As we wait for the bail out to work in US the oil has touched the roof once again by jumping phenomenal 25$. The reason given is that the "Oil prices have shot up in view of the US government's bailout anxiety and a weak dollar. 25$ jump on anxiety? I thought in past 16 years of keeping in touch with the markets I had seen it all. With the crude jumping to these heights - you would actually be a fool to expect that we will not hit the lower cct on our exchange one of these days. Why do I have a feeling that there are people who knew about it. I was told by someone about the date also and there -- boom -- it does it on the specified day. Anyway there is really nothing anyone can do about it expect to wait and see. Targets on Nifty and Sensex -- don't you dare ask me - the unknown benificiary of the advance news about the jump in crude probably kept this info to himself.
I am not a joker anymore in writing this blog - I am a bloody Ass trying to pin the markets. But you know what don't get it wrong - I do not give up and will continue doing what I feel like doing and this blog will survive provided I have time to update it. Well to the summary now. The Asia closed mixed with both the red and green colours - Nikkei up 1.42%, Hange Seng up 1.58% and Strait Times down 0.58%. We had Sensex closing at zero line (0) and nift ywas down by 22.2 points (0.52%). The world markets too are in dumps With Europe FTSE closing 1.41% down, Dax down by 1.32% and CAC down by 2.34%. US is a story by itself by being at the moment on an average 3.5% down. Dow down 3.28%, Nasdaq dwon 3.94% and S&P down 3.84%. The main reason being quoted is the surge of the Oil by 25$ - crazy is the word.
On the Candles we have not done well - infact if at all a reversal to two days of upswing might be on the cards. The black candle was not backed by volumes though. So here we stall in the middle of the bollinger Bands once again with all the possibility to go down. The 5 EMA line remains below 20 EMA line. The negative divergence on MACD remaining and giving negative indications. RSI turns bearish, Mass Index is above 26 and fast climbing into the reversal zone - if it does not turn back now - then by tomorrow it is likely to be too late by anycase. We may be well firmly into a bearsih grip by then. It is only on Slow Stochastic that the red line is above the blue line and seems fine. But by itself I will not give it too much weightage. TRIX - my so far the beloved leading indicator says - bearish times ahead. So as far as I am concerned - till we now go well into the oversold territory - do not expect too much from the markets.
It is 0200 (Yeah it is night 2 'O' Clock) and I am waiting to go flying next . I might not have time to update again before the markets open. So please pardon me. Lucky are those who are sitting on shorts.
After a fascinating run up in the Nifty in the last two days, it sure had some breath catching to do. Markets are half human, which means that if we get exhausted after a brisk run, so do the markets. And the run up seen in the last two days was much more than what we can call a ‘brisk run’. So, obviously, the markets needed some rest and they got it today. The Nifty managed to go about 50 points up in the first 30 minutes of the day and made a high of 4303 (as compared to my analysis yesterday that it had resistance at 4300). Soon enough, it started coming down and finally ended the day with a loss of 22 points while the BSE Sensex closed 47 points down. As of now, European markets closed in the red with prices paring upto 1.5% while the Dow Jones is more than 2% down. Crude has shot up to almost $128, a jump of $25 in a day. So, all international cues, at the time of writing this post, are negative.
Seen above is the 30 minutes chart of the Nifty. We shall discuss island reversal techniques here. The Nifty on Monday last (15th Sep 2008) opened with a huge negative gap when Delhi was rocked by serial bomb blasts on Saturday, 13th Sep 2008, and Lehman Brothers in the USA declared bankruptcy. Three days later, on 18th Sep 2008, the markets opened with another big downward gap but soon recovered and the very next day it opened with a big positive gap after the US government bailed out insurance giant AIG by granting them a loan of $85 billion in return for 80% stake in the company. These gaps created a pattern known as an island reversal pattern. In such a pattern the prices open with a downward/upward gap, trade in a narrow range for sometime, and then open with another gap on the opposite side thus creating a candle or a cluster of candles to be separated from the rest of the candles. A cluster at the bottom is a bullish sign while a cluster on the top is a bearish sign. It is usually said that in case of an island reversal, chances are reasonably high that prices would return to the point from where the previous trend started. In this case the last downtrend started from 4540, so the charts suggest a rally to that level. More on island reversals can be read on Bedford and Associates and Incredible Charts. There are lot of other sites with information on island reversals. The chart above has today’s price candles inside a square which has been zoomed into and that shows another candle today which is separated from the rest of the prices, another short term bullish sign. Needless to say that an island cluster holds more significance and is more reliable than a single candle formed as an island.
Seen above is the same 30 minutes chart of Nifty but with another set of information. We are trying to use some Fibonacci rules on this chart. The prices started coming down from a high of 4538 on 8th Sep 2008 and touched a low of 3800 on 18th Sep 2008. Then the trend reversed and the prices rallied and retraced almost 61.8% in a matter of two days as shown by the Fibonacci retracement levels in dark green and in large brown numbers. A small rest is being taken by the Nifty currently. There are two possibilities. If we are in a bear market, we could see all these gains wiped out and should see prices coming below 3800. But if we are in a bull market then the most reasonable ‘rest’ that we can expect is a retracement of 23.6% or 38.2% of the rise seen in the last two days. As seen by the Fibonacci retracement levels in light green, a 23.6% retracement should see prices down to 4190 levels while a 38.2% retracement would bring us down to 4115. As already mentioned, international cues are all negative at the moment.
Market may open down. Market may up between 11.15 and 11.33 Market may steady or up side between 13.09 and 13.39. Market may close at up to previous closing.
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Opening Bell Call
Buy
RELIANCE - Reliance Industries Ltd
HDFC - Housing Development Finance Corporation Ltd.
ABB - ABB - ABB Limited
CIPLA - Cipla Ltd
RPL - Reliance Petroleum Limited
On 21st September 2008 - The BSE Sensex closed at 13,994 (down 47 points) while the NSE Nifty closed at 4,223 (down 22 points).
Opening Bell Call
Sell
BAJAJHIND - Bajaj Hindusthan Ltd
LT -Larsen & Toubro Limited
RPOWER - Reliance Power Limited
PUNJLLOYD - Punj Lloyd Limited
BOMDYEING - Bombay Dyeing & Mfg Co. Ltd
Technical Analysis for 22nd September 2008
BSE-SENSEX - Major Support - 14042, 13955, 13869, 13806, 13744, 13595, 13446, 13297
BSE-SENSEX - Major Resistance - 14104, 14167, 14253, 14340, 14489, 14638, 14787, 14936
NSE-NIFTY - Major Support - 4242, 4212, 4182, 4162, 4141, 4091, 4040, 3990
NSE-NIFTY - Major Resistance - 4263, 4283, 4313, 4343, 4394, 4444, 4495, 4545
Sensex Technical View :
Some sessions had shown a chart and video about the Head and Shoulders pattern at 14100 which was a decisive reason for us to exit at 14100-14000 and start buying at 13100. The second target of 12500 was almost achieved . If we see again the neckline comes to around 14200 odd zone which is yet another resistance above which we should see sustained closing in next few weeks to negate the pattern.
Also it was mentioned to keep a watch on Dollex charts and could see some positive indications and if we see technically all indicators gave a positive divergence which would generally lead to a strong pullback and was one of the reasons to start buying at 13100 :).
Gap Support placed at 13300 zone is a level to watch on dips. As suggested booking profits at 14200 was the idea and further on trailing stops be kept or look to re-enter on stock specific dips.
Market Observations and Thoughts :
Rumours are the best things to avoid or one should have a position before the supporting rumour. Just a few days back ICICI was going bankrupt and it moved up 100 bucks :) . Was surprised by a joke saying upper ckt on Monday :) ... There are lots of rumours but one should have better reasons to take a trade :) or investment.
Crude :
Crude as expected is giving a pullback much stronger then 110 and technically wont expect it to sustain above 120 zone after a few sessions as expiry squeeze seen and not able to gauge wat is the exact price !!!! . Again a dip to from this is possible and can get rangebound in coming days.
Gold :
After quite some time gold has again become highly volatile with varied expectations from the US bailout scene. Technically we saw a good pullback once from 890 and later from 918. It would be very difficult to cross the 930-950 range in any case so a good short chance can come around the zone of 930s.
Review :
Some of the investment bets advised to clients which gave quick returns and were gradually booked and trailed . Good returns of 10-25 % .
Reliance Inds - 1830 to 1980/2100 .
Reliance Capital - 1030 to 1180/1280
Rolta - 240 to 290.
Sesa Goa - 102 to 115/123 . Quick move :)
GTL infra - 33-34 to 38 .
Also holding on partially to IFCI, IDFC , GTl infra some others and waiting to add at lower levels.
Stocks to watchout for :
Brushman Inds and Bang overseas saw good intra-day pull up .
Investors can look to buy Sugar stocks on further dips as they have again corrected to good levels with a medium to long term view . Best bets - Shree Renuka Sugars , Balrampur Chini , Sakthi Sugars.
Nifty may open in between 4150-4175, and sustaining below 4188, may fall to 4129 for the day.
4129 is the support level where we need to keep our eyes on, and breaking it, nxt tgt will be 4068.
Now for short term, or positional traders, keep a watch on 4068, till it is broken, some upside may come in nifty in cmng days, but if breaks 4068, nifty will make new low for the year.
Crude : $113/Barrel
If crude is able to trade above 111.77 where the 200day Moving average comes exactly. Then the following targets are possible $118, $125 with is the fibonnaci
retracements of 50% and 60% respectively taken between the recent high $147 and the
most recent low $90 as shown in the picture
retracements of 50% and 60% respectively taken between the recent high $147 and the
most recent low $90 as shown in the picture
Nifty CMP : 4223
May be a Gap down opening. Because Nifty Hourly Charts showing Overbought and falling RSI and Stocastic Levelsmorning thoughts
The markets remained sluggish , volatile and saw wild swings as expected .
On the upper side the indices are still to face resistance but being in f/ o expiry week , its likely to be in a trading range.
Structurally the markets looks ok but some profit booking and sluggishness cant be ruled out.
The markets will again see highest volatility with pre sun outage tomorrow.
However the U.S markets are in a grip of a structural bear market and the current levels of Dow jones looks quite high and will see much lower levels in days to come.
Along with the U.S markets the European markets have also violated the trendline and are in a simulataneous bear grip and will see much lower levels , futse , cac , dax – all are headed to much lower levels.
In recent times foreign indices have become a hype and people look too much at them and decide their course of trading- investing , instead of looking at their screen and risk aversion and get trapped and confused.
If American and European markets are in bear market , which they certainly are – then who will benefit , only asia will benefit – they have no option other then coming to asia and putting their money here which they get at negligible interest…
If U.S and European markets rise , then who will look at Asia ---?
Moreover crude looks in a bear trend too – and any rise is seeing as a shorting opportunity.
Gold and silver as an asset class are still best for investment , but will see lower levels .
So following all this where are the asian markets headed..
Nikkei has already seen their best times during early 90’s and that levels are unprecedented again , hangseng is no indicator for any micro and macro economy , Taiwan is in bear grip and will see much lower levels , kospi , strait times are still growing.
The most talked about destination is shangai – china and sensex – India …the s’2 factor.
Will this economy and indices leave behind everyone or will follow suit….?
The supports for the nifty is at 4150 levels and resistance at 4400 levels
The supports for the sensex is at 13800 levels and resistance at 14700 levels
Stocks to watch
Bharti airtel – looks good at declines
Hpcl looks weak
Nifty :: And As we say in yesterday post once again momentum turn down from higher level and break important channel support 4234.. As per wave count may be in Nifty and Sensex primary C of b wave start.. Watch this corrective down move support 4111/4052/3990.. After Sharpe decline we see some consolidation at lower level and again move up in October moth if hold last and final support 3900.. Till then our strategy for 23rd Sep. below 4236 Sell at high (S.L 4300) Buy on deep (S.L 4052).. Resistance for up move at 4236/4242/4277/4300/4327.. Supports at 4200/4172/4150/ 4111/4052..
The Indian market opened on positive note not able to sustain at higher levels saw some profit booking at the last hour of session. For the coming 4191-4144 key levels for bounces. On the other side 4263-4280 will act as resistances .
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