Archives : BLACK FRIDAY REVISITED - 16/08/2013.

BLACK FRIDAY REVISITED – 16/08/2013. 

BEARS ON TOP.

.

Market cracked after a weak start on Friday as the Sensex went down by more than 750 points. There was panic all around due to concern regarding depreciating Rupee. Rupee seems to be in a free fall as it even breached the all time low level. Also aiding to the panic was the concern regarding the tapering of monetary stimulus by the US Fed. Thus Friday’s fall has completely undone whatever was gained in the last four days. The pull-back lasted for four days and ended at Sensex 19310 and Nifty 5754. Now once again the focus is back on the long term strong support which the Bullish Rising Gap between Sensex 18284 - 18062 and Nifty 5526 – 5447, has been providing.

 

 


BLACK FRIDAY REVISITED – 16/08/2013. 

BEARS ON TOP.

.

Market cracked after a weak start on Friday as the Sensex went down by more than 750 points. There was panic all around due to concern regarding depreciating Rupee. Rupee seems to be in a free fall as it even breached the all time low level. Also aiding to the panic was the concern regarding the tapering of monetary stimulus by the US Fed. Thus Friday’s fall has completely undone whatever was gained in the last four days. The pull-back lasted for four days and ended at Sensex 19310 and Nifty 5754. Now once again the focus is back on the long term strong support which the Bullish Rising Gap between Sensex 18284 - 18062 and Nifty 5526 – 5447, has been providing.

TECHNICALLY SPEAKING.

Sensex opened the week at 18898, made a high of 19310, low of 18559 and closed the week at 18598. Thus it registered a weekly loss of 191 points. At the same time the Nifty opened the week at 5606, made a high of 5754, low of 5496 and closed the week at 5507. Thus the Nifty went down by 58 points on a weekly basis.

On the daily charts, both Sensex and Nifty has formed a big black body on Friday. If we consider the last three days candles, then it is like an Evening Star pattern which is a bearish reversal pattern; but it cannot be classified as one as it has occurred in a downtrend. The bearish candle on Friday has undone the good work of last four days. On the weekly charts both the indices have formed a black body candle with a long upper shadow. It shows continuation of bearishness on the weekly charts and the long upper shadow indicates selling pressure at higher levels. 

Market witnessed a pull-back for four days and it ended after making an intermittent top at Sensex 19310 and Nifty 5754. So from a longer term perspective both the indices are undergoing a correction of rise from Sensex 15135 to 20443 and Nifty from 4531 to 6229. The corresponding Correction levels are at Sensex 18416-17789-17163 and Nifty 5580-5380-5179.

The market has tested the most important Bullish Rising Gap between Sensex 18284-18062 and Nifty 5526-5447 many times. Last time Nifty managed to bounce back from a low of 5486 which was inside the gap, whereas the Sensex bounced from18551 which was above this gap. Market has managed to bounce back number of times from above this Gap but a breach of this gap will signal the end of the long term rally.

This week Sensex tested both the long term average of 200dma and medium term average of 50dma but was not able to close above those. This week both the indices are below the short term average of 20dma (Sensex – 19433 and Nifty – 5778), the medium term average of 50dma (Sensex – 19343 and Nifty – 5801) and the long term average of 200dma (Sensex – 19345 and Nifty – 5851). Thus the trend in the short term, medium term and long term timeframe continue to remain bearish.

MACD and ROC both are negative and continue with their Sell signal. RSI (36) continues in Sell mode suggesting that the bearish momentum is high. Stochastic Oscillator continues in Buy mode as %K (32) is above %D. MFI (36) has improved but is still below the equilibrium line which suggests money flowing out of the market. ADX is around 22 suggesting that the current trend is now gathering strength. The Directional Indicators continue with its Sell signal as -DI is above +DI. OBV continues to make lower top lower bottom formation and hence it remains in its Sell mode. Bollinger band also continues with its Sell signal. Thus majority of the Oscillators points towards bearishness to continue in the near term.

The Nifty O.I. PCR has reduced and is now at 0.97. For the current month series, highest Open interest build up is seen at 5400 Put and 5600 Call. This suggests that the market expects a narrow trading range with support coming in at 5400 levels and resistance around 5600 levels. Friday saw high amount of Call writing at 5500 strike which suggests immediate resistance to come in at that level.

The Trendline Resistance for the Sensex is at 19331. The Trendline Support for the Sensex is at 18046.

The Trendline Resistance for the Nifty is at 5735. Trendline Support for the Nifty falls at 5392.

For the week ahead, Sensex will find Support at 18255-17884-17575 and will find Resistance at 18925-19237-19569.

For the week ahead, Nifty will find Support at 5393-5309-5215 and will find Resistance at 5610-5729-5815.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5215

5309

5393

5507

5610

5729

5815

Sensex

17575

17884

18255

18598

18925

19237

19569

LAST WEEKS RECOMMENDATIONS:

Majority of the previous week’s recommendations reached their targets with ease with the exception of HDFC.

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Sell Grasim

2434

2352

2304

125

Rs.16,250

HDFCBk

610

586

585

500

Rs.12,500

AsianPnts

431

415

414

1250

Rs.21,250

Sell HDFC

747

723

731

250

Rs. 4,000

Sell ITC

325

317

317

1000

Rs. 8,000

Total

Rs.62,000

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell DrReddy

2166

2207

2091

2013

Sell Reliance

827

839

808

788

Sell TCS

1781

1810

1730

1678

Sell Kotak

632

646

613

593

Sell M&M

840

862

809

778

WATCH OUT FOR:

Reliance Ind

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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