Archives : BEARS REIGN SUPREME - 21/06/2013.

BEARS REIGN SUPREME – 21/06/2013.

STRONG SUPPORT AT NIFTY 5526-5447.

Last week saw complete domination by the bears. Led by the fast falling Rupee and weak global markets, our market fell sharply; breaching important supports on the way. Indices have closed well below the 200dma and as a result the long term trend has also turned bearish. The chief culprit behind the fall was the Rupee which has already gone below the 60 mark and is on the way towards achieving a target of 62. This means that there will be little respite for the bulls, who are now praying that the most critical support which is the Bullish Rising Gap between Sensex 18284-18062 and Nifty 5526-5447, should hold. If this gap gets filled, then one can safely say that the current Bull rally has run its course.

 

 


BEARS REIGN SUPREME – 21/06/2013.

STRONG SUPPORT AT NIFTY 5526-5447.

Last week saw complete domination by the bears. Led by the fast falling Rupee and weak global markets, our market fell sharply; breaching important supports on the way. Indices have closed well below the 200dma and as a result the long term trend has also turned bearish. The chief culprit behind the fall was the Rupee which has already gone below the 60 mark and is on the way towards achieving a target of 62. This means that there will be little respite for the bulls, who are now praying that the most critical support which is the Bullish Rising Gap between Sensex 18284-18062 and Nifty 5526-5447, should hold. If this gap gets filled, then one can safely say that the current Bull rally has run its course.

TECHNICALLY SPEAKING. 

Sensex opened the week at 19249, made a high of 19383, low of 18615 and closed the week at 18774. Thus it registered a weekly loss of 403 points. At the same time the Nifty opened the week at 5820, made a high of 5863, low of 5616 and closed the week at 5667. Thus the Nifty went down by 141 points on a weekly basis.

Both the indices have formed a big black body candle on the weekly charts which is representative of the bearishness witnessed last week. On the daily charts, both the indices have formed a small white body candle on Friday. If we consider the last two days formation, then it is a Thrusting pattern, which is a bearish continuation pattern. Hence both weekly as well as the daily charts suggest continuation of bearishness.

Bullish Island Reversal pattern, formed two weeks back, has failed; when Sensex went below 18765 and Nifty below 5683 which were the lows registered during the Island Reversal formation.

Both Sensex and Nifty opened with big gap down on Thursday and in the process left behind a Bearish Falling gap between Sensex 19069 - 19100 and Nifty 5755 – 5777. Going forward this gap is likely to act as a strong Resistance.

This week both Sensex and Nifty finally closed well below the long term average of 200dma (Sensex – 19159 and Nifty – 5811). Both the indices are already below the medium term average of 50dma (Sensex – 19508 and Nifty – 5919) and also the short term average of 20dma (Sensex – 19445 and Nifty – 5886). Thus the trend in the long term timeframe has now turned bearish whereas the trend in the medium term and short term timeframe continues to remain down.

The Bullish Rising Gap between Sensex 18284-18062 and Nifty 5526-5447 was tested many times in the last couple of months and that 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 long term rally.

Currently the market is undergoing a correction of the entire upmove from Sensex 15135 to 20443 and Nifty 4531 to 6229. The corresponding Correction levels are 18416-17789-17163 for the Sensex and 5580-5380-5179 for the Nifty.

MACD and ROC are both negative and continue in Sell mode. RSI (35) too continues in Sell mode suggesting a continuation of bearish momentum. Stochastic Oscillator continues in Sell mode as %K (18) is below %D. MFI continues to fall and is well below the equilibrium line at 20, suggesting money continues to flow out. ADX has reduced to a level of 23, suggesting the current trend has almost all of its strength. The Directional Indicators continue with their Sell signal as –DI continues to stay above +DI. OBV too continues with its Sell signal. Bollinger Band also continues with its Sell signal given two weeks back. Thus majority of the Oscillators points toward continuation of bearishness in the short term.

The Nifty O.I. PCR has further reduced to 0.81. It is now nearing oversold levels but not yet reached there. For the current series, highest Open interest build up is seen at 5800 Call and 5600 Put. This suggests that the market expects a trading range with support at 5600 and resistance around 5800 levels. Lot of Put writing was seen at the strike of 5600 on Friday, which suggests immediate support to come in at that level.

The Trendline Resistance for the Sensex is at 19346. The Trendline Support for the Sensex is at 18681.

The Trendline Resistance for the Nifty is at 5846. The Trendline Support for the Nifty is at 5646.

For the week ahead, Sensex will find Support at 18402-18062-17711 and will find Resistance at 19069-19383-19711.

For the week ahead, Nifty will find Support at 5548-5447-5332 and will find Resistance at 5755-5863-5972.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5332

5447

5548

5667

5755

5863

5972

Sensex

17711

18062

18402

18774

19069

19383

19711

LAST WEEKS RECOMMENDATIONS:

STOCK

Recom @

Target

Reached

Buy Lupin

783

800

805

Buy OBC

236

243

242

Buy Dena

84

87

87

Buy Rallis(I)

142

147

143

Buy GruhFin

235

242

237

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell ACC

1163

1177

1142

1120

Sell HDFCBk

635

646

616

596

Sell REC

191

196

182

173

Sell TataGlob

136

139

131

126

Sell JPAss

58

60

54

50

WATCH OUT FOR:

REC

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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