Archives : SEASON OF FALSE BREAKOUT, FAILED TARGETS - 06/02/09.

SEASON OF FALSE BREAKOUT, FAILED TARGETS – 06/02/09.

Flip-Flop is a word, which aptly describes the market movement in the past week, or perhaps in the last four weeks. The trading range for the market is getting narrower and narrower and the market is thus facing pressure of being a directionless.

 

Every time it goes down around Sensex 8700-8600 and Nifty 2660-2685, it invariably bounces back to Sensex 9400 and Nifty 2860 odd levels. From the higher side of the range i.e. Sensex 9400 and Nifty 2860, the market invariably goes down towards the lower boundary of the range. This flip-flop of the market in a very small range makes life difficult for the traders as their Stop-losses keep on getting triggered.

 

For the past four weeks every time the market gave an upward breakout, invariably the market went down in the next week and vice-versa when the market gave a downward breakout. This week the market has closed with a positive under current, but still one cannot be so sure of more upside, considering the uncertainty and choppiness. Hence it is advisable to use Hedging Strategies. In the present uncertain market conditions one can say that this has been a Season of False Breakouts, Failed Target and Stop-losses getting triggered.

New TOOL for Fundamental Analysis.

SENSEX.

NIFTY.

Strategy for the week:

LAST WEEK’S RECOMMEDATIONS:

THIS WEEK’S RECOMMENDATIONS:

SEASON OF FALSE BREAKOUT, FAILED TARGETS – 06/02/09.

Flip-Flop is a word, which aptly describes the market movement in the past week, or perhaps in the last four weeks. The trading range for the market is getting narrower and narrower and the market is thus facing pressure of being a directionless.

 

Every time it goes down around Sensex 8700-8600 and Nifty 2660-2685, it invariably bounces back to Sensex 9400 and Nifty 2860 odd levels. From the higher side of the range i.e. Sensex 9400 and Nifty 2860, the market invariably goes down towards the lower boundary of the range. This flip-flop of the market in a very small range makes life difficult for the traders as their Stop-losses keep on getting triggered.

 

For the past four weeks every time the market gave an upward breakout, invariably the market went down in the next week and vice-versa when the market gave a downward breakout. This week the market has closed with a positive under current, but still one cannot be so sure of more upside, considering the uncertainty and choppiness. Hence it is advisable to use Hedging Strategies. In the present uncertain market conditions one can say that this has been a Season of False Breakouts, Failed Target and Stop-losses getting triggered.

New TOOL for Fundamental Analysis.

This week the market kept on punishing those stocks whose promoters had pledged their stocks irrespective of the reason behind pledging. The market rewarded those stocks whose promoters had not pledged their holdings.

 

The market rewarded Real Estate stocks like Orbit, Purvankara and Parsvanath by increasing their prices any where between 20% to 40%, when it was disclosed that the promoters of these stocks had not pledged their shares and came out clean. Certainly, a new tool for Fundamental Analysis.

 

SENSEX.

Sensex opened the week at 9363, which was also the high, made a low of 9017, and closed the week at 9300, thus registering a weekly loss of 124 points.The Sensex has formed a Bullish Opening White Marubuzo on the daily charts and almost like a Bullish Hammer like formation on the weekly charts.The Sensex continued to flirt with the 50 DMA (9366) but somehow was not able to close above it.The Sensex rebounded from a low of 9017 without breaching the previous week’s low of 8789 and in the process filled the rising gap 9021-9053 formed in the previous week. Thus 9017 will now act as a strong support.The MACD continues to give Buy signal but is in the negative territory. The momentum indicator like RSI has managed to close above 50 and ROC too is giving a Buy signal as it has turned positive.The Trendline Resistance is at 9430-10229 and Trendline Support is at 9134-8794.For the week ahead the Resistance is at 9438-9631-9911-10229. Support is at 9137-9017-8789-8631. 

NIFTY.

Nifty opened the week at 2872, made a high of 2873, low of 2752, and closed the week at 2843. The weekly loss was 31 points.The Nifty has formed a Bullish Opening White Marubuzo on the daily charts and Bullish Engulfing pattern. It formed a Bullish Hammer like formation on the weekly chartsNifty almost bounced from 2752, without breaching the previous week’s low of 2685. Since it bounced twice from 2752, it will provide strong support to the Nifty.The MACD continues to give Buy signal but is in the negative territory. The momentum indicator like RSI has managed to close above 50 and ROC too is giving a Buy signal as it has turned positiveThe O.I.PCR is healthy at 1.26. Strong PUT writing is visible at the strikes of 2800 and 2700, which will act as support.The Nifty has Trendline Resistance at 2891-3099. The Trendline Support is at 2776-2730. For the week ahead, the Resistance is at 2881-2922-3046-3099. Support is at 2776-2730-2661-2570.

Strategy for the week:

Construct a Bull Spread for Reliance Industries (1344).Buy 1350 CALL (60) and Sell 1440 CALL (25). The cost of this Bull Spread will be 35 (Rs. 2625) and maximum profit will be 55 (Rs. 4125).

LAST WEEK’S RECOMMEDATIONS:

Inspite of such a range-bound market, majority of our targets were reached except for RIL & ABAN. RIL is likely to reach its upward target this week.
  • BUY JINDAL STEEL 1032 TGT was 1075 Reached 1097.
  • BUY ABAN 484 TGT was 520 Reached 512.
  • BUY ORACLE FIN. 608 TGT was 638 Reached 656.
  • BUY RIL 1323 TGT was 1365 Reached 1350.
  • BUY STERLITE 275 TGT was 288 Reached 287.
 THIS WEEK’S RECOMMENDATIONS:
  • BUY RIL 1344 SL 1322 TGT 1386-1409.
  • BUY JINDAL STEEL 1074 SL 1042 TGT 1112-1160-1195.
  • BUY IOC 442 SL 435 TGT 449-459.
  • BUY SAIL 87 SL 84 TGT 92-96.
  • BUY SESA GOA 98 SL 94 TGT 105-108.
 

Watch Out For:

Reliance industries 1344, weekly chart.triangle breakout.buy with sl 1322 tgt 1386-1409. 

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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