Archives : WEEK OF CONSOLIDATION - 21/03/2014.

WEEK OF CONSOLIDATION –  21/03/2014. 

WAITING TO EXPLODE.

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The market did not do much in the last week except for taking rest. This rest in the form of consolidation will augur well for the market as the Bulls will get ready for a strong onslaught in the coming days. A sharp upward movement will be seen once this consolidation will be over, i.e. once Sensex closes above 22023 and Nifty above 6562. The potential target of this upward rally will be at Sensex 23126 and Nifty 6912 with resistance expected around Nifty 6700. So traders and market participants should buy into declines or weakness to get into the market especially the midcap stocks.

 


WEEK OF CONSOLIDATION –  21/03/2014. 

WAITING TO EXPLODE.

.

The market did not do much in the last week except for taking rest. This rest in the form of consolidation will augur well for the market as the Bulls will get ready for a strong onslaught in the coming days. A sharp upward movement will be seen once this consolidation will be over, i.e. once Sensex closes above 22023 and Nifty above 6562. The potential target of this upward rally will be at Sensex 23126 and Nifty 6912 with resistance expected around Nifty 6700. So traders and market participants should buy into declines or weakness to get into the market especially the midcap stocks.

TECHNICALLY SPEAKING.

Sensex opened the week at 21849, made a high of 22040, low of 21704 and closed the week at 21753. Thus it registered a small weekly loss of 56 points. At the same time the Nifty opened the week at 6532, made a high of 6574, low of 6473 and closed the week at 6493. Thus the Nifty closed the week with a minor loss of 11 points.

On the daily charts, both Sensex and Nifty have formed a small black body candle. This candle is a part of ongoing consolidation. Also on the weekly charts both the indices have formed a small black body candle. This is second small body neutral formation in two weeks. This formation has come on the back of Bullish Three White Soldiers formation. Hence both daily and weekly charts are suggesting consolidation with a bullish bias.

The current consolidation will be completed once Sensex closes above 22023 and Nifty above 6562. If this happens then it will complete a Bullish Flag formation with potential target of Sensex 23126 and Nifty 6912. Till then any dips or weakness in the market needs to be bought into, as it is a buy on declines.

The market has left behind a Bullish upward gap (Sensex 21539-21525 and Nifty 6413-6403). This Bullish Gap is acting as a strong support which got validated two weeks back when the Sensex reversed from a low of 21573 and Nifty from 6432. Also the Bullish Gap mentioned above is also a Measuring Gap and as per Gap theory the target falls at Sensex 23101 and Nifty 6886.

When the indices closed above the previous top, both the indices completed a Bullish pattern in the intermediate term and the targets as per that falls at Sensex 23003 and Nifty 6897.

Thus as per Gap theory and Pattern analysis, Sensex seems headed towards a target of 23003-23126 and Nifty 6886-6912 in the intermediate term.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  But there is a strong confluence zone between Sensex 22294-22302 and Nifty 6695-6712 which is likely to act as strong Resistance Zone in the near term.

When the market overcame the previous top and made fresh lifetime highs, it marked the end of six year consolidation. On the weekly charts both Sensex and Nifty have completed a Bullish Saucer formation and the targets as per that will fall at Sensex 24799 and Nifty 7454 on the lower side and Sensex 27081 and Nifty 8145 on the higher side. The targets are likely to be achieved over a period of next 20 months.

Current rally has started from a low of Sensex 19963 and Nifty 5933. Hence it becomes imperative that this support level holds so that the indices can move towards higher targets. Thus a breach of Sensex 19963 and Nifty 5933 will derail the current bullish rally.

This week, both Sensex and Nifty managed to remain above the short term average of 20dma (Sensex – 21411 and Nifty – 6375), the medium term average of 50dma (Sensex – 20994 and Nifty – 6242) and the long term average of 200dma (Sensex – 20200 and Nifty – 6013). Thus the trend in the short term, the medium term and the long term timeframe remains bullish.

MACD and ROC are both positive and continue with its Buy signal. RSI (65) suggests that strong bullish momentum is likely to continue. MFI (51) has reduced further but still suggests positive money inflow is greater than negative money flow. Stochastic Oscillator is in Sell mode as %K (79) is below %D. ADX (34) has increased, suggesting that the uptrend is very strong. The Directional Indicators are in a Buy mode as +DI continues to remain above -DI. OBV continues in Buy mode making higher top higher bottom formation. Both the indices continue with Buy signal on Bollinger Band. Thus Oscillators suggests a strong bullish bias in the near term.

The Nifty O.I. PCR is at a level of 1.24 which points towards bullish bias prevailing in the market. For the March series, highest Open interest build up is seen at 6400 Put and 6600 Call. This suggests that the market expects a trading range with support coming in at 6400 levels and resistance around 6600 levels. For the April series, highest Put writing is seen at 6400 levels and highest call writing is at 6700 strike. Thus for the next month series, one can expect a range of 6400 on the lower side and 6700 on the higher side.

The Trendline Resistance for the Sensex is at 22253. The Trendline Support for the Sensex is at 21316.

The Trendline Resistance for the Nifty is at 6674. The Trendline Support for the Nifty is at 6348.

For the week ahead, Sensex will find Support at 21483-21207-20920 and will find Resistance at 22040-22302-22539.

For the week ahead, Nifty will find Support at 6415-6336-6243 and will find Resistance at 6575-6654-6712.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

6243

6336

6415

6493

6575

6654

6712

Sensex

20920

21207

21483

21753

22040

22302

22539

LAST WEEKS RECOMMENDATIONS:

Except for GSPL, all the Recommendations given in the previous week did not reach their targets. But the Star performer of the week was GSPL which went up by around 10%!!!

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy ICICI

1215

1243

1231

250

Rs. 4,000

GodrejInd

297

307

299

1000

Rs. 2,000

Buy M&M

1027

1066

1055

250

Rs. 7,000

Buy GMDC

126

133

130

2000

Rs. 8,000

Buy GSPL

61

65

67

4000

Rs.24,000

Total

Rs.45,000

.
THIS WEEKS RECOMMENDATIONS:
.

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy JsWStL

981

964

1007

1035

Buy JsWEngy

55

53

59

64

Buy JKTyre

169

164

178

188

Buy GTOffShore

67

64

72

77

Buy IndianBnk

108

106

112

116

WATCH OUT FOR:

JSW Steel

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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