NEWSLETTER

Sensex Technical View :

Sensex has done the minimum bounce target of 9700. Now as was listed yesterday in the few points that a quick sharp pullback can go to 9700 minimum and 10500-10700 in short term in a more sharper one.

Fibonacci Retracements for the fall are placed at 9550/10700 /11650 /12500 which correspond to 23.6/38.2/50/61.8 retracements.

Even if markets have to reach a level of 11650 and 12500 it may not be instant and ideally in the short term buying done at lower levels should be booked partially or fully ( stock specific ) around the 10500-10700 zone and again wait for further opportunities.

A new small gap up has been created around 9300 which would be the next nearest support in coming days. So wait and watch once we reach closer to 10500 .

Stocks to watchout for :

Some of the stocks which look set for a strong counter bounce back after steep falls.

Sugar stocks like Bajaj Hind , Renuka

DLF , Reliance Infra

IDEA, Suzlon

In the stocks suggested BOI , Glenmark investors can take partial profits in 20 % gains. Some of the strong bounce backs were seen in hindalco , ril , tata steel as mentioned, hcc and lic housing left.

Reliance Inds resistance would be seen around the 1420 and 1500 mark where one can book profits if bought on dips.

Market Observations and Thoughts :

RBI has cut crr , repo and slr which is a lot of steps taken quickly to ease the liquidity concerns in the money markets. The steps were needed for cooling of the money market rates which had again crossed 20 %. Although the swift and extent of the move will definitely give a boost to Sensex and Nifty in extreme short term. The huge covering in the end in many large caps and sustaining above 9700-9800 seemed like people were expecting RBI action as the money market concern were on.

Buy on Rumours Sell on News the standard statement continues to remain the simplest strategy. So at least buying on major gap ups or announcement based moves may not be highly profitable as risk would turn higher so wait and watch around the 10500 zone.

An interesting observation during the day was JSW steel the difference between BSE and NSE prices and then circuit on BSE and running on NSE whereas its in FNO too. Was it weird no idea or some mistake by the exchanges ??

Nifty will show some strength on opening based on good news over the weekend.

now nifty sustaining above 3046, could have the strenght to go up to 32xx levels in this week.

i feel 3255 will be an important level to watch out for on the upside.

however if trades below 3046, may get weak, as dow ( US Markets) is also at resistence levels.

still positional trade has to be avoided for the week, and for intra levels be in the chat room.

Posted below is the daily chart of NIFTY spot. Corrective upmove in progress from the bottom of around 2200. This is possibly a good corrective/pullback rally. On charts, as of now it looks like it will hit 3000 - 3050 levels. (watch out for some major res around 3030-3040 area). Stay long until this rally lasts.

(1) Nifty Chart For 03/11/2008 ::

from MY CHARTS FOR INDIAN STOCK MARKET by MY CHART

Nifty :: As we say in last Monday post Nifty bounce beck from extremely oversold level, no dough about shot term up move, Still Nifty in mid term corrective mode and Facing too may strong resistance near 3100 level, that’s why avoid buying at higher level. As per short term up move our strategy for 3^rd Nov. buys on deep sell at high. Watch strong resistance for up move 3050/3060 & 3115/3135.. Supports at 2845/2760/2700/2670..

(As per Our CRB index post, CRB index bounce beck exactly from our support level $250, in coming week watch hard hitter metal stock carefully for short term up move)

Attached above is a tentative 5 wave count from may 2003 to january 2008 & maybe corrective WAVE A at 2252. The markets can experience a corrective 3 wave upmove to form WAVE B,(B1,B2,B3 are the probable targets ).The corrective 1st wave has started most likely from 2252 and as said before 3050-3150 seems to be the target right now..After completion of the WAVE B, the markets will resume their downwards journey to make the final WAVE C. The normal time taken for the upmove is anything between 6-10 weeks app. (Lets see where the correction of this 1st wave up takes us down to & from wherewe correct , as at this stage generally external help pours in also , which propels markets up along with short squeeze..)

Such panic bottoms are a normally traps for the baby bears (SELL ON RISE TYPE )who keep shorting the rise thinking the down waves will continue , whereas the smart bears have already turned a bit bullish..The technicals for the week and month were discussed below..Hope this helps all who are confused and asking all experts ,as to how to trade in the coming days and weeks..enjoy the ride up ..cheers

BRAVEHEARTS WHO BOUGHT STOCKS CAN KEEP BOOKING.

3NOVBUY ROLTA ABOVE 180 TGT 193>203 STOPLOSS175

BUY JINDAL STEEL ABOVE 803 TGT 854>923 STOPLOSS 775

NIFTY WEEKLY strong resistances zone 3354

Last week nifty gains 11.67% and break the momentum of 5 week down side and close with hand some gains. For coming session we can witness more upside towards 3140- 3296 on the lower side2686 will act support zone .On the other side we can see some profit booking near 3254- 3400 zone For this week closing above 2910 nifty can test 3120-3237 on the lower side closing below 2680 it can test 2569-2451 levels.

The Indian market opened on handsome gains and close in green zone. For the coming session we can witness more upside towards 3000-3100 on the lower side 2728 will act as support zone.

The range for NF in october was very high, 4061-2228, which basically did unprecedented damage & carnage , not seen in decades in India or anywhere in world markets..Ocober ended with some respite..How will November pan out??????..NOVEMBER ZONE to watchout for i feel is NF 3050, Above that if we get a few closes , the BULLS can take over , below that well , BEARS back again at their job..The range could be large again as of now between 2100-3800. For this WEEK watch 3150 for RESISTANCE & 2670-80 levels for support, below which, support will be at 2500 area ..As selling is overdone, and weak hands are already out or completely desimated, strong hands should lend support at everydip and carry the market further up in the next month or so.At every level participants still stuck in positions will keep getting out or deleveraging their positions, thereby keeping the markets under pressure for some time to come. A good stratergy could be PLAY the SELL CARD when markets make lower highs, and the BUY CARD when markets make higher lows with strict stop losses in place.. Basically meaning become traders for sometime. Wishing all of you a happy November Month,,,,,,cheers.

October 08 has been the worst month for equities all over the world. They say this is a once in century event where financial restructuring is taking place. FIIs have been selling relentlessly in our markets. Since we lack the depth to absorb that selling prices have corrected sharply. Sellers have to face a nightmare in this scenario. They are getting lower prices during this hasty exit and weakness of Indian rupee against US dollar has reduced their returns. Even then they are selling. What does that indicate? It means sellers need cash desperately.

What should we do? We stay calm and collect stocks when they are cheap. We must also stop evaluating our portfolio based on last traded prices. If we are not in the markets to sell stocks then the last traded price on the screen has no meaning for us. Indian equities are shifting into Indian hands slowly. This is a good sign because we are not as volatile as hedge funds. Our government may take steps to allow pension funds to invest in stocks. We may have creation of sovereign wealth fund funded through our forex reserves to support the markets. We may have additional incentives for investing in equities.

I have been always advocating a nationwide approach to investor education. That must be one of the national priorities. Plus there should be a curb on anybody and everybody giving their 'expert' opinion on TV channels creating a fear psychosis. Fear can be induced very easily. Short sellers make merry in the presence of fear. Most retail investors are not savvy traders. They are not equipped to handle bear phases of markets. What is important to note is that this phase would also end. Many people asked me as to when this would end. If anybody had that answer then he would be a millionaire overnight. He would not share it with others anyway. So why ask?

Buy good businesses that can withstand this storm. We would come out unscathed.

Bull Market and Bear Market Primary Trend Cycles

from Indian Stock Market Calls by rajandran@gmail.com (Rajandran)

Simply Applied the concept of Bull and Bear Market Primary trend cycles what i learned from incredible charts. Check it
out.
Bull-Bear Market Primary Trend Cycle


Image Extracted from Incredible Charts


Nifty Four Years Weekly Charts



3200 where 20 day EMA resistance comes as per daily charts

But 3500-3600 is the region where 20 Week EMA resistance is
expected to come.Currently it is above 3800+....

Chance of Nifty to merge the 20week EMA... which is expected
to meet near 3500-3600 region over the time


Fibonacci Weekly Charts for Nifty as on 26th OCT 2008

This is nifty weekly chart 2950 was the last hope which is .618% but that is also broken. Now next level is 2458
and if broken then 2024 is the last level.


As per super cycle nifty is making wave 2 and then .786 is the target.
so u can understand what will be market conditions

The 3, 6 and 12 month rate of change are all in sell mode and price lows are confirmed by momentum lows. See the blue box on the above chart.

*******Technicals
Nifty is in downtrend and is correcting upwards.
Nifty has corrected 30% from bottom of 2253 so it seems that intermediate bottom has formed at 2253.

Now higher top and bottom is required to claim for uptrend.
******Trading system for NIFTY
Ø 3d LMA- 2618, 3d HMA- 2800.
3d SMA- 2756, 8d SMA- 2827, 34d SMA- 3575.
Ø ~BIAS – positive, MOMENTUM – negative, TREND – negative.
Ø STRATEGY-
*New call- No new call generated.
*Open position- no open position.
Ø STOPLOSS-
*for shorts--- stopped out.
*for longs---2618.

***Fund flow (October 29)
~FIIs net in Index fut. + 1341 cr, FIIs net in Stock Fut. + 606 cr
~FIIs in Cash Market – 1075 cr, Mut Funds in Cash Market + 620 cr
***total fund flow + 1492 cr today & nifty was up by 12 points.
*** Net fund flow of - 9863 cr in October series.

***Past fund flow

Fund flow of -8071 cr in June series (-520), +6474 cr in July series (+18), -6641 cr in August series (-119), -6903 cr in September series (-104), - 9863 cr in October series (-1410).

02 Nov 08: The moot question now is -- Will we continue on this so called rally or will we visit the lows again. Firstly - is this a rally to begin with? A hammer followed by a white candle, one doji and another white candle. All the same this is the best run for three continuous days that we have had in last 3 months. If we take a period of last six months then we had a better run than this on two occasions. First on starting on Jul 17th and second on Jul 30th. In the first run we ran up from 3800 odd levels to 4500 levels - during the second run we ran up from 4200 levels to 4650 levels. Infact some may be inclined to classify the two weeks period as one run with a minor three-four day aberration. The run up during that time was 700 points on nifty, or 850 odd points if we take the period as one run up. Last time the fall was not as vicious. This time the fall has been much more hurting so frankly to make a recovery to levels above 800-900 points run up is actually possible. So if we take the bottom at 2250 - then we should see a run up anything upto 3200 to 3500 before the serious selling again sets in. See my reading is hypothetical. Jaggu says that the run up should see a height of 3500 - actually he is much more technical/better in his reading of the markets. So frankly - I will just trust him. (You can click his name to reach his blog) So if I was to go short - I will wait for some time and not be in a hurry. Couple this with the plethora of fire fighting steps being taken around the world will help this recovery to remain so - a recovery till some more time. See there are twists and turns at every moment so do take everything I try to put across with a pinch of salt.

Well to the world markets now. Asia was all negative - actually they had already run up quite a bit as we closed for the Dipawali. So some retracement was to be accepted. Nikkei closed 5.01% down, Hang Seng 2.52% down and Strait Times down 0.43%. Europe was all green - and mind you this was after an across the board red/flat opening. FTSE finally closed 2% up, Dax 2.44% up and Cac 2.33%. US too opened flat to red and then recovered to highs by just after mid session, however by the close they were on an average 1.5% green only. All the same - they were all green. Dow up 1.57%, Nasdaq 1.32% and S&P 1.54% up. Well except for our markets the general track record of the markets is that the month of sep is generally the worst, this time Oct would have taken its place had it not been the retracement during the last few days.

On our candles the last candle has been a tall white one with a small wick on top. The candles are heading from the bottom of the Bollinger band to somewhere just below the middle. The Bands too have contracted a bit. 5EMA still is trailing below the 20 EMA but distance for once is reducing. The volumes were good. The divergence in MACD too has reduced and there is an attempt by the red line to move above the blue line. Mass index is below the 26 marker. RSI has come out of oversold zone and gives a bullish signal. On the slow stochastic the red line is above the blue line and is past the 50 marker and seems good. The force with which TRIX was looking down has slowed a bit and seems to be slowing in its fall down. On the momentum indicator the extreme value that we have got three days back (thousand or more) - we have got on only two occasions in past three years - the first one being during Jan this year. On MACD this is the extreme position seen for the first time in last 3 years. The same is the story with TRIX - it has gone below the 0.99 point only this lime in last three years. So we are in the extremes - and the negativity created is phenomenal. The bounce back too may be as bad - trapping a lot of people who went short at low levels or maybe who will short at these levels.

On the pivots for nifty
R3 3146
R2 3059
R1 2972
Pivot 2834
S1 2747
S2 2609
S3 2522

Projected high range 2903 to 3015 and low range from 2826 to 2714
Fib Projected high 2982
Fib projected low 2638

The Moving Average Convergence-Divergence (MACD) is a timing model, which was invented during the late 1970s by Gerald Appel, has become one of the most popular of technical tools, used by short- and longer-term investors in the stock, bond, and other investment markets. It is a featured indicator on virtually every computer-based technical trading program and trading platform. MACD is an indicator for all seasons. Many of us use MACD for simple crossovers or looking for Divergences but there are certain very significant supplementary additions to the basic rules relating to MACD buy/sell signals which Gerald Appel describes in his book Technical Analysis: Power Tools For Active Investors. These are as following:

• Buy signals are much more reliable when the MACD has crossed from above to below 0 at some time since the most recent sell signal. The MACD does not have to be below 0 at the time of the buy signal, but it should have been below 0 at some time since the start of the recent decline.

• Sell signals are more reliable when the MACD has crossed from below to above 0 at some time since the most recent buy signal. The MACD does not have to be above 0 at the time of the sell signal, but it should have been above 0 at some time since the start of the most recent advance.

• During very strong market periods, usually during the early and best stages of bull markets, the MACD will retreat during market reactions to a level just above 0. In this case, you can shade the previous rules a bit as you might if the MACD tops out just below 0 during a bear market or severe intermediate decline. Most often, however, the 0 crossing condition should be respected.

A very important rule, if there are no divergences – means that MACD lines and Price lines are moving in conjunction and trends of the markets are favorable with Price rising above its MA you can ignore the first sell signal generated by the MACD. YOU SHOULD HOWEVER TAKE THE SECOND SELL SIGNAL!!!

The above rules help you in setting procedures by which you can buy weakness and sell strength rather than buying and selling every change in minor trend and this also reduces the frequency of trading.

In addition to above Gerald Appel also advocates the following:

• You should maintain at least two MACD combinations: a faster one for buying and a slower one for selling.

• When market trends are very positive, buy very fast and sell very slow. You can employ the 6–19 combination for buying, or you can employ the somewhat more reliable 12–26 combination. The 19- to 39-day combination is used for selling.

• When market trends are neutral to somewhat positive, buy fast and sell slow. Use the 12–26 combination for buying. Use the 19–39 combination for selling.

• When market trends are clearly negative, buy fast and sell fast. You can use the 12–26 MACD combination for both buying and selling, in which case you will sometimes be selling before the slower-moving 19- to 39-day MACD has crossed from below to above 0. However, unless a stop-out takes place, the 12–26 MACD lines should generally rise above 0 as a precondition for a sell.

I am back again with a post on State Bank of India(SBI):).
Banks were the last ones to fall in this catastrophic fall,And they
just added fuel to the fire momentum to the fall.

Coming back to SBI.You may be interested in my previous SBI post
SBI ANALYSIS.
The anticipated fall came in SBI,But now since the fall was fast and deeper
the local wave counts will not work,Will have to see a bigger picture.
From january 2008 high SBI waves are still not very clear,Though this could be
5th down.
Attached SBI chart Shows a nice distribution near 1400-1600.To know more about
Distribution read High volume not bullish always.
Now the main thing
The daily chart of SBI shows a huge Head & shoulder chart pattern.To read more about
chart patterns Chart patterns.
So if SBI trades below 1000 for 2,3 days its going quite low 700-600 kind.
So the main level here to look for would be 1000.
I had a nice strategy for the last few days long nifty short SBI.

The 3 major downwards moves came from 4649-4303-3649, i have taken the retracement from 2252 for all these 3 levels..The upmove resisitance comes in the shape of clusters here for the move up, CLUSTERS are at app. 2800-3050-3200. October is coming to an end and i dont think we will make any more new lows this month. Bulls have to forget the brutal hammering they got at the hands of the bears last month and keep taking the market slowly away from 2252 to make a semblence of sanity for times ahead. Around 2524 ( monday close ) levels will hold a key area of supports for times to come . Let us see how the footprints are made in the next week or so, to see the trade ahead for the next 2-3 months..Markets i feel will be traders paradise for some time to come..People who had bought the panic dips of friday and monday should book profit and buy again in dips . Trade accordingly , cheers.