Archives : CONSOLIDATION BEFORE UPWARD MOVE - 09/09/2016.

CONSOLIDATION BEFORE UPWARD MOVE - 09/09/2016.

TREND REMAINS UP.

After achieving the targets of Measuring Gap and Flag pattern, both Sensex and Nifty have gone into consolidation mode. For the indices to move up further, a consolidation is always welcome, as it fuels the rally to achieve higher levels. One should not mistake this short term correction as a reversal of trend. Since the trend remains up, one should use such dips in the market to create long positions in strong stocks.


CONSOLIDATION BEFORE UPWARD MOVE - 09/09/2016.

TREND REMAINS UP.

After achieving the targets of Measuring Gap and Flag pattern, both Sensex and Nifty have gone into consolidation mode. For the indices to move up further, a consolidation is always welcome, as it fuels the rally to achieve higher levels. One should not mistake this short term correction as a reversal of trend. Since the trend remains up, one should use such dips in the market to create long positions in strong stocks.

TECHNICALLY SPEAKING.

Sensex opened the week at 28631, made a high of 29077, low of 28631 and closed the week at 28797. Thus it closed the week with a gain of 265 points. At the same time the Nifty opened the week at 8852, made a high of 8968, low of 8848 and closed the week at 8866. Thus the Nifty closed the week with a gain of 57 points.

On the daily charts, Sensex has formed a Bearish Engulfing whereas Nifty has formed a black body candle but fails to form a bearish pattern. On the weekly charts, Nifty has formed a Shooting Star formation whereas the Sensex has failed to do so. Thus daily as well as weekly candlestick pattern suggests a bearish bias in the near term.

This week, both the indices went up leaving behind one more Bullish Gap on daily as well as weekly chart, i.e. between Sensex 28631-28581 and 8848-8824 on the Nifty. This gap will act as Support in the immediate term. Below this gap, lies a very critical Bullish Gap between Sensex 27667-27647 and Nifty 8479-8475, this has supported the market more than six times. As long as this Gap holds, one can expect much higher levels on the indices. Below this Gap, lies a very powerful Bullish Weekly Gap between Sensex 27358-27294 and Nifty 8407-8398.

Last week witnessed a bullish breakout to the narrow trading range of more than six weeks between Sensex 28289-27627 and Nifty 8728 – 8476. As a result, both the indices achieved Flag pattern target (Sensex – 28859 and Nifty – 8869) as well as Measuring Gap targets in last week. One can expect much higher targets to be achieved and also possibly test the life-high levels.

MACD and Price ROC are both positive and continue in Buy mode. RSI (62) suggests bullish momentum. Stochastic Oscillator %K (86) has gone below %D giving a fresh Sell signal. ADX has increased to 25 which suggest that Uptrend is now gathering strength. Directional Indicators continues in Buy mode as +DI remains above –DI. MFI (58) suggests Positive Money Flow. Bollinger Band continues with its Buy signal given last week. Thus majority of Oscillators are still suggesting a bullish bias in the near term.

This week, both the indices remained comfortably above the short term average of 20dma (Sensex – 28266 and Nifty – 8717), medium term average of 50dma (Sensex – 27937 and Nifty – 8599) and even the long term average of 200dma (Sensex – 25945 and Nifty – 7933). Thus the trend in the short term, medium term and even the long term timeframe continues to remain Bullish.

Options data for September series indicate highest Call Open Interest build-up at the strike of 9000 and highest Put build-up at 8600. Thus Options data suggests a trading range with resistance coming in at 9000 and support at 8600.

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Maruti

5160

5342

5499

150

Rs.50,850

IndusInd

1192

1230

1256

600

Rs.38,400

BhartForg

873

902

907

600

Rs.20,400

Buy BoB

166

172

178

3500

Rs.42,000

KakatiaCem

391

425

425

1000

Rs.34,000

Total

Rs.1,85,650.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

8543

8642

8754

8866

8937

9029

9119

Sensex

27627

28010

28417

28797

29094

29448

29844

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy AuroPharma

802

783

831

863

Buy FIEM Ind

1104

1075

1149

1196

Buy BHEL

154

150

160

167

Buy IDBI

79

77

83

88

Buy JsWEnergy

81

79

85

90

WATCH OUT FOR:

Aurobindo Pharma Gold Cross

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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