Archives : POSITIVE CLOSE TO A VOLATILE WEEK - 19/12/2014.

POSITIVE CLOSE TO A VOLATILE WEEK - 19/12/2014. 

MEDIUM TERM TREND TURNS DOWN.

It was a peaceful end to an extremely volatile week. The market expectedly bounced back from the trendline support obtained by joining recent bottoms. The bounce-back is now testing the medium term average of 50dma but has closed the week just below that level. The correction still continues. Prior uptrend will resume only if the Nifty manages to close above the level of 8372. Till then one can expect selling at higher levels as the medium term as well as the short term trend has turned bearish.

 

 


POSITIVE CLOSE TO A VOLATILE WEEK - 19/12/2014. 

MEDIUM TERM TREND TURNS DOWN.

It was a peaceful end to an extremely volatile week. The market expectedly bounced back from the trendline support obtained by joining recent bottoms. The bounce-back is now testing the medium term average of 50dma but has closed the week just below that level. The correction still continues. Prior uptrend will resume only if the Nifty manages to close above the level of 8372. Till then one can expect selling at higher levels as the medium term as well as the short term trend has turned bearish.

TECHNICALLY SPEAKING. 

Sensex opened the week at 27136, made a high of 27497, low of 26469 and closed the week at 27371. Thus it closed the week with a small gain of 21 points. At the same time the Nifty opened the week at 8160, made a high of 8263, low of 7961 and closed the week at 8225. Thus the Nifty closed the week with a minor gain of 1 point.

On the daily charts, Nifty has formed a Bearish Doji which is a bearish reversal pattern requiring a confirmation. The Sensex has formed a small white body candle with long upper shadow but clearly falling short of being called a Shooting Star. On the weekly charts both the indices have formed a small white body candle with long lower shadow which combined with last weeks candle forms an ‘In-Neck’ pattern which is a bearish continuation pattern. A bearish candle as the next week’s formation will confirm continuation of bearishness. Hence both the daily as well as weekly candlestick patterns suggest bearishness to continue.

Currently the market is witnessing a pull-back in the on-going Correction. The Pull-back levels are 27368-27645-27923 for the Sensex and 8215-8294-8372 for the Nifty. Thus the Correction will be deemed complete only when Sensex closes above 27923 and Nifty above 8372. Till then one can expect the on-going fall to continue.

If the downtrend continues then we are looking at a correction of the rise from 19963 for the Sensex and 5933 for the Nifty. For this the intermediate Correction levels are placed at Sensex 25438-24392-23347 and 7597-7280-6962 for the Nifty. On a higher degree the entire rally has started from low of Sensex 17448 and Nifty 5118 and the equivalent Correction levels are placed at Sensex 24477-23135-21793 and 7286-6872-6458. We find a strong confluence zone between Sensex 24477-24392 and Nifty 7286-7280 which should act as strong support zone.

MACD and Price ROC are both negative and continue with their Sell signals. RSI @ 37 is well below the centerline suggesting bearish momentum. Stochastic Oscillator has turned into buy mode as %K (26) has gone above %D. Also the MFI has dropped further to 30 which suggest money flowing out. ADX has fallen to 30, which indicates that the uptrend has lost some of its strength. Direction Indicators too are in Sell mode as +DI has gone below –DI. Bollinger Band continues in Sell mode given in the previous week. Also the negative divergence observed in MACD and RSI seems to be playing out. Thus majority of the Oscillators are suggesting bearishness. 

This week, both the indices tested the medium term average of 50dma (Sensex – 27518 and Nifty 8235) and closed below it. Also both Sensex and Nifty continue to remain below the short term average of 20dma (Sensex – 27941 and Nifty – 8381). However, both Sensex and Nifty continue to remain well above the long term average of 200dma (Sensex – 25263 and Nifty – 7551). Thus the trend in the short term and medium term timeframe has turned bearish whereas trend in the long term timeframe continues to remain up.

This week the Volatility Index saw a surge of around 35% to a level of 19 but closed the week lower. Option data suggest highest Put Open Interest has shifted to 8000 whereas the highest Call build-up is at the strike of 8500. Thus Option data suggests a trading range with support coming in at 8000 and resistance around 8500. On Friday there was a surge in Open Interest for the 8350 Call which will act as immediate resistance.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7856

7961

8085

8225

8320

8429

8535

Sensex

26248

26615

26994

27371

27739

28126

28541

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Sell BajAut

2521

2441

2444

125

Rs. 9,625

ABNuvo

1662

1597

1550

250

Rs.28,000

Sell CESC

656

624

603

500

Rs.26,500

Sell IRB

245

233

229

1000

Rs.16,000

Crompton

172

161

164

2000

Rs.16,000

Total

Rs.96,125.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy CoaLInd

376

368

389

403

Buy GDL

349

341

362

376

Buy AmaraRaja

796

774

830

865

Buy CentralBnk

85

81

92

99

Buy KPiT

204

197

216

229

WATCH OUT FOR:

Central Bnk

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.

Copyright © 2000 - 2018 Jatin Sanghavi. All rights reserved.
No part of the material on this website may be reproduced or distributed in any forms or by any means, electronics or mechanical without the written permission of the author.
Sitemap