Sunday, June 30, 2013

My thoughts on the indices after the week ending 28th June

After making a low near 5477, Nifty made a new high near 6229, and it appears now that it has made a 'higher low' near 5566. Nifty as well Sensex have respected the rising uptrend line from June 2012, and that line remains crucial for the long term. In the last 2 days, Nifty has rallied very fast by almost 225 points from the low on Thursday.

Short term charts have given a strong reversal, and although my long term view (see previous post below), is of a sideways market between 4000-4200 and 6000-6200 for another couple of years, the short term trend remains UP, and it has become a 'buy-on-dip' market.

The hourly charts are now overbought, and there might be some cooling off in the next couple of days to perhaps 5770 and maybe even 5730. As long as Nifty does not break 5675 (spot) in the next few days, one needs to stay LONG, for much higher targets.

The resistances are 5860-65, and then 5935-70. Die-hard (perma) Bears can use these levels to try shorts near these levels (SL being a close above those levels).

If Nifty closes above 5975, I see another huge resistance near 6010 - 6075.

Only on a close above 6090, can we look for new highs to maybe even 6250, but I  will be careful with longs above 6000.

Nifty weekly chart :


 Sensex weekly chart (it is always better to also keep an on Sensex levels mentioned below) :)



 

Saturday, June 8, 2013

Why I am not in favour of a runaway bull run yet

Most of those who read my tweets will be aware that I start looking for tops and opportunities to go short whenever Nifty goes near 6100 and above. This belief that our market is not yet going to run away comes from a long term chart of Sensex (Nifty came much later, hence the study on Sensex).

The yearly chart of Sensex is the reason for my bearishness at the levels mentioned above.

Although I believe in the science of 'waves' I do not think I have the expertise to apply the study on our charts.

However, in my view, even a simple longer term view of the same charts, gives a different picture than just studying short term charts.

To keep it simple, Sensex might be showing a period of consolidation in a broad range.

Those following Nifty alone might be under the impression that it gave a breakout when  6181 was crossed (that was the January 2011 high). However, high of Sensex in January 2011 was 20664.8 and the high in May was 20443.6, which means Sensex DID NOT give a breakout.

This is the reason I feel, our market is in a mode of consolidation similar to what it did from 1992 to 2003.

Whether this will take that much time, is not possible to say, but if one believes in the 'consolidation phase', our market needs to go and test the lower band of the broader range (4000 to 6200) over the next quarters.

Yearly chart of Sensex: