Nifty(5087.3): Markets had a follow through to the hanging man pattern - throwing in a short term sell signal. However the internals of the move still remains a bit ambivalent giving an outside chance of one more rise before turning lower. If Nifty heads higher it may either stop at 5217 or below or head slightly higher.
Two important points from yesterday. One, as pointed out only now Portugal is getting media coverage. Second, the A is to C ratio that we discussed yesterday(see yesterday's chart) needs a small explanation. If that ratio is about to play out, I will not be surprised if Nifty heads to even as low as 3900. Unfortuantely, this will be an Iron-clad confirmation only when Nifty hits 4800. Until that one has keep positions small.
So how do play the current set up? Play it through puts- Long 4800 put around 23-26 and forget it (Fixed risk). If you are aggressive - write 5200,5300 calls and if Nifty crosses 5225 fold the trade.(The premium could double if the set up is wrong).
Support: 5065 and 4990
Resistance: 5170 and 5225
19 Responses to “Technicals 31st Jan 2012”
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What would be the optimum number of lots of nifty 4800 puts to be purchased
You have to allocate the size correctly Gunjan
hai jai
write 5200,5300 calls means its a long or short
Sara, it’s better for you to take 4800 put.
jai ..it seems market would reach 5350
hi Jai, your view on RIL and the buyback. Thanks
RIL is still weak in the medium term. It needs to cross 905 for longer term bullishness
Jai,
A question to the contrary. When do you see the situation changing for the bullish. Recently on CNBC you had mentioned that there is a 40% chance that a new Bull market has started. When do you see a clear signal coming in for the Bull market start ?
Regards
If the pullback that is about to start this week, holds above 4800 – then it would be.
Jai…
Any update.. its been a battle of nerves for some days.. Do you really see at 4800 coming..?
Regards
Srikanth
I do not know, how far down it will come during the pull back. BUT the risks of being long now is VERY VERY high. Patience is a virtue
Dear Jai,
Nifty is above 5200, what is your mid market view
Ajay
hi jai
i have a gut feeling that this is a sucker’s rally, as the markets are discounting all the bad news, if that’s the case how much upside one can see from here?
regards
Hi Shabbir,
It is quite possible it is a sucker rally – the more important thing is even if this turns out to be a bullish set up we would expose ourselves to tremendous risk at this point in time. Preserving cash at this point makes a lot of sense. 5275 or little over that should reverse the market, atleast for the short-term
I’m amused when I hear commentators say Europe is close to being solved and markets are rallying because of that. Solving europe is a mathematical impossibility. At best the inevitable will get postponed.
Real surprised that bad news is getting sucked in easily. Lot of strength in the market. I personally felt that today’s news was as bad as you get for the FII community.
REgards
Sad we missed the 700 point rallly that started on Jan 2nd (400 from 14th Jan) with the anticipation of reaching 4800 🙁
I am sure we might see 4800 in future but current trend seems to be positive till there is a clear southside indication.
Though Baltic is showing global economic weakness we seem to get more and more money from FII’s. Not sure when the party will end though.
-Shiva
Shiva,
The important thing was extinguishing 97% of the shorts at 4530 support.
We may even end up not seeing 4800 but the most important thing is to take action only when the market agrees with the view one holds. Imagine if one had been short in this market – the market would have delivered a knock out blow. The market is going up bcos of those trying to stand in front of this market. The important thing in this business is to survive for the long term. Always play extreme defense, the rest will fall in place.
Best,
Jai
Hi Jai,
Do you see Gold & Silver also coming down along with all other asset class? Or Gold/Silver could hold its ground?
At the moment no. But I’m thinking Gold will not cross 1765. AND NO, its not a double bottom in gold unless it crosses 1807. Silver some 34ish cap.
Cheers,
Jai