Archives : HISTORICAL, BEARISH & MOST VOLATILE WEEK - 11/11/2016.

HISTORICAL, BEARISH & MOST VOLATILE WEEK - 11/11/2016.

HISTORIC DECISION; MARKET SUFFERS.

In a shocking move on Tuesday evening, the Modi Government decided to do away Currency of higher denomination with immediate effect. It was a very strong and bold step taken by the Government to clean up the financial mess that the economy is into, besides stopping Terror Financing. This extraordinary action took the market by surprise and as a result the Trump Victory was completely overshadowed. This move spells death knell for the parallel economy.

BIG RANGE : 8000 – 8600.

On Wednesday, the indices opened with a big gap down; tested and even breached the 200dma, but quickly recovered from that level. At one point of time, Sensex was down by more than 1600 points; post which both the indices saw a smart recovery. Interestingly both Sensex and Nifty achieved the Head and Shoulders target of Sensex 26352 and Nifty 8139. As it usually happens, the next few days or even weeks can go in for consolidation, with range being 8600 on the higher side and 8000 on the lower side.


HISTORICAL, BEARISH & MOST VOLATILE WEEK - 11/11/2016.

HISTORIC DECISION; MARKET SUFFERS.

In a shocking move on Tuesday evening, the Modi Government decided to do away Currency of higher denomination with immediate effect. It was a very strong and bold step taken by the Government to clean up the financial mess that the economy is into, besides stopping Terror Financing. This extraordinary action took the market by surprise and as a result the Trump Victory was completely overshadowed. This move spells death knell for the parallel economy.

BIG RANGE : 8000 – 8600.

On Wednesday, the indices opened with a big gap down; tested and even breached the 200dma, but quickly recovered from that level. At one point of time, Sensex was down by more than 1600 points; post which both the indices saw a smart recovery. Interestingly both Sensex and Nifty achieved the Head and Shoulders target of Sensex 26352 and Nifty 8139. As it usually happens, the next few days or even weeks can go in for consolidation, with range being 8600 on the higher side and 8000 on the lower side.

TECHNICALLY SPEAKING.

Sensex opened the week at 27852, made a high of 27743, low of 25902 and closed the week at 26818. Thus it closed the week with a loss of 456 points. At the same time the Nifty opened the week at 8535, made a high of 8598, low of 8002 and closed the week at 8296. Thus the Nifty closed the week with a loss of 137 points.

On the weekly charts, both Sensex and Nifty have formed a big black body candle with longer lower shadow, in line with the downtrend. On the daily charts, both the indices opened with a gap down and formed an Opening Black body Marubuzo. Interestingly, it is almost like an Abandoned Baby Top but it has formed in a downtrend, whereas Abandoned Baby Top is formed in an Uptrend. Thus daily as well as weekly candlestick study indicates a bearish bias in the near term.

Last three days have formed a Bearish Island Reversal but it cannot be given great significance as the formation has occurred in a downtrend, whereas Bearish Island Reversal occurs in an Uptrend. The top of the Island is usually the failure point i.e. Sensex 27743 and Nifty 8598. Besides the top, even the Bearish Gap (Sensex 27344 – 27357 and Nifty 8460-8610) will act as a hurdle.

Both the indices achieved many Pattern targets on Wednesday itself. Immediate target for Bearish Rising Wedge, i.e. Sensex 26522 and Nifty 8142 was achieved easily, whereas the extended lower targets at Sensex 25073 and Nifty 7656 are yet to be achieved. Besides, a Bearish Head and Shoulders pattern, Bearish Falling Wedge pattern and also the Bearish Measuring Gap targets were achieved.

The current fall is a Retracement of the entire rise from Sensex 22494 to 29077 and Nifty from 6825 to 8968. Thus, the relevant extended Correction levels are placed at Sensex 26562-25786-25009 and Nifty 8150-7897-7644.

MACD and Price ROC are both negative and continue in Sell mode. RSI (32) continues to remain below the centreline, indicating bearish momentum. Stochastic Oscillator %K (56) is above %D, indicating a continuation in Buy mode. Sell signal on Bollinger band continues. ADX has improved to 28 which suggest that downward trend has become very strong. Directional Indicators continue in Sell mode as +DI remains below –DI. MFI (40) suggests Negative Money Flow. OBV continues in Sell mode, making lower Top, lower Bottom formation. Thus Oscillators are suggesting a bearish bias.

This week, both the indices tested the short term average of 20dma (Sensex – 27720 and Nifty – 8574) but could not close above it. Both the indices continue to remain below the medium term average of 50dma (Sensex – 28112 and Nifty – 8684) but above the long term average of 200dma (Sensex – 26473 and Nifty – 8122). Thus the trend in the short term and medium term timeframe remains bearish whereas the trend in the long term timeframe still continues to remain Bullish.

Options data for November series indicate highest Call Open Interest build-up shifted to the strike of 8700 and highest Put build-up has shifted to 8000. Thus Options data suggests a wide trading range with resistance coming in at 8700 and support at 8200. On Friday, 8500 Call added very high Open Interest which indicates immediate resistance.

LAST WEEKS RECOMMENDATIONS: 

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Sell Maruti

5705

5300

5103

150

Rs.90,300

AjantaPh

1877

1753

1712

400

Rs.64,000

ABNuvo

1283

1186

1183

750

Rs.75,000

Biocon

878

815

804

1100

Rs.81,400

Havells

386

357

351

2000

Rs.70,000

Total

Rs.3,80,700.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7978

8083

8186

8296

8407

8549

8678

Sensex

25688

26080

26468

26818

27294

27679

28048

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell Ultratech

3634

3721

3501

3366

Sell M&M

1240

1271

1194

1147

Sell HUL

802

821

773

743

Sell JubFoods

893

915

860

826

Sell Wockhardt

784

802

757

729

WATCH OUT FOR:

Jubiliant Food

Bata

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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