Archives : FINALLY, 200 DMA CONQUERED - 24/04/2009.

FINALLY, 200 DMA CONQUERED – 24/04/2009.

After almost a year, market has managed a close above the 200DMA. Last time it was above the 200DMA, was way back in early May 2008. As the Sensex and Nifty both have managed a weekly close above 200DMA it shows the buying interest coming back into the market. We had mentioned last week that the momentum will only continue if the indices are able to close above the 200dma and now since that is done, there will good momentum visible in the week ahead. As it is an expiry or settlement week the market will now see a strong bout of short covering which will push the indices higher.

SENSEX.

NIFTY.

INDEX LEVELS:

 S3S2S1CLOSER1R2R3
Nifty3132329633893480364837153820
Sensex10460107151116411329115801191112472

Strategy corner:

LAST WEEK’S RECOMMENDATIONS:

THIS WEEK’S RECOMMENDATIONS:

WATCH OUT FOR:

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FINALLY, 200 DMA CONQUERED – 24/04/2009.

After almost a year, market has managed a close above the 200DMA. Last time it was above the 200DMA, was way back in early May 2008. As the Sensex and Nifty both have managed a weekly close above 200DMA it shows the buying interest coming back into the market. We had mentioned last week that the momentum will only continue if the indices are able to close above the 200dma and now since that is done, there will good momentum visible in the week ahead. As it is an expiry or settlement week the market will now see a strong bout of short covering which will push the indices higher.

SENSEX.

Sensex opened the week at 11065, made a high of 11362, made a low of 10715, and closed on Thursday at 11329, thus registering a weekly gain of 306 points.

The Sensex has formed a positive white candle on daily charts on Friday and it assumes more importance as it managed a close (11327) above 200DMA (11164). On the weekly charts the Sensex has formed a big white body candle almost a closing Marubuzo.

There is a long lower shadow which indicates buying pressure at lower levels.Sensex has managed a close above the 200DMA for the first time since last May 2008, and hence it qualifies as a strong breakout.The Sensex managed to bounce from 10715-10764 on three consecutive days successfully i.e. on Tuesday, Wednesday and Thursday. Also the previous week’s low from where the Sensex had bounced is also in the same vicinity at 10719. Hence the support zone around 10715-10764 assumes great significance.

The upward rally will now continue as long as Sensex manages to hold 10715 levels.Sensex has managed to give up bullish Flag breakout and the targets for which are 11911-12536.If we consider the immediate fall from 15579 to 7697 then the correction levels are 10708-11638-12521. But, if we are considering the entire fall from 21206-7697 then the correction levels gets stretched up to 12857-14452-15965.

The Trendline Resistance is at 11580 and Trendline Support is at 10613-10460.

For the week ahead the Resistance is at 11580-11911-12472. Support is at 11164-10715-10460.

NIFTY.

Nifty opened the week at 3384, made a high of 3491, low of 3296, and closed on Thursday at 3480. Thus the weekly gain was 96 points.Nifty has formed a bullish white candle on the daily charts on Friday. It has managed to close above the 200DMA on two consecutive days i.e. Thursday and Friday. Nifty has formed big white body candle on weekly charts.

The long lower shadow shows buying pressure from lower levels.Nifty has managed a close above the 200DMA for the first time since last May 2008, and hence it qualifies as a strong breakout.The Nifty managed to bounce from 3296-3310 on three consecutive days successfully i.e. on Tuesday, Wednesday and Thursday. Also the previous week’s low from where the Nifty had bounced is also in the same vicinity at 3311. Hence the support zone around 3296-3310 assumes great significance.

The upward rally will now continue as long as Nifty manages to hold 3296 levels.Nifty has managed to give up bullish Flag breakout and the targets for which are 3658-3842.If we consider the immediate fall from 4649 to 2252 then the correction levels are 3167-3450-3719. But, if we are considering the entire fall from 6357-2252 then the correction levels gets stretched up to 3820-4305-4764.

The Nifty has Trendline Support at 3301-3132.

For the week ahead, the Resistance is at 3648-3715-3820. Support is at 3389-3296-3132. 

INDEX LEVELS:

 S3S2S1CLOSER1R2R3
Nifty3132329633893480364837153820
Sensex10460107151116411329115801191112472

Strategy corner:

We recommend a Bull Call Spread for Rel Cap Closed at 557. Buy 560 CA at Rs. 21 and Sell 600 CA at Rs. 9. Total cost of constructing the Spread is Rs 12 (Rs 6624), which will be the maximum loss and maximum profit will be Rs 28 (Rs 15456).

LAST WEEK’S RECOMMENDATIONS:

Last week all the three pairs did fairly well. Tata Steel and Oracle managed to reach the Sell and Buy targets respectively.

Pair 1.

  • Sell Tata Steel 258 Tgt was 247 Reached 236.
  • Buy HDFC 1799 Tgt was 1871 Reached 1832.

Pair 2.

  • Sell Tata Motors 235 Tgt was 221 Reached 228.
  • Buy Oracle 866 Tgt was 912 Reached 929.

Pair 3.

  • Sell JSW Steel 315 Tgt was 301 Reached 306.
  • Buy Indian Bank 115 Tgt was 121 Reached 119.

THIS WEEK’S RECOMMENDATIONS:

STOCKCMPSLTGT - 1TGT -2
 BuyRel. Capital557535596626
BuyGrasim1802174818671932
 BuyRIIL786759834885
BuyKFA41394447
 BuyRCOM232216245255
BuyLIC Hsg.344330359378

WATCH OUT FOR:

REL CAPITAL:  557 SL 535 TGT 596-626-654.

Trendline Breakout in Weekly Chart.

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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