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Technicals 9th April 2012

Apr 092012

Nifty(5322): Nifty's struggle and inability to cross 5385-5400 resistance is the first sign of trouble. If Nifty closes below 5260 that will be sign of more trouble brewing. Going forward, the most important data points for us are going to come from currency charts. If INR prints 52.2, it will be the ultimate confirmation for us that the rally from Dec 2011 is over and the path to a new low below 4530 is underway.

The Euro seems to be forming a head and shoulder consolidation pattern. A break below 1.30-1.2975 would be additional bearish clue for us.

Technicals 30th March

Indian Market/Stocks, Premium Content 8 Responses »

Mar 302012

Nifty(5178): Nifty on expected lines went below the low of 5165. The bullish interpretation at this point is that the move from 5630 is a corrective decline and the correction got over at 5135. What is in favour of this? The intraday momentum has not been able to clock new lows when price has done so. However, on the higher time frame , daily charts, momentum is with price.

What's the bearish case - the market is in its third wave and the waves are sub-dividing in a 1, 2, 1, 2 fashion. INR is in favour of this scenario. Other currency cross-rates are favouring this outcome. China as pointed is bound for a big big low.

So we need to see Nifty stay below 5400 on the counter trend bounce. Quite possible it might not even cross 5320-5340. Today, being the end of a quarter - we might see some window dressing by FM's

The chart below shows the above scenario.

Nifty intra day chart

Technicals 16th March

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Mar 162012

Nifty(5380): Nifty caved in sharply yesterday and shed 1.53%, off the lows of the day. From now on the speed of the move is going to be important be it higher or lower. If we see gaps or wide ranged bars for more than just a day, it will signal to us that the market is moving in a impulsive fashion. As projected in our intraday wave count a couple days back, we think we may have finished the corrective phase to the decline from 5630 to 5165 and the next phase that takes Nifty below 5165 may have started. Watch 5330 today if market blows through that, we can be confident of a new swing low below 5165 (ideally 5077).

Some people are seeing a Inverse head and shoulder on Nifty. Mind you inverse head and shoulder is a bottom reversal pattern. It must occur after a prolonged decline. What we have on Nifty is some sort of prolonged advance. Hence in my opinion there isnt one on hand.

Open positions: Nifty March 5k Puts @13, RIL March 780 Put @7.5; Long USDINR @49.8 SL 48.8 tgt 51.75 (partially booked at 50.75)

Technicals 12 Mar 2012

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Mar 122012

Nifty (5333.55): Ok, let the chart speak.

Nifty- Hourly charts

Look for resistance to kick in at 5403 or 5460. A very remote chance of 5520. To get here Nifty could take today's entire session and possibly a little of tomorrow's session too. But once resistance is in, a fast decline should start, be it a C wave or wave 3 - both have similar characteristics. Remember, it will not be a straight decline though as shown by the dotted line but rallies will be small.

Technicals 7th Mar 2012

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Mar 072012

Nifty(5222.40): An erratic day that finally settled lower by little over 1%.

Nifty Daily Chart

If the top at 5630 is a significant top, the counter-trend top, i.e. B wave correction to the 2010-2011 decline, there are two ways this can play out.

1) Nifty blows through 5090-5077 area - if this scenario happens, we have a powerful wave on hand and Nifty could drop straight to 4950.

2) The current decline stops at above 5077 - then there is a bounce coming through that may take Nifty to 5495 to 5510. Post that a bigger decline begins. There is some support at 5139 and 200 DMA at 5165. Hence, be willing to extinguish some short positions closer to 5100 Nifty.

Will be closely monitoring the internals of the move if the second case pans out - it needs to be in 3 steps , else the B wave stands a chance of moving higher to 5900 (see earlier post ). As the structure unwinds, Ill update in plain english.

Current positions:

Apollo Tyres Long at 78, 3/4ths booked at 85 (I'm aware many did not get the SMS due to network Jam - this is for those who got)

Short Nifty Fut from 5450 spot, partially booked

Long Nifty March 5000 PE @32-33, partially booked @47-49

Long USDINR at 49.8 spot Tgt 52 stop 48.8

Previous position:

GMDC stopped out at 194.

Technicals 29th Feb 2012

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Feb 292012

Nifty(5375.50): Nifty saw a bounce back after 4 sessions of decline. We have a "Inside Day" pattern on the daily charts and considering the wide ranged bar on Monday this was expected.

Nifty- Daily Chart - Inside day

Nifty is correcting the decline from 5630 to 5268. This is basically phase of 2 of the move that started from 5630 and counter trending. Phase 3 will be a equal to the 4 sessions of decline from 5630 or sharper than that. The level of 5077 is a 4th wave of previous degree and we should ideally see Nifty descend there if not lower. A couple of Fibonacci clusters also come in slightly above here.

Hence we should be looking to add some short positions on Nifty in a staggered manner at or around 5450 and 5495 (may be as early as 5410). If the momentum seems strong and blows through these levels - keep your powder dry. We must see some kind of stalling around these levels. Ill anyway be monitoring the intraday action.

New Positions:

1) Long Apollo Tyres 78 Sl 72 at close Tgt 89

2) Long GMDC 207 SL 194 at close Tgt 240

Technicals 27th Feb

Indian Market/Stocks, Premium Content 9 Responses »

Feb 272012

Nifty(5429):

Nifty Weekly charts

A dark cloud cover on weekly charts on Nifty - this a reliable pattern but we need to see a follow through to this pattern. Momentum agrees with price so far. So we must look for a corrective decline to 5200 or 5077.

IF we see a bounce to 5490-5510 in the first 2days of the week, it might shorting opportunity for the extreme short term.

Supports:5390, 5210 and 5077

Technicals 23rd Feb 2012

Indian Market/Stocks, Premium Content 6 Responses »

Feb 232012

Nifty(5505):

Nifty Daily chart

Indian benchmark indices saw a key reversal day on the indices (see chart above). A new swing high followed by a strong rejection of the new high. This is usually very bearish but momentum points to an unfinished move. So, we will prefer a corrective decline followed by a another leg up.

BUT, if we see a "FIVE" along with this correction, we may have to conclude differently. As shown in yesterday's chart, the bigger B wave can end either at 5650 or slightly below OR closer to 5975. Yesterday's high was very close to 5650. Keep tabs on USDINR - if it crosses 49.8 that would the first warning sign for Bulls that things may not be smooth for them.

Supports: 5480, 5325 and 5077 (so watch for correction to get some support here - I prefer a decline 5325 to 5077)

Resistance: 5650

Technicals 22nd Feb 2012

Indian Market/Stocks, Premium Content 8 Responses »

Feb 222012

Nifty(5607):

Nifty weekly charts

The above chart is the 'case 2' we had outlined several days back in this month's morning note. Beyond 5975 Nifty it would be 'case 3'. We are very close to getting some very important clues as to what the Indian Nifty is going to do. USDINR - cross above 49.8 will be the first clue that USDINR will stretch to potentially 52 and as a consequence will indicate a corrective phase for Indian equities.

Sorry for the very short update - not fully recovered but will be able to respond to questions you might have on this chart.

Technicals 15th Feb 2012

Indian Market/Stocks, Premium Content 14 Responses »

Feb 152012

Nifty(5416): Markets despite being overbought, continues go up on receding momentum. The move from early February is like an automobile coasting on residual inertia of motion even though the vehicle has run out of gas.

Nifty(Left) and Bank Nifty (right) - Daily Chart

While this is very unhealthy and the markets will sooner or later drop vertically once the residual inertia is over, prudent risk management and patience is an absolute must. The retracement will completely erase the last leg of this short-term move. That leg started at 5077 and that will be some sort of guaranteed level we are going to see once the correction sets in. We will watch for a big one day reversal pattern or 5325 for confirmation - do not know which will be the case.

Having said that this move is clearly a powerful wave in the short term. What does it mean in the higher time frame? Is it a sucker rally that is correcting the entire decline from Nov 10 to Dec 2011 as I'm assuming it to be? OR is it the beginning of something bigger? The answers for that will come through ONLY when the correction starts. Stay tuned.

Nifty support : 5325, 5210 and 5077. Resistance: 5440 and 5495

Open Position: Long Coal India @326-328 Tgt 360 Upgraded stop 320 at close

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