Sunday, June 27, 2010

A small dip first?


An extremely quick and brief update from the rainy beaches of Goa.....

It was an extremely volatile week that ended with a very big fundamental news for the oil and gas sector in India. The stocks from this sector will definitely be re-rated.

However, Nifty has given a bearish pattern for the weekly chart and any dip lower than the low last week (5259.9) will trigger this pattern, and the immediate supports are near 5245 and 5205. However, in my opinion, a dip to even 5160 - 80 will be healthy for another and probably a final attempt to cross 5400 on way to 5545. So, any dip this week can be an opportunity to buy as low as possible, with a stop loss below 5150.

A dip below 5150 - will most probably signal curtains to the bull run opening up targets difficult to believe right now - so, let us wait and see whether and where Nifty takes support.

Sunday, June 20, 2010

No high is a high in a Bull market


The bearish possibility last week was completely negated as soon as Nifty crossed 5060 first and then 5170, closing well above these levels.

I have seen many chart patterns get repeated over a few months / years, and I have spotted a very similar pattern that occurred in August 2009. Nifty fell to 4350 levels in 2 successive weeks in August 2009 only to close near the highs in both weeks. The third week saw a breakout from these hammer candles, above 4578.8 and then Nifty travelled all the way to 5181.95 over the next 9 weeks.

A similar pattern has been created now, when Nifty fell to 4961 and 4967 in successive weeks and crossed the weekly hammer candle when it crossed 5139 on the first day of the week gone by and has not looked back ever since.
A chart showing the similar patterns on weekly charts is shown. However, the markets are now at overbought levels, and if the same pattern is to be repeated, a small correction is due this week - expiry is a good trigger. As shown in the daily charts of August 2009 and current, I expect a dip to 5180 - 5220 at some point, maybe before expiry.

As long as 5150 - 5170 are held in the dip as a worst case, Nifty can resume its upward march. Likely targets -------5450 - 5545.


If and when (more of 'when' and less of 'if' Nifty does give a dip, I am sure, lot of people might start shouting about the end of the rally and will also start giving targets of 4650 and 4200.

However, options data for July suggest a pleasant surprise for bulls in July too.


STAY LONG FOR JULY AS LONG AS 5150 HOLDS.

I am expecting a similar pattern in the world markets - a dip and a rise to about 5% above current levels at least (DOW 10750, S & P 1150 to give some figures)

Sunday, June 6, 2010

The HungAry Bear


The levels mentioned in the chart last week need to be referred again and that tells the whole story.

Nifty went to the first level on Monday and was banged down on Tuesday, 1st June, then recovered and rallied for the rest of the week to touch the second level right near the close on Friday, surely tempting many to carry longs over the weekend!

A friend @girish_k tweeted on Friday evening -

girish_k @ap_pune PIIGS are Hung(a)ry for more :D. So apt.

However, the charts had said it earlier - the trigger keeps changing.

Those who followed my old posts when I used to mention - bulls are constantly raising the bar - now, exactly the reverse is happening. 'Bears are lowering the bar'.

2 weeks back, the bar by the bears was at 5278, then at 5200. Now this bar is at 5150-70.

A gap down opening on Monday is almost sure, and if Nifty opens below 5060, it will create a dangerous formation on charts, and moreover, if the close is also below 5050, the bar will get lowered to 5060 straightaway.

The laggards of the recent past - telecom and sugars led the rally in the past 10 days, and the index heavyweights - Reliance, Tata Steel, ICICI Bank, did not do much - could it have been called a rally at all?

Tata Steel below 473 is heading for a quick drop to 466 and then 433!!

Agreed - Harbhajan Singh scores a quick 30-40 in 15 balls once in a while - but can one bank on him?

A close below 4940 opens a target of 4535! All depends on the extent of the bounce after the deep cut expected in the next couple of days.

Trading guidelines - if Nifty opens gap down below 5060, hold shorts as long as close is below 5060. If after the fall, Nifty rises sharply, and crosses 5060, one can go long and see if 5150 is getting crossed, failing which 4535 is a logical target in the days / weeks to come. All this is for the next few days and not for tomorrow. For tomorrow, I am afraid, we might close at the lows.

Disclaimer - These views can change intra-day depending on the market movement.

PS - For those who asked about HungAry, google 'Hungary crisis' and you will get the answer.