Archives : MARKET TAKES A BREATHER - 13/09/2013.

MARKET TAKES A BREATHER – 13/09/2013.

LONG TERM TREND TURNS UP.

After a stupendous rally of ten days where the Sensex gained more than 2600 points and Nifty more than 800 points, the market had to pause for breath and it did that this week. This week the market opened with a big gap-up and continued its upward journey resulting in a Bullish Rising Gap being formed on the daily as well as weekly charts. This Gap between Nifty 5738-5688 will provide strong support to the market in the near term. Also the long term trend of the market has turned bullish.

  


MARKET TAKES A BREATHER – 13/09/2013.

LONG TERM TREND TURNS UP.

After a stupendous rally of ten days where the Sensex gained more than 2600 points and Nifty more than 800 points, the market had to pause for breath and it did that this week. This week the market opened with a big gap-up and continued its upward journey resulting in a Bullish Rising Gap being formed on the daily as well as weekly charts. This Gap between Nifty 5738-5688 will provide strong support to the market in the near term. Also the long term trend of the market has turned bullish.

TECHNICALLY SPEAKING. 

Sensex opened the week at 19448, made a high of 20055, low of 19444 and closed the week at 19732. Thus it registered a weekly gain of 462 points. At the same time the Nifty opened the week at 5738, made a high of 5932, low of 5738 and closed the week at 5850. Thus the Nifty closed the week with a gain of 170 points.

Both the indices completed a Bearish Engulfing at the top on Thursday. Both candles also form a Tweezer Top formation. Friday saw a Doji being formed on the daily charts on Sensex, whereas the Nifty has formed a small white body candle. Both are neutral formations. The weekly charts have formed an Opening White body Marubuzo with a long upper shadow. The long upper shadow indicates that the market is taking a pause. Thus both daily as well as weekly charts continue to look promising but in the short term a sideways consolidation looks likely.

Both indices opened the week with a big Gap-up and sustained that gap, thus forming an Upward Rising Gap between Sensex 19293 – 19444 and Nifty 5688-5738. This gap has not only been formed on the daily charts but also on the weekly charts, hence it will provide strong support to the market in the near term. Also the presence of 200dma for the Sensex (19363) and 50dma for the Nifty (5709) inside this gap, will add to the strength of the support.

The above mentioned Gap can be classified as a Measuring Gap (Sensex 19293 – 19444 and Nifty 5688-5738) in the current upward rally (the rally has started from a low of Sensex 17448 and Nifty 5118). If this gap holds, then as per Gap theory, the target for the upward rally works out to be Sensex 21289 and Nifty 6308.

This week both Sensex and Nifty overcame the strong Resistance zone due to the confluence of 200dma (Sensex – 19363 and Nifty – 5839) and the 61.8% Retracement (Sensex – 19299 and Nifty – 5805) of the entire fall, thus suggesting a reversal in trend.

Currently both the indices have taken a pause after rallying non-stop for ten days and registering more than 2600 points gain for the Sensex and 800 points for the Nifty. At the most, one may consider the current phase as a consolidation phase. Hence some pull-back can be expected of the rise from Sensex 17448 to 20055 and Nifty 5118 to 5932. The corresponding levels for the same are Sensex 19059-18752-18444 and Nifty 5621-5525-5429.

This week both Sensex and Nifty have managed to conquer the medium term average of 50dma (Sensex – 19211 and Nifty – 5709) as well as the long term average of 200dma (Sensex – 19363 and Nifty – 5839). Also both the indices are already above the short term average of 20dma (Sensex – 18744 and Nifty – 5528). Thus the trend in the medium term and long term timeframe has turned positive whereas the short term trend is already up.

MACD and ROC are both positive and continue with its Buy signal. RSI (59) continues to stay above the equilibrium line suggesting that the bullish momentum is intact. Similarly MFI (55) continues with its Buy signal as it is above the centerline which suggests money flowing into the market. Stochastic Oscillator has given a fresh Sell signal in overbought territory as %K (91) went below %D. ADX has reduced and is flat at 20 suggesting a reduction in strength of the trend. The Directional Indicators continue with its Buy signal as +DI is above -DI. OBV continues in Buy mode, making higher top higher bottom formation. Bollinger band has given a Buy signal on Tuesday when both the indices managed to close above the upper Bollinger band. Thus majority of the Oscillators are pointing towards more bullishness in the short term.

The Nifty O.I. PCR suggests bullishness and is at 1.52. For the current month series, highest Open interest build up is at 5300 Put and 6000 Call. This suggests that the market expects a wide trading range with support coming in at 5300 levels and resistance around 6000 levels. Friday saw high amount of Put writing at 5600 strike which suggests immediate support coming in at around Nifty 5600 levels.

The Trendline Resistance for the Sensex is at 20277. The Trendline Support for the Sensex is at 18847.

The Trendline Resistance for the Nifty is at 5987. Trendline Support for the Nifty falls at 5665.

For the week ahead, Sensex will find Support at 19444-19126-18847 and will find Resistance at 20055-20351-20664.

For the week ahead, Nifty will find Support at 5754-5649-5566 and will find Resistance at 5936-6047-6133.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5566

5649

5754

5850

5936

6047

6133

Sensex

18847

19126

19444

19732

20055

20351

20664

LAST WEEKS RECOMMENDATIONS:

All the Recommendations of previous week reached their targets with ease with the exception of Cipla. However the Star Performers of the week were JSW Steel and LIC Housing which went up by more than 12% and 10% respectively!!!

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy Cipla

437

455

447

1000

Rs.10,000

LiCHsg

173

190

191

1000

Rs.18,000

JsWSt

580

623

653

500

Rs.36,500

ReLInf

366

387

390

1000

Rs.24,000

AsianPt

425

442

451

1250

Rs.32,500

Total

Rs.1,21,000

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy BajajAuto

2003

1970

2058

2116

Buy M&M

830

811

858

887

Buy BoB

530

516

551

573

Buy ReLInfra

387

378

401

416

Buy NTPC

141

139

145

149

WATCH OUT FOR:

BoB

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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