Archives : STUNNING RECOVERY - 06/09/2013.

STUNNING RECOVERY – 06/09/2013.

RESISTANCE ZONE 19299-19392.

On Tuesday it seemed as if the party for the bulls was over as the market crashed rapidly from a level of 5580 to 5318 in a single trading session; amidst rumours of increased political unrest in Syria. But Wednesday saw the market recovering on the back of positive announcements made by the new RBI chief Mr. Raghuram Rajan. The stunning recovery saw the market recover much more than what was lost, led primarily by the banking sector. As a result the short term trend has turned up for the market. Sensex is very close to testing the Resistance zone 19299-19392, which will decide the immediate course of market movement.


STUNNING RECOVERY – 06/09/2013.

RESISTANCE ZONE 19299-19392.

On Tuesday it seemed as if the party for the bulls was over as the market crashed rapidly from a level of 5580 to 5318 in a single trading session; amidst rumours of increased political unrest in Syria. But Wednesday saw the market recovering on the back of positive announcements made by the new RBI chief Mr. Raghuram Rajan. The stunning recovery saw the market recover much more than what was lost, led primarily by the banking sector. As a result the short term trend has turned up for the market. Sensex is very close to testing the Resistance zone 19299-19392, which will decide the immediate course of market movement.

TECHNICALLY SPEAKING.

Sensex opened the week at 18691, made a high of 19293, low of 18166 and closed the week at 19270. Thus it registered a weekly gain of 651 points. At the same time the Nifty opened the week at 5480, made a high of 5688, low of 5318 and closed the week at 5680. Thus the Nifty closed the week with a gain of 209 points.

After forming a big black body candle on Tuesday which almost engulfed previous three days white candles; the last three days of the week saw tremendous recovery by the market and formed three white body candles which completely overcame the bearishness of the big black body candle. On the weekly charts, both Sensex and Nifty have formed a big white body candle which is almost like a Closing White body Marubuzo. Thus both daily as well as weekly charts suggest bullishness to continue in the short term.

Currently both Sensex and Nifty are witnessing a pull-back or retracement of the entire fall from Sensex 20443 to 17448 and Nifty 6229 to 5118. The pull-back levels for that are Sensex 18592-18946-19299 and Nifty 5543-5674-5805.

Currently the Sensex is very near to a strong Resistance Zone between Sensex 19299 – 19392, which is due to the confluence of an Intermediate Top (19392), 200dma (19332) and the 61.8% Retracement (19299) of the entire fall.

A small Upward Sloping Rising Channel breakout has been witnessed in both the Sensex and Nifty, on line charts. The target as per this comes around Sensex 19664 and Nifty 5787.

This week both Sensex and Nifty have managed to close above the short term average of 20dma (Sensex – 18585 and Nifty – 5483). There is a divergence as far as the medium term average of 50dma is concerned as the Sensex has closed well above it (Sensex – 19167), whereas the Nifty is still below it (Nifty – 5705). Also both the indices continue to remain below the long term average of 200dma (Sensex – 19332 and Nifty – 5834). Thus the trend in the short term has turned positive whereas the long term trend is still bearish.

MACD continues with its Buy signal despite being in the negative territory. ROC has become positive and continues with its Buy signal. RSI (55) has moved above the equilibrium line on Thursday and a Buy was signaled. This indicates bullish momentum in the market. Same was the case with MFI (58) which too signaled a Buy on Thursday which suggests money flowing into the market. Stochastic Oscillator continues with its Buy signal as %K (81) continues to be above %D. ADX has reduced and is at 20 suggesting the reduction in strength of downtrend. The Directional Indicators continue with its Sell signal but more interestingly -DI and +DI have both converged and are at the same level. OBV has gone above the previous top and signaled a Buy. It continues to make higher top higher bottom formation. The stop loss for the Sell signal in Bollinger band has been triggered, as the indices have closed above the mean of 20dma. Thus majority of the Oscillators are pointing towards more bullishness in the short term.

The Nifty O.I. PCR has improved and is now at 1.52. For the current month series, highest Open interest build up is at 5300 Put and 5700 Call. This suggests that the market expects a trading range with support coming in at 5300 levels and resistance around 5700 levels. Friday saw high amount of Put writing at 5400 strike which suggests immediate support coming in at around Nifty 5400 levels.

The Trendline Resistance for the Sensex is at 19395. The Trendline Support for the Sensex is at 19027.

The Trendline Resistance for the Nifty is at 5822. Trendline Support for the Nifty falls at 5618.

For the week ahead, Sensex will find Support at 18925-18612-18291 and will find Resistance at 19569-19856-20163.

For the week ahead, Nifty will find Support at 5583-5486-5377 and will find Resistance at 5775-5879-5972.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5377

5486

5583

5680

5775

5879

5972

Sensex

18291

18612

18925

19270

19569

19856

20163

LAST WEEKS RECOMMENDATIONS:

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Recom @

Target

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Buy Infosys

3105

3238

3140

Buy HeroMot

2046

2125

2094

Buy Wipro

483

500

500

Buy ABG Ship

282

291

290

Buy Rolta

62

65

63

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Cipla

437

425

455

474

Buy LiCHsg

173

168

181

190

Buy JsWSt.

580

566

601

623

Buy ReLInfra

366

360

376

387

Buy AsianPt

425

414

442

460

WATCH OUT FOR:

LIC Hsg

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