Archives : SHORT & SWIFT - 07/07/2017.

SHORT & SWIFT - 07/07/2017.

 

BULLS RECLAIM LOST GROUND.

 

The current Rally (more than 1800 Nifty points) has seen a parabolic rise in the frontline indices. Corrections form an integral part of all Rallies and the current Rally too has seen Corrections. But interestingly, all Corrections have been short lived in terms of price as well as time. Just when it looked as the current Correction would be more meaningful and slightly deeper, it once again proved to be short and swift. The indices took support at the 50dma and bounced back and are now within kissing distance of lifetime highs again.

 



SHORT & SWIFT - 07/07/2017.

 

BULLS RECLAIM LOST GROUND.

 

The current Rally (more than 1800 Nifty points) has seen a parabolic rise in the frontline indices. Corrections form an integral part of all Rallies and the current Rally too has seen Corrections. But interestingly, all Corrections have been short lived in terms of price as well as time. Just when it looked as the current Correction would be more meaningful and slightly deeper, it once again proved to be short and swift. The indices took support at the 50dma and bounced back and are now within kissing distance of lifetime highs again.

 

TECHNICALLY SPEAKING.

 

Sensex opened the week at 31156, made a high of 31460, low of 31017 and closed the week at 31360. Thus it closed the week with a gain of 439 points. At the same time the Nifty opened the week at 9587, made a high of 9700, low of 9543 and closed the week at 9665. Thus the Nifty closed the week with a gain of 145 points.

 

On the daily charts, both Sensex and Nifty have formed a Doji which indicates indecision. On the weekly charts, both the indices opened with a upward gap and formed a real white body candle. Thus more than daily, weekly candlestick pattern indicates a bullish bias in the near term.

 

The Support zone of Sensex 30651-30634 and Nifty 9482-9467, which was due to the confluence of 50dma and 38.2% Retracement, held strong and the market rebounded from there. The Correction proved to be short lived and as a result the indices are now within kissing distance from lifetime high levels.

 

Both the indices rebounded after taking support at the medium term average of 50dma (Sensex – 30792 and Nifty – 9524). The bounce back was strong and as a result the indices also overcame the short term average of 20dma (Sensex – 31152 and Nifty – 9602). Both the indices continue to remain above the long term average of 200dma (Sensex – 28631 and Nifty – 8849). Thus the Trend in the short term timeframe has once again turned bullish, whereas the Trend in the medium term and the long term timeframe continues to be Bullish.

 

The current Rally has produced two Bullish Gaps, which can act as strong Support zones. The first Bullish gap between Sensex 29780-29681 and Nifty 9250-9225 will not only act as Support but holds the key to intermediate trend. The second Bullish Gap which is more significant as it is also a Weekly Gap i.e. between Sensex 29356-29098 and Nifty 9060-8977 hold the key to the long term trend. Besides acting as a support, this gap also acts as a Measuring Gap. The target as per Gap theory falls at Sensex 32737 and Nifty 10144.

 

A Saucer pattern was completed when the indices closed above Sensex 29077 and Nifty 8968. Golden ratio target has been achieved but the complete pattern target which is at Sensex 32437 and Nifty 10043 remains to be achieved. On the weekly formation, both the indices completed a Cup and Handle formation and the targets are Sensex 34677-37554 and Nifty 10536-11413.

 

If one considers the Cup and Handle formation of 7 years from 2007 to 2014, the target for that pattern falls at Sensex 34715 and Nifty 10462. The Golden Ratio target of the current pattern weekly pattern of 2 years is at Sensex 34677 and Nifty 10536. Thus in the medium term one can expect a test of the above targets i.e. Sensex 34677-34715 and Nifty 10462-10536.

 

MACD and Price ROC, both are positive and in Buy mode. RSI (60) suggests momentum has turned bullish. Stochastic Oscillator %K (83) is above %D and hence in Buy mode. ADX has reduced to 21, which suggests a consolidation in Uptrend. Directional Indicators are in Buy mode as +DI is above –DI. MFI (56) suggests Positive Money Flow. OBV has started making higher tops and bottoms. Sell signal given by Bollinger Band has been negated on Monday. Thus Oscillators are suggesting a bullish bias.

 

Options data for July series indicate highest Call Open Interest is at the strike of 9700 and highest Put build-up has shifted upwards and is at 9500. Thus Options data suggests a narrow trading range with resistance coming in at 9700 and support at 9500.

 

INDEX LEVELS:

 

 

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

9390

9474

9575

9665

9778

9862

9944

Sensex

30338

30680

31017

31360

31689

32023

32362

 

THIS WEEKS RECOMMENDATIONS:

 

STOCK

CMP

SL

Tgt-1

Tgt-2

Buy Ceat

1903

1863

1965

2029

Buy Reliance Ind

1491

1465

1530

1570

Buy Divis Lab

680

664

705

731

Buy Glenmark Ph

665

652

685

706

Buy Jubilant Food

1093

1071

1127

1162

 

WATCH OUT FOR:

 

Jubiliant Food
 
 

 

 

 

 

 

 


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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