NEWSLETTER

The bear fallacies and charts have taken the traders by utter surprise. They are not ready to believe on the vital information shared in this forum. For the first time after Jan 2008 bulls had a fool proof plan to trap bears. First they bought 2200 put in early FEB for March month which created feel good factor in bears which kept on shorting Nifty till 2500.

Then they sold 3 mn put of 2700 strike rate reversing the trade of 2200 and going long all out. Then they wrote 2800 and 2900 calls which were clear indication of Nifty crossing 2900 which my deal friends did not agree and remained short. And market did not give chance to cut their shorts. Now 3000 could happen very early in the morning and if sustains then 3100 is not ruled out.

George Soros which had gone short in Nifty at 6200 the first fund to short market has started going long now and believe that market will test 4200 in next 3 months. Whether this will happen or not only time will tell us because I have personal belief of market could test 3700 if it crosses 2985 for 3 days and close above that level.

Whenever markets favour bulls CNI calls becomes hot cakes. We produced calls like Essar Oil, Tisco, J P, HDIL, Ranbaxy, Rel Capital, RIL and Nifty which all were smart movers. In fact, if RIL remains above 1425 even tomorrow then for sure it will touch 1800 and 2000 which will help Sensex to gain further grounds.

It seems the Akruti short covering is not yet over. We will have to keep close eye on Akruti till Thursday. Damage is already done to the said scrip as it has gone out of F and O but will the operators lose this golden opportunity to encash the bear cheque….? The maximum longs were created at 600 to 700 range and cmp of Rs 1700 gives credit of over 150 by way mark to market and if the stock price rises further then the weakness of the system I e lack of physical settlement could come handy to the bulls driving the stock.

Market sources are betting on Birla’s exit in Idea at Rs 65 which is not only driving Idea price but also Hindalco price as Hindalco hold huge chunk of Idea. This will immediately address the Hindalco’s cash problem. However, do not forget to exit from Hindalco on news as Hindalco has already run by more than 30% on this expected news.

There is strong recovery is tea sector. Tata tea is also considering merger of Everest Marketing into Tata Tea. This could create some spark in Tata Tea. A leading bear has cut all their short and started building long in Tisco, Telco, Jet and Bombay Dyeing. Telco we were the first to claim that it will get close to Rs 3500 crs ; street did not agree but now turning into realty. B Dyeing some shorts are created which seems a tonic for the bulls and above 149 the technical break out this stock will become a magic stock. We do not change our insight and belief frequently.

Ranbaxy and Tisco are testimony for the same. Now you can watch what happens in HCC, Suzlon and Moser Baer where we have long calls. Moser baer recently appointed Warbhug nominee on the board. I think this is enough hint.

At the end of the day, can we say that the bear rally could be the onset of a new bull run which could start from Sept 09….? All the bull runs have started with bear rallies. To that extent one can’t ignore what Mark Mobious says.

Sensex : (9424.02) Today Sensex face resistance at 9600, if cross 9600 then blast up to 9772 and 9946. Sensex find support at 9282, if 9282 break then fall up to 9108 and 9000.

Nifty : (2939.90) Today Nifty face resistance at 2970 and 2991, if cross 2991 then goes up to 3043 and 3096. Nifty find support at 2898, if 2898 break then fall up to 2846 and 2807.

Nifty March Futures closed at 2938.35 (Rs 1.55 discount) on Monday with a turnover of Rs 10217.33 crores, sheds 2676200 shares (-10.99%) in open interest bringing down the open interest to 21673300 shares.
For Nifty Traders keep a eye on 2970 and 2991 level, market is likely to open gap up. If 2970 and 2991 level cross in the morning easily then take a fresh long call for a target of 3050 and 3100 , keep a very tight stop loss at 2970 .

(Inder Bhatia)

HOT LIC HOUS ------

The Indian market opened on bang above 2830 levels our breakout level and close with huge gains. For coming session we are heading near 2967-2977 strong resistances levels .Nifty are trading in over bought zone on hourly charts. On the lower side 2911-2872 will act as support zone .

Nifty Bhaloo)

(Ilango)

Nifty breaks past the "2815" and also the earlier strong resistance zone of "2860" after showing a "Buy Signal" in the weekly.
Market Internals as posted in SS's blog-Relative Strength has alerted on the improving internals of the Nifty Fifty. And that is worth a million to keep an eye on..Thank You SS...
Market never broke the 2-day swing low nor closed below 5 day avg/ema since its low of 2539. The previous high of "2970" and another channel resistance at "3035" are the levels to look out for in the coming days.
Ride this trend till a negative divergence develops or a 2-day swing reversal.

MY CHART

Nifty :: Unbelievable extended up move due to global market news.. May be Nifty enter in our most probably target on 24^th once break 2981.. In such kind of news driven market avoid buying at high in corrective up move.. Nifty and all world indices enter in extreme overbought zone .. Watch first strong resistance 2970 to 2981 above it next strong resistance 3035/3110/3118/3150.. Our strategy for 24^th buy on deep (S.L 2840) Sell at high (S.L 3150).. Supports at 2877/2840/2800..

MY CHART

Nifty :: Very difficult to count Elliott Wave in side way flat momentum.. Here we try to plot two alternate count of last leg in Nifty chart..

(1) As far as stay above 2540 Nifty move up as Primary Double A-B-C of B running with intermediate flat a-b-c of c Maximum target of c in between 3050 to 3550...Most probably target zone of c in between 3050 to 3250..

OR

(2) Intermediate ZigZag a-b-c of b still running..Maximum target of b in between 2100 to 2600 .. Most probably target zone of b in between 2400 to 2600..

For 23^rd March

Once again an insider day with low volume.. Nifty made double bottom near 2771...Now 2771 is works as most imp level below it watch strong support 2723/2690 /2654.. Our strategy for 23^rd March up to 2822 sell at high (S.L 2841) buy on deep (S.L 2723).. Resistance for up move at 2822/2836/2870/2882.. Supports at 2771/2752/2723/ 2690/2654…

S S Cheema

This is one photograph that I clicked today during Surya Kiran’s display in Nashik today morning. I will be uploading some more photographs in the Army Aviation site later. It reminded my days of flying fixed wings during my basic training and during the Instructor’s course.

The markets have surged forward on boosters. It did not give a damn to being over bought or all the tons of indicators. In any case other than a handful of indicators that lead or the oscillators showing overbought condition – all the rest are trailing and have turned around to say – we are bullish. I am a man with my feet in two boats – as usually all analysts – or those who call themselves analysts are. Remember my past few posts and in particular the one written on 15 March – I quote “The highest expected is 3800 on Nifty – and please for GOD’s sake do not brush this away – it has a substance. The second level that is being talked about is 3400 – and finally the last level that is being talked about is the 2900 level.” My! My! if that call of mine is getting so close to be true then what bugs me? What makes me think that I am on two boats? While yes it is true that we are beating one resistance after another to climb higher – I am very sure in my mind that there have to be times and levels where we stop/think/consolidate as we move on. My biggest worry stems from the fact that if we are still in bear market and this is indeed a bear rally then we are in for a trouble. Such bursts of euphoria generally tend to die down extremely harshly, especially if the rate of going up is 200-300 points on nifty every week. So though I did say that we can have a surprise rally in our hands – the present upswing can be a dangerous time to lay bets. All the same – the markets do know what they are doing and I am also sure I will tread this path with extreme caution. Jaggu in his blog says that the bull rally will start when we cross the 200 EMA. I agree with him – because I am sure that he is right. (you can reach his blog by clicking his name). I have included the 200 EMA line in the chart today and you can see where it trails – up at 3400 levels.

The global cues continue to rock. Asia opened green and never looked back – closing at the highest levels for the day – Nikkei up 3.39%, Hang Seng up 4.78% and Strait Times up 4.21%. Europe too opened green and then tried to dip towards the zero line – but finally closing – FTSE up 3.17%, DAX up 2.81% and CAC up 2.79%. US sees green in the midsession of four and a half percentage point. It would be interesting to see where the US ends.

Our candles meanwhile – the candle today was exceptionally strong, tall and white one. It comes after four day of the markets deli dallying – and it has in one go violated the upper bollinger band. I had not expected it at all. The volumes are 101% of last 50 day average. ADX looks up and confuses me – so this is the second day I will not try to read into the ADX and keep it aside. RSI is bullish as hell and like I explained in my study of markets for last two years – it is trailing above average – and may not stay at these levels if we still call ourselves in a bear markets. Slow Stochastic is extremely overbought and the last time we saw it at these levels for so long was when we saw an attempt to rally in may and Dec last year. Incidentally the RSI was also at these levels and the ADX was showing greater strength at those two times.

Let us see the Pivot data for tomorrow.

R3 3091 against 2859 yesterday
R2 3040
R1 2989
Pivot 2898 against 2798 yesterday
S1 2847
S2 2756
S3 2705 against 2738 yesterday
Projected High Range 2944 to 3015
Projected Low Range 2883 to 2812
Fib Projected High 2987
Fib Projected Low 2768

Notice the R3 shoot up with the S3 virtually at the same level? May signal volatility in tomorrow’s session.

(Rajesh Joshi)

Bullish Vertical Strategy For BANK NIFTY initiated on 5th March 2009 has earned more than 140% profit in March Series till today : ( Lot size of BANK NIFTY = 50 )

Bullish Vertical Strategy for BANK NIFTY Cmp 3420 initiated on 5th MArch is as below

• Buy BANK NIFTY Call Option of strike Price 3500 @ 159 &
• Sell BANK Nifty Call Option of Strike Price 4000 @ 25 ( BANK NIFTY Strong support @ 3382 )

For Covered strategy BANK NIFTY = Maximum Loss is Rs 134 per lot & Maximum Profit is Rs 366 per lot. Total investment in the strategy = 134 * 50 = Rs 6700.

Profit Calculation for the above Option Strategy : ( BANK NIFTY Cmp 3940 )

• Profit in BANK NIFTY Call Option of strike Price 3500 = 344 - 159 = 185 Rs per lot
• Profit in BANK Nifty Call Option of Strike Price 4000 = 25 -20 = 5 Rs per lot.
• Net Profit = 185+5 = 190 Rs per lot. = 190 * 50 = Rs 9500
• Profit percentage = 140%

( Note : The investors are adviced to still hold on the above strategy as BANK NIFTY Call Option of strike Price 3500 was all buyers @ 344. The actual price of BANK NIFTY Call Option of strike Price 3500 will be ( 3940 -3500 = 440 ) as the BANK NIFTy closed at 3940. To view earlier post click here )

(Rajesh Joshi)

BSE SENSEX last week was range bound and closed @ 8966.68 appro. 210 points above the last week. You can notice in the above Day chart, sensex has tested the major resistance & was not able to cross the resistance line. Coming week the index likely to be weak or flat. Sensex will be strong if manages to closes above the resistance line, else will be weak and avoid any fresh long postions. Support 8867-8587-8466-8307, Resistance 9086-9120-9259-9556.

March Nifty Fut was also flat for last week and closed @ 2801.65. Here also you can notice in the above chart, Nifty Fut is very near to its major resistance trendline. Nifty Fut chart looks much bettet than sensex chart as it has yet to test the level. Next weak will be the crucial to decide the future trend for the index. Avoid any huge positions on either side, till the trend is clear. Support 2757-2715-2681-2643-2600 Resistance 2815-2830-2868-2918.

(NOORESH)

Sensex Technical View :

- The level of 9300 is crossed in the near term with a good strong candle which clearly opens up the next target to ideally be the upper resistance line which is very crucial trend decider. The move might be a surprise but we have been waiting for clarity for last couple of sessions and this move shud lead to 9700 at least.

- The upper trendline comes roughly around 9950-10000 zone but the previous top around 9725 is an intermediate resistance which can be crossed.

- The most important thing to watch here is how we react from the orange line zone which is around 10k.

- On the time analysis front we have almost completed 48-50 sessions now and we did see a bottom around 8047 but it was not lower then the previous ones so we may have come out of the big drop pattern for now which was 10-12 weeks frop and then pull up.

- In the last 5 months the market has had a range of 10900-7700 on a broader and in technical ones a sideways triangle pattern which actually breaksout above 10k levels. But the markets have almost moved 1400 points already so difficult to expect a move beyond 10k.

- So trade on positive side till one reached 9700-9980 zones and then look for a turnaround or further formations to decide the next move.

Sensex RSI angle :

-- If we see the above chart the RSI indicator plotted has given a sharp reversal points ever since January. Although as an indicator RSI can continue to remain overbought/oversold for longer periods.

-- Last week when i posted the RSI chart we remained cautious which is a neutral approach and watch how it moves around 9100-9250. The current move is strong and has crossed 9250-9300 easily and may now next stall at 9700-10000.

--- In such a case RSI may come to a level very close to that of January top so one should be very cautious around 9700-10000 zone and risky traders can even look to short.

-- Ideally markets do react from such overbought zones but even if Sensex has to give a very sharp breakout beyond 10k it would be very difficult to do so without reacting from the zone mentioned.

Stocks to watchout for :

Cairn , HDFC , Ongc , Gmr infra of the discussed stocks moved sharply. GNFC , Tvs motors sluggish. The speculative FNO bets also gave a 15% pop. On pyramiding 2 stocks discussed were Axis Bank and LnT are still on hold. We would soon look into small and midcaps for investments.

Speculative moves now possible in Bombay Dyeing, Adlabs and Century Textiles in next 4-6 sessions if it has to.

Possible small trades if available to breakout with a strict stop of 3% tgt 7-10 % .

IDBI above 47 for tgt of 51 -52

IOB above 46 for a tgt of 50

RNRL if crosses and stays above 46 can tgt 50/54 quickly

Market Observations and Thoughts :

The move today has surprised lot of the traders in the market as many are stuck on the short side and have been relentless in adding the positions. The current move has been fuelled in by the aggressive shorters who are running for cover. So one has to rememeber with short term trading its always more about money management ( low leverage ) and stoplosses discipline then about timing it right. Markets are bound to surprise !!! either u be ready for it or u may end up getting a shocker.

The current move did surprise me and after a busy weekend ( no blog update as personal work) it became difficult to digest such a quick move but could not capitalize with a couple of longs only and an advise to hold small qty of 2600 put which is 25 to zero. Bear rallies can be deceptive and quick you catch some u lose some.

There is one good quote which may be applicable some months down the line and not now !!! .

" Every Bull market starts with a bear rally :) "

ssAnother Wolfe Wave? Target 3100~

ss

In a fantastic move today, Nifty finally cleared the overhead resistance of the trend line and the 50 day average. This is very important as it changes the whole scenario for the markets as a closing above the 50 day average turns the intermediate trend to "up". Now, we only need to stay put above this average and consolidate. The trend since last week was "buy on dips" and today's move just confirms this fact. Reliance (below) finally manages to break the 4 month bind and pops up above the 1400 mark.

(Sudarshan Sukhani)

A 5 percent gain in the Nifty has set the markets on fire today. These gains have come together with up moves in world markets, all over.
Is this a bear market rally or the beginning of a bull market ? The answer is not relevant to traders who should follow the trend. The trend remains up, so go with it. For Investors, buying should always be done on dips (when there is a perception of value). Buying now, after a 400 point (15%) rally may not be a good idea. Investors should now wait patiently for a decline. It will come.

My response to queries:
Chandu said: "we rally today we will come in to overbought zone, can we sell there "
My notes: No. Markets can stay 'overbought' or 'oversold' for many days. Selling is done only after clear signs of weakness. i have noted such signs in the blog section "Practical Technical Analysis".

Neel said "If it is at all bear market ,what wil be the possibility to nifty touch below 2500 and at what point it wil get support"
My notes: If the Nifty does break out of the 2550 - 3150 trading range, then the possibility of coming back to touch 2500 will diminish.

Rakesh asked: "So sir, What should be the strategy, Can I go long on Bharti?"
My Notes: You buy when the trend is UP. You can trade in the Nifty, or go for individual stocks. I cannot comment on any one stock, but traders should go for momentum stocks which are performing well currently.

Sweety has a problem, that many of us have faced. This is what the comments say:
am writing this during market hours (Monday 1.27pm) - as i have a serious dilemma.
(1) I did not have any open position and i had to start afresh during this morning.
(2) Nifty opened up at higher level.
(3) I use 5 minute chart - RSI & BB . So, as per my trade rule I will initiate trade only when the price crosses RSI 50 and also BB mid-price; whether it is short or long depends upon from where it is crossing.
(4) To day morning there was a gap up - and till now I am unable to initiate any trade on nifty, because my trade set-up does not allow me to do so.
(5) Due to this i am missing some good gains.
My query is: U must have also met with such situation many times in the past... and what did you do?

My Notes:
You may not realize it, but you are among the few traders who will be very successful in this market. You have a trading strategy. That's good. Then, you have the discipline to adhere to it. Excellent. So what if you could not participate in today's move. There are and will be hundreds of other moves where your strategy will enable you to participate. Your discipline will also protect you from many losses.
There are two ways to approach this issue: First, You can modify your rules to take care of gap open. use the 15 minute rule or extend it to 30 minutes. Second, you can keep your system as it is. It is your choice. In either case, it is your discipline that will win, not the actual tactics.

(Mustafa)

Outlook for the day

It was a strong opening to the markets and more importantly, the strength was visible through out the day. On the daily charts, indices have traded and closed above 9120 / 2836 levels, which was the breakout level mentioned in our previous daily report to form long positions. Further, looking at the upside momentum coupled with a ‘V’ formation breakout on the daily charts indices are likely to test 9940 – 10470 / 3050 – 3170 or even to the extent of 10945 / 3240 levels. On the downside 9160 – 9080 / 2860 – 2840 levels may act as support for the day. Since the intermediate trend remains up, one should use corrections to trade from long side.


pankaj

morning thoughts..

As said the trend is still intact and the markets moved up with vangeance and force.
Technically the indices has given a breakout and some more upsides are likely with intermittent profit taking.
Few days back we had clearly mentioned and intimated at 2587 that astrologically a big move of 400 points is coming in nifty , and nifty has never looked back since and has gained almost 375 . As discussed earlier a move above 9300 levels on sensex will fuel a good upmove and the indices finally manged to break above 9300.
Now any bull gap will be treated as the 4 th bull gap with simulataneous 4 gaps on the charts shown above.
Last day charts clearly showed a pattern of higher top and lower bottoms , but this view has been negated as expected and the nifty has formed a candle stick bar pattern on charts – same indicated via a green circle.
The blue semi circle was the cluster area where the nifty was facing huge resistance from past 4 months , but has managed to break past it to create a lower top and higher top on daily charts.
This indicates that the markets are likely to see a gap on charts again and a reaction could be seen to fill those gaps on daily charts.
However if the green circle indicated manages to form a top straddle with first blue circle , then the rally can be more quick and fast and the expected reaction wont come , and the indices will keep on stretching.
The supports for the nifty is at 2850 levels and resistance at 3050 levels
The supports for the sensex is at 9350 levels and resistance at 9800 levels