Archives : EXPECT A PULL-BACK; NOT A REVERSAL - 18/11/2016.

EXPECT A PULL-BACK; NOT A REVERSAL - 18/11/2016.

Please note that there will not be any article update for next week. Next update will be on 02/12/2016. 

QUESTION IS ‘WHEN’, NOT ‘IF’.

As expected the indices continued to move inside the trading range created by the big white body candle last Wednesday. The two questions on the mind of every market participants is ‘If the Correction is over’ and ‘whether the Nifty 8000 hold’. The answers are very clear, the Correction continues and the Correction levels are placed at Nifty 8150-7897-7644. As far as the Nifty 8000 level is concerned, the question is ‘when’ and not ‘if’. But as certain studies show, a Pull-back cannot be ruled out in the short term but the trend will remain Bearish.


EXPECT A PULL-BACK; NOT A REVERSAL - 18/11/2016.

Please note that there will not be any article update for next week. Next update will be on 02/12/2016. 

QUESTION IS ‘WHEN’, NOT ‘IF’.

As expected the indices continued to move inside the trading range created by the big white body candle last Wednesday. The two questions on the mind of every market participants is ‘If the Correction is over’ and ‘whether the Nifty 8000 hold’. The answers are very clear, the Correction continues and the Correction levels are placed at Nifty 8150-7897-7644. As far as the Nifty 8000 level is concerned, the question is ‘when’ and not ‘if’. But as certain studies show, a Pull-back cannot be ruled out in the short term but the trend will remain Bearish.

TECHNICALLY SPEAKING.

Sensex opened the week at 26809, made a high of 26809, low of 26106 and closed the week at 26150. Thus it closed the week with a loss of 668 points. At the same time the Nifty opened the week at 8284, made a high of 8288, low of 8048 and closed the week at 8074. Thus the Nifty closed the week with a loss of 222 points.

On the weekly charts, both Sensex and Nifty have formed an Opening black body Marubuzo which is in line with continued bearishness. On the daily charts, both the indices have formed a small black body candle like a Spinning Top. Last two days have formed neutral formations which indicate that the momentum on the downside has reduced. Thus weekly candlestick study indicates a bearish bias in the near term.

Last week, both the indices have left behind a Bearish Gap between Sensex 27344-27457 and Nifty 8460-8510 which will act as strong hurdle going forward. Also this Gap can be considered as a Measuring Gap. Thus as per Gap theory, the target falls at Sensex - 25724 and Nifty – 8002.

As per Pattern analysis, both the indices have formed a Bearish Rising Wedge formation and the extended target as per that formation falls at Sensex 25073 and Nifty 7656.

The current fall is a Retracement of the entire rise from Sensex 22494 to 29077 and Nifty from 6825 to 8968. Thus, the relevant 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 (26) continues to remain below the centreline, indicating bearish momentum. Stochastic Oscillator %K (12) is below %D, indicating a continuation in Sell mode. Sell signal on Bollinger band continues. ADX has improved to 36 which suggest that downward trend has become very strong. Directional Indicators continue in Sell mode as +DI remains below –DI. MFI (22) suggests Negative Money Flow. OBV continues in Sell mode, making lower Top, lower Bottom formation. Thus even though Oscillators are suggesting a bearish bias, a minor Pull-back cannot be ruled out as RSI and Stochastic are in oversold zone.

This week, both the indices continued to remain below the short term average of 20dma (Sensex – 27385 and Nifty – 8465), the medium term average of 50dma (Sensex – 27939 and Nifty – 8629) and even the long term average of 200dma (Sensex – 26613 and Nifty – 8137). Thus the trend in the short term and medium term timeframe remains bearish whereas the trend in the long term timeframe has now turned Bearish.

Options data for November series indicate highest Call Open Interest build-up shifted to the strike of 8500 and highest Put build-up remains at 8000. Thus Options data suggests a wide trading range with resistance coming in at 8500 and support at 8000.

LAST WEEKS RECOMMENDATIONS:

STOCK

Reco. Price

Tgt

Reached

Lot Size

Profit

Ultratech

3634

3366

3275

200

Rs.71,800

Sell M&M

1240

1194

1169

500

Rs.35,500

Sell HUL

802

773

783

600

Rs.11,400

JubFoods

893

860

827

500

Rs.33,000

Wockhardt

784

729

723

600

Rs.36,600

Total

Rs.1,88,300.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

7749

7873

7978

8074

8188

8287

8398

Sensex

25061

25430

25827

26150

26583

26925

27344

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell OFSS

3020

3101

2897

2772

Sell BajajAuto

2575

2638

2480

2383

Sell HDFCBank

1211

1236

1173

1134

Sell ZeeEnt

447

458

430

412

Sell Bata

425

436

408

390

WATCH OUT FOR:

HDFC Bank

Titan

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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