Archives : ANOTHER PANIC IN THE OFFING - 03/10/2008

ANOTHER PANIC IN THE OFFING - 03/10/2008.
 

Bears pinned down the Bulls and took complete control of the market as the indices went from weakness to further weakness. In the process Sensex lost a whopping 576 points and Nifty 167 points on a week to week basis. This does not augur well as we head towards the lower support range.

The strong double bottom support for the Sensex – 12500 & Nifty – 3790 was broken and the indices made new lows. The Sensex made a low of 12153 and Nifty rebounded from 3715. The closing has been near the lows and the pattern formation too, suggest a Bearish Head and Shoulders formation, which will certainly bring the market to its knees. So now we will be on the way to test the 50% Retracement target of the entire Bull Run which is at Sensex – 12055 and Nifty – 3639 will be critical levels to watch out for.

 

TRADING RANGE:

TECHNICAL OUTLOOK:

Pattern Analysis: Indicators Suggest:Retracement: DERIVATIVe Analysis:RESISTANCE & SUPPORT:LAST WEEK’S RECOMMENDATIONS:THIS WEEK’S RECOMMENDATIONS:

ANOTHER PANIC IN THE OFFING - 03/10/2008.
Bears pinned down the Bulls and took complete control of the market as the indices went from weakness to further weakness. In the process Sensex lost a whopping 576 points and Nifty 167 points on a week to week basis. This does not augur well as we head towards the lower support range.

The strong double bottom support for the Sensex – 12500 & Nifty – 3790 was broken and the indices made new lows. The Sensex made a low of 12153 and Nifty rebounded from 3715. The closing has been near the lows and the pattern formation too, suggest a Bearish Head and Shoulders formation, which will certainly bring the market to its knees. So now we will be on the way to test the 50% Retracement target of the entire Bull Run which is at Sensex – 12055 and Nifty – 3639 will be critical levels to watch out for.

 

TRADING RANGE:

Markets have a peculiar way of going down in this Bear market. We have observed that they go down moving trading in lower range than before. The shift takes place in the trading range. The present range for the Nifty is 3800 to 4000. Previously the trading range started drifting lower from 4000-4300 and 4300-4550. If the support at 3800 is broken, then the Nifty will drift towards a new range of 3550-3800.

 TECHNICAL OUTLOOK:

Pattern Analysis: Technically speaking the Sensex and Nifty have both formed Bearish Patterns. Sensex has formed a Bearish Evening Star Pattern on the daily charts, while Nifty has managed a Bearish Engulfing on the daily charts. The pattern analysis suggest that the Nifty and Sensex are both tracing out a bigger Bearish Head and Shoulder formation, which is likely to be confirmed in the next weeks trading, so better be careful and stay away. Nifty and Sensex have both broken the Gann angle support line and hence both are headed lower as can be seen in the adjoining chart.

Trendline Support for the Sensex is at 12120 and for the Nifty is at 3801. The Trendline Resistance for the Sensex is at 13367 and for the Nifty is at 3881-4064.

  

Indicators Suggest: The indicators are not showing any strength. Infact the momentum indicators are favouring a steep decline in the coming week. The Daily ROC, and the MACD are showing further weakness in the market.

Retracement: Sensex is retracing its entire rise from 2905 to 21206 and the 50% Retracement level for the entire Bull Run is at 12055. Similarly for the Nifty the one way rise has been from 920 to 6357 and the 50% Retracement level is at 3639. These levels are extremely important and those should not be breached.

 

DERIVATIVe Analysis: The OI PCR is at a precarious 0.91 suggesting fear amongst Put writers. CALL writing is seen at the strikes of 4000 and 3900 suggesting presence of strong resistance for the market at that strike prices. Similarly 3800 PUT has seen reduction of Open Interest suggesting that the Put writers have shifted their base support from 3800.

 RESISTANCE & SUPPORT:

Sensex Resistance 12822-13051-13203-13367. Support 12418-12153-11875-11578.

Nifty Resistance 3881-3919-4000-4064. Support 3801-3715-3617-3554-3430.

 LAST WEEK’S RECOMMENDATIONS:Once again we were back to where we belong and we earned tremendous profits in such Volatile & Uncertain market conditions. All our recommendations hit Bull’s Eye. All our readers must have made handsome Profits. SELL ABB 823 TGT WAS 743 REACHED 721.SELL EDUCOMP 3314 TGT WAS 3120 REACHED 3095.SELL TATA STEEL 461 TGT WAS 422 REACHED 390.SELL APTECH 149 TGT WAS 133 REACHED 110.SELL BHARTI 776 TGT WAS 735 REACHED 651.SELL REL CAP 1173 TGT WAS 1136 REACHED 1021.If one had bought 200 shares each of ABB & REL CAP, 100 shares of EDUCOMP, 500 shares of TATA STEEL, 2000 shares of APTECH, and 300 shares of BHARATI AIRTEL, then one could have earned a WHOPPING TOTAL PROFIT Rs. 2,23,700/- IN JUST ONE WEEK’s TIME. THIS WEEK’S RECOMMENDATIONS:SELL RELIANCE IND 1761 SL 1805 TGT 1729-1640-1502.SELL L&T 1159 SL 1189 TGT 1141-1032-1000.SELL TATA POWER 887 SL 911 TGT 843-818-760.SELL INFOSYS 1391 SL 1428 TGT 1369-1320.SELL REL CAP 1063 SL 1119 TGT 1021-1005-972.BUY BPCL 372 SL 363 TGT 382-393.

BUY DR.REDDY 550 SL 533 TGT 562-574-588.

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