Archives : WEEKLY DELIBERATION PATTERN - 28/08/2014.

WEEKLY ‘DELIBERATION’ PATTERN – 28/08/2014.

ENDING FINANCIAL ‘UNTOUCHABILITY’.

Even as the MODI Government completes 100 days in office, there is a feeling that the government has fell short of meeting very high expectations of the people. One needs to understand that Mr. Modi has no magic wand to make the problems facing the country for past several decades, disappear in just 100 days. Mr. Modi is well aware of this reality and is preparing for the long haul by making the functioning of the government transparent and has brought accountability to this government. On this occasion he launched his biggest and most ambitious financial inclusion program aptly titled ‘Jan Dhana Yojana’ making banking facility available to all and thereby targeting to eradicate ‘Financial Untouchability’ in the country.

 

 


WEEKLY ‘DELIBERATION’ PATTERN – 28/08/2014.

ENDING FINANCIAL ‘UNTOUCHABILITY’.

Even as the MODI Government completes 100 days in office, there is a feeling that the government has fell short of meeting very high expectations of the people. One needs to understand that Mr. Modi has no magic wand to make the problems facing the country for past several decades, disappear in just 100 days. Mr. Modi is well aware of this reality and is preparing for the long haul by making the functioning of the government transparent and has brought accountability to this government. On this occasion he launched his biggest and most ambitious financial inclusion program aptly titled ‘Jan Dhana Yojana’ making banking facility available to all and thereby targeting to eradicate ‘Financial Untouchability’ in the country.

TECHNICALLY SPEAKING.

Sensex opened the week at 26490, made a high of 26674, low of 26314 and closed the week at 26638. Thus it closed the week with a gain of 219 points. At the same time the Nifty opened the week at 7931, made a high of 7968, low of 7862 and closed the week at 7954. Thus the Nifty closed the week with a gain of 41 points.

It was a truncated week and all the four days formed small body candles which don’t have strong trend implications and are very close to neutral formations. But on the weekly chart, a small white body was formed after two strong white body formations in the previous two weeks. This is a Deliberation or a Stalled Pattern. It is a bearish reversal pattern which requires confirmation. Thus a real black body candle in the next week can confirm bearish reversal and a weekly close above the patterns high i.e. above Sensex 26674 and Nifty 7968 will negate this formation.

In March this year the market had given a very strong bullish breakout for multiple patterns on multiple timeframes. One of the formations was a Bullish Rounding Bottom on the weekly charts which has a target of Sensex 27081 and Nifty 8145. A Flag pattern got completed when the Sensex closed above 26530 and Nifty above 7922. The target for this pattern is at Sensex 27828 and Nifty 8304. The targets will be achieved as long as the Sensex remains above 26262 and Nifty above 7855.

Both the indices completed a Bullish Island Reversal and thereby generating a Buy signal. The signal will stand negated if the Sensex closes below 25232 and Nifty below 7540. The market is constantly making higher top higher bottom formations and the short term trend is likely to reverse if the Nifty closes below 7540 and Sensex below 25232. A breach of this support is likely to test the Support zone between Sensex 24979-24878 and Nifty 7441-7394 which is due to a confluence of the 61.8% correction level with intermittent bottoms at Sensex 24892 & 24878 and Nifty 7441 & 7422.

On a higher scale, a very strong Support zone is formed between Sensex 23879-23729 and Nifty 7112-7067. This is a result of confluence of 38.2% Retracement of the higher rally (Sensex – 23879 and Nifty 7112), 61.8% Retracement of the immediate rally (Sensex – 23813 and Nifty 7097) and the start of the intermediate Bullish Rising Gap (Sensex 23729 and Nifty 7067). The long term trend will continue to remain bullish as long as this Support zone is held.

This week, both Sensex and Nifty have managed to remain above the short term average of 20dma (Sensex – 26050 and Nifty 7784) as well as the medium term average of 50dma (Sensex – 25756 and Nifty – 7694). Both the indices continue to remain well above the long term average of 200dma (Sensex – 22867 and Nifty – 6818). Thus the trend in the short term, medium term and long term continues to remain bullish.

MACD and Price ROC are both positive and continue with their buy signal. RSI has increased to 66, indicating bullish momentum for the market. ADX at 28 indicates the uptrend is gaining strength. Directional Indicators continue in Buy mode as +DI is above –DI. OBV continues in buy mode making higher top higher bottom formation. MFI has further increased to 79 suggests positive money flow in the market. Thus Oscillators are suggesting a bullish bias for the market.

August series ended on a strong note with the market gaining around 3%, while Oil and Gas sector had the highest long rollovers. For the September series, highest Open Interest buildup is seen at the strikes of 7900 and 8100. Highest Put writing is seen at the strike of 7900 and highest Call writing is seen at the strike of 8100. Thus this indicates a trading range for the market with support coming in at 7900 and resistance around 8100.

Strong Trendline Support for the Sensex is at 25645. Trendline Resistance for the Sensex is at 26985.

Strong Trendline Support for the Nifty is at 7654. Trendline Resistance for the Nifty is at 8015.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7654

7752

7841

7954

8046

8140

8230

Sensex

25645

25928

26300

26638

26960

27368

27828

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Buy PNB

984

1021

996

500

Rs. 6,000

Buy OFSS

3552

3653

3644

125

Rs.11,500

Buy BOB

919

954

931

500

Rs. 6,000

JubFood

1311

1353

1325

250

Rs. 3,500

JSW Steel

1289

1326

1295

250

Rs. 1,500

Total

Rs.28,500

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Dr.Reddy

2947

2905

3007

3070

Buy OIL

615

604

633

652

Buy BheL

240

236

247

255

Buy PVR

680

660

712

745

Buy Redington

105

102

110

116

WATCH OUT FOR:

BHEL

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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