

99

2000

Rs.10,000

Buy Sterlite

96

99

100

4000

Rs.16,000

Total

Rs.58,000

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Maruti

1727

1707

1765

1805

Buy HDFCBk

703

692

722

743

Buy IOC

305

300

313

322

Buy TataComm

238

234

245

253

Buy Bhel

197

194

202

208

WATCH OUT FOR:

IOC

Please Note: There won’t be any article released next week i.e. 17/05/2013.  Normal weekly article will resume from 24/05/2013.

  

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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