Archives : OVERDOSE OF BEARISHNESS - 04/09/2015.

OVERDOSE OF BEARISHNESS - 04/09/2015. 

AUGUST LOWS BREACHED.

Just when it seemed that the market was stabilising near the Nifty 7700 levels, the Bears attacked with all the vengeance and breached the recent August lows of Sensex 25298 and Nifty 7667. It was Black Friday revisited as the Bears were on rampage. Not only the recovery will take longer than expected but the downside will also be lower than expected. The relevant Correction levels are placed at Nifty 7591-7119-6646.


OVERDOSE OF BEARISHNESS - 04/09/2015. 

AUGUST LOWS BREACHED.

Just when it seemed that the market was stabilising near the Nifty 7700 levels, the Bears attacked with all the vengeance and breached the recent August lows of Sensex 25298 and Nifty 7667. It was Black Friday revisited as the Bears were on rampage. Not only the recovery will take longer than expected but the downside will also be lower than expected. The relevant Correction levels are placed at Nifty 7591-7119-6646.

TECHNICALLY SPEAKING.

Sensex opened the week at 26469, made a high of 26504, low of 25119 and closed the week at 25201. Thus it closed the week with a massive loss of 1191 points. At the same time the Nifty opened the week at 8009, made a high of 8043, low of 7626 and closed the week at 7655. Thus the Nifty closed the week with a loss of 346 points.

On the daily charts, both the indices made a Bullish Harami on Thursday, but the pattern could not get confirmed. On Friday both Sensex and Nifty formed a big Opening Black body Marubuzo which has strong bearish implications. On the weekly charts, both the indices have formed a big Black body candle in line with the down trend. Thus the daily as well as weekly charts indicate bearishness in the near term.

The market is currently undergoing a Correction of the entire rise from 17448 to 30024 for the Sensex and 5118 to 9119 for the Nifty. The relevant Correction levels are placed at Sensex 25220-23736-22252 and Nifty 7591-7119-6646.

Both the indices made a Bearish Gap on Tuesday between Sensex 26141-26215 and Nifty 7929-7947 which will act as strong resistance going forward. Any Pull-Back rally is likely to face strong resistance at the above mentioned levels. On the higher side there is a Bearish Falling Gap on daily as well as weekly chart i.e. between Sensex 26730-27131 and Nifty 8091-8225, which will act as a strong Resistance zone going forward.

The current fall helped achieve the target for Bearish Rising Wedge (which was at 26049 for the Sensex and 7882 for the Nifty). Now the indices are on course to achieve the targets for Ascending Broadening pattern (Sensex 25034 and Nifty 7533) and Head and Shoulders pattern (Sensex 24486 and Nifty 7425). Last week a higher degree Head and Shoulders got completed and the target as per that pattern falls at Sensex 22552 and Nifty 6741.

MACD and Price ROC are both negative and continue in Sell mode. RSI suggests more bearish momentum whereas MFI indicates money flowing out of the market. Stochastic oscillator remains in oversold zone. ADX @ 37 suggests that the current down trend is very strong. Directional indicators continue in Sell mode. Bollinger Band continues with its Sell signal. Thus Oscillators suggest bearishness to continue in near term.

This week, both the indices continued to remain below the short term average of 20dma (Sensex – 26811 and Nifty – 8135), the medium term average of 50dma (Sensex – 27540 and Nifty – 8344) and even the long term average of 200dma (Sensex – 27897 and Nifty – 8434). Thus the trend in the short term, medium term and even the long term timeframe continues to remain bearish.

Volatility Index India VIX shot by around 20% to close around 26 on weekly basis, which is a sign that Volatility is here to stay and will remain in an upward trajectory with a likely target of 39. Options data for September series indicates highest Put Open Interest build-up at the strike of 7500 and highest Call build-up is now at the strike of 8200. Thus Option data suggests a very wide trading range with support coming in at 7500 and resistance around 8200.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7323

7422

7540

7655

7723

7841

7947

Sensex

24163

24587

24892

25201

25553

25910

26215

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Sell BajAut

2280

2167

2183

125

Rs.12,125

Sell L&T

1616

1563

1520

250

Rs.24,000

Sell ACC

1363

1316

1317

250

Rs.11,500

Sell Bhel

235

222

204

1000

Rs.31,000

Hexaware

236

224

228

1000

Rs. 8,000

Total

Rs.86,625.

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell Maruti

4063

4152

3929

3793

Sell Grasim

3374

3452

3253

3130

Sell CoLPaL

1885

1915

1839

1792

Sell Strides

1145

1173

1102

1057

Sell BharatForge

1077

1102

1039

1000

WATCH OUT FOR:

Grasim H&S

Nifty Bearish H&S

Nifty Midcap 50

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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