Dec 072011
 

Nifty(5039): A small range bound day post a big move is a normal market behaviour as market participants take stock of the move.

We have an inside day bar and a "doji" pattern on the daily charts. A move past the boundaries usually provides a good short term trading opportunity. So watch 5002 on the lower side and 5055 on the higher side for a quick 30-40 point intraday day move (Caution if Nifty opens above this level in the first 5-10mins).

Resistance: 5110 and 5165

Support: 4955 and 4870. Watch 50DMA at 5020 too.

Open positions: Silver, Heromotors, OFSS, Apollo Tyres.

 Posted by at 2:59 am

  27 Responses to “Technicals Dec 7th 2011”

  1. Given the positive expectations from europe do you think the probability of Nifty slipping lower towards 4700 in the short term has reduced.

    • Dear Sri,

      QE2 was announced on Nov 4/5 2010 many Asian markets peaked around that date including India. EFSF was announced on Oct 27th, commodities, stock markets, currencies hit a peak and turned from there. What is called as +ve expectation in the financial press is rarely correct.

      best regards,
      Jai

  2. SIR I READ U ARE EXPECTING A HIGH ON DEC 9., I AM HOLDING 2 LOTS OF HH FUTURE SHORTS SHOULD I COVER 1 OF THEM AND LET 1 REMAIN OPEN AS U ARE EXPECTING A HIGH

    • Dear Gunjan,

      This trade has nothing to do with that – hold. If you have profits, sure take one off the table. If you would feel more comfortable holding 1 rather than 2, sure go ahead.

  3. Jai –

    Is there a count which could cause a 5320+ level on NIFTY? Some big guys are predicting S&P to go to 1330 levels before Christmas and it seems Indian markets have been in lockstep with US markets for the last few months..

    Thanks,
    Vivek

    • Dear Vivek,

      Any number of possiblities can be presented – but stick to what our experience tells us until proven wrong. When trying to short, wait for a day’s red bar to appear after a rally and then short the following day when there is a follow through. Use that for LT, that has not happened yet.

      S&P, yes C wave of correction may not be over. If so 1325 is possible for S&P. I’m thinking if its done 1285 spot will not be crossed

      Best regards,
      Jai

  4. Any short trade on LT. It seems to be racing towards 1400 again!!

  5. Jai,

    Clearly, neither a new low or a high is going to be created tomorrow. Maybe after the BIG news there would be a dash for one of the 2 extremes.
    If we were to look at things from a pure technicals, standpoint. How do we position ourselves on the Nifty for the the 8th and the 9th ?

    Also, I have ended being short on Infy from 2600. Should I surrender now or hold out a bit more. Need some directional input pls.

    Regards

    • You are too early to write it off my friend 🙂 What stops today’s or tomorrow’s high from being a high? Remember no analysis is fatalistic, you should prepare but unless the market confirms it, a potential remains just that. Agile, if you can input how we trade the turn dates, it would help others

      • Jai,

        Any comments on Infosys ?

        Regards

      • On or around the turn date, meaning +/- one trading day of the turn date, if the market has been going up consequently, then whatever is the high made on that date is the turn high. Similarly if the market has been going down then whatever is the Low made on that date is the turn low. It is not a new high or a new low always.

        It is very difficult to position a trade to take advantage of a particular date because of various factors, chiefly the fact that the date is +/- one day. So, for example, if 8th is the turn date then it could be 7th or 9th or 8th itself. A trade initiated after confirmation may make less money but it is a surer trade. Any other trade, your guess is as good as anyone else’s. In that case one should have the guts, money and conviction to hold or get out whether in profit or loss.

        If you look at Jai’s reply in TCS, the parameters are quite wide. How should you position yourself in such a trade? Your holding power and Margin paying power has to be quite high.

        In my case I can give you an example of a trade in Titan. It was a short trade intiated at 221. Titan came down to 197. My target was 190 or lower so I waited. What happened? Titan went on to 236 !!! Now? And understand that the way it shot up after 225 was like there is no stopping it. Fortunately my stop was 237 which I then modified (mentally) to 240 considering the speed of the rise. Fortunately it did not hit even the original stop. Tht is how good Jai’s stop was. After that is of course history.

        Hope that helps.

        • Agile, Thanks for taking the time to explain this in great detail. Much appreciated.

          Agile, Jai, if i was to try and apply the explaination provided above and the happenings of yesterday and today, effectively this means that the market should be headed down. Once again, i understand that there are multiple possibility but the above gives me an impression that the markets should be headed down based on the above theory.

          • Rut,
            Let me put in an easier fashion – if the market goes trending up into the pivot date long a put at the T-1th trading day around midday-market close. If the market goes trending down, long a call at T-1th day around midday-to close. That has always yielded fair amount of money. When the confirms this, just top up 🙂

  6. Sir your views on TCS. Currently trading at 1193 in future. The stock has turned twice from 1191-1203 range in the past. If it does start the downward spiral what will be the target for the stock.. if the downside is big, then may be we can excecute a synthetic put…(using 1200 call @29)

    • TCS big downsides could be postponed to 2012. My prefered route for this is that it does not cross 1250. The alternate is a bull trap to 1290 and a thud.

  7. HI Jai,

    Nifty now 5069 what will be course for nifty today. I am short at 5089.

    Ajay

    • Ajay,

      If I had such a crystal ball, I would be sitting at Salzburg watching the Alps and pulling trades at will 🙂 Hold with a stop abv 5110. Once you see the trade move in your favour say 30-40 points tighten stop to breakeven and hold, (ALL CASH LEVELS not futures)

      • In Intraday trades one should always book profits from time to time so that one is fresh for another trade.
        Nifty yesterday’s close was 5065.60 and today’s open was 5069.80. Nifty went up and then came down to test the open/close. That would have been a good point to book profit.

        Hope this helps.

  8. Dear All,

    If i am right what jai is saying let this top be made around these days and then we will short the market for good gains …. i hope jai this is what ur views..

    • That is always my view Vipan. Analysis is one thing, trading is another. The ticker is always the boss. At expected pressure points the tape must confirm the view and there should be follow through.

      Best regards,
      Jai

  9. Sir

    Any views on ICICI Bank.. We have seen some decent moves in the private sector banks except for Icici

    • All I know is it MUST come to 591. And there is a good degree of possibilty that it will not cross 820. Today’s short was a toss up between, ICICI and Indus – went with Indus. I was trying to configure a put spread for ICICI but could not construct a good one. Configuration here is negative.

      Best regards,
      Jai

  10. Hi Jai,

    Do you see any big movement on Crude?

    Particularly the friday summit & your dates around 8th & 9th – what impacts could it have on Crude’s chart? I’m Short & wanted your input if its wise to hold or to come out?

    Thanks & Regards,
    Parag

    • Sorry, I haven’t looked at the hourly charts, but what I said the previous time holds good. Crude has to get back to low 80’s or 70’s. The interference on USD and Euro is just delaying it

  11. Jai,
    To better understand the turn theory, I have some questions:

    Can we say that yesterday’s (7th Dec) high of Nifty (5134.65 in futures and 5099.25 in spot) is the turn high?
    Or
    If Nifty closes lower today (8th Dec), will that be considered as turn low?
    Or
    We wait and see what happens tomorrow (9th Dec)?
    🙂
    Thanks.

    • 7th Dec is the high. This Dec could turn out to be the 4th negative Dec since 1992 or may end mildly +Ve. I dont think we are going below 4640 tomorrow 😀

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