Tuesday, November 4, 2014

Where do you think Nifty will close on 31st December 2014?


Sunday, October 26, 2014

NTPC update - will it disappoint bulls once again

Since the last post on NTPC, with specific reference to the OI of 150 CE, it seems the 150 CE writers are not willing to give up, and in fact the OI has increased from 16 odd to 18.72 lakhs.



The levels on the 150 CE chart indicate that the CE can rise to 1.5-1.8 or even 3, which means the stock can cross 150, but as long as NTPC does not cross 153, these CE writers are safe with their written CEs.

Since we are heading into expiry week, this OI becomes even more important, and hence needs to be closely watched.

Those who have bought the CE below 1, can consider booking it near 1.5, but at the same time need to keep an eye on the OI of this CE.

It is possible that the CE might lose in price from 1.5, but the OI too can start reducing.

Another hint can come from OIs of 145PE (OI 3.34 lakhs) and 150 PE (OI 2 lakhs). If these OI figures start going up, NTPC can rise 

If this happens, it is worth buying it again below 1.

It is all about the Push from the OIs of the PEs and the pull from the OI of the CEs, and whoever is stronger will win.

To summarise - watch for RISE in OI of 145 and 150 PEs, and also FALL in OI of 150 CE.

If this does not happen, NTPC will once again disappoint bulls, as it has done so many times of late.

If following so many figures is difficult, just wait for updates on Twitter.

Happy trading .....

Monday, October 20, 2014

An old observation on OI on stock options - watch NTPC now

NTPC suddenly shot up in the last hour of trading today.

Looking at the OIs of various CEs, it is seen that 150 CE has the maximum OI (16.08 lakhs).

It has been observed that when a stock rallies beyond the strike price that has the maximum OI, it rallies further for at least another 10%.

Looking at the chart of 150 CE, there is a resistance at 3-3.2.



It can be safely said that once NTPC crosses 153-154, it can rally for another Rs. 15 to say 165-170.

Nothing is certain in the stock market, but it is worth keeping the above in mind and if and when NTPC 150 CE crosses 3.5, you can aim for a target of 15 on it (but trail it, and not wait blindly).

It will also help to keep an eye on how much the OI of 16.08 lakhs reduces, since that will be a big indication of things to come.

Happy trading.....

Thursday, October 9, 2014

"Jara hatke" study

I noticed the triple bottom on SBI on the monthly chart (August, September and October so far), and realised if this bottom holds, SBI can give a good rally.

This made me plot the following chart:


This chart is the ratio of BankNifty futures to Nifty futures on hourly time frame.

At present it is trapped in the range 1.9 to 2. A breakout above 2, can take it to 2.1.

These fractions look small, but if you apply the ratio to Nifty, it becomes clear.

8000 x 1.9 = 15200

8000 x 2 = 16000

8000 x 2.1 = 16800.

It might be argued that Nifty futures will not remain static, and this ratio can still remain range bound.

However, it is worth going long in BankNifty when the ratio drops to 1.9, and hold long till the ratio hits 2, and on crossover 2.1. 

This can also give good 'Pair trades' for those who do it regularly.

The historic high is 2.15 !!



Friday, September 26, 2014

Nifty at a long term support

The low on Nifty spot is bang on a long term trendline right from where this bull run started.

If this support holds, there can be a rally - whether a pullback rally, or a rally to new high, time will tell (rather options charts will tell).



It makes sense now to hedge shorts, or even take naked longs with 7800 as stop loss, on Nifty spot 

Wednesday, September 24, 2014

Same support, but at a higher level this time

It was mentioned in the post dt 16th September, why the level near 7925 might give support and had said --

"If this region gives support once again, bulls have some hope to make another attempt to conquer the formidable 8150 - 8200 resistance."


Nifty did get the support and did make an attempt to cross the formidable resistance, but failed (in the process made a triple top at 8160 on 3 consecutive days, this top is also a double top on weekly charts now, unless crossed in the next 2 days..unlikely! )

As explained through tweets, this was visible on the 8100 CE which made a double top near 83, and this CE crashed to a low of 2.25 today !

Nifty made a panic low at 7950 today and again hit the 200 hourly moving averages.



8000 CE also hit the support band (tweeted a few times), and went below it briefly in the panic after the SC verdict on 'Coalgate'.

Nifty is now oversold on hourly charts, and with expiry tomorrow, it will be interesting to see if expiry is closer to 8100 or 8000. My guess is, it will be between 8050 and 8075)

It is likely that Nifty might be rangebound next week too (7930--8150)

Thursday, September 18, 2014

The bullish Harami has played its part...now what ?

Every candlestick pattern can be called a pattern only if there is a followup action in the next couple of days, and the Bullish harami candle of yesterday got a confirmation straightaway today.

Now, what next? Logically, the previous all time high should now be crossed in coming days.

Below are some facts based on charts of futures and options that can help in managing the long trades.

Firstly, bears can claim that the rally today was just a gap fill (8100 to 8134 was a gap over the weekend) on Nifty futures.



To negate this, Nifty futures has to cross the first hurdle at 8148-8150, which was a double top. There are some resistances above that too.

PCR at 8100 strike price is 0.9 as of now, and this will give further hints. 



This has to rise way above 1.2 as soon as possible. This will happen when 8150 is crossed, and also when 8100 CE shorts are covered and at the same time, OI of 8100 PE rises (should go well above 50 lakhs).




If all of the above happens in the next couple of days, logical target for the 8100 CE is near 140!! (cmp 68)


So, keep an eye on the OIs of 8100 CE and PE tomorrow to get a hint regarding future price action.


Tuesday, September 16, 2014

Nifty at crucial level

Something for the bulls:

Although Nifty declined sharply today, it is at a critical level on the charts as explained below:

Ever since this bull run started from 5930-40 in February 2014, Nifty has taken support around the 200 hourly moving averages thrice so far, and the low today was again near the 200 hourly moving averages (Simple and exponential).



If this region gives support once again, bulls have some hope to make another attempt to conquer the formidable 8150 - 8200 resistance.

The next 2 days will be very crucial (have I heard this before?).

Ideally, Nifty needs to open with a gap tomorrow and go straight up, since more time spent around these levels will be an invitation to more bears.

The 8100 CE hourly chart also shows how the panic low was bang on a previous low near 15 today.






One overnight hint will be available from the India ETF - INDY in the US markets. INDY gapped down today to 29.68 to fill a gap. If it closes above 30, it indicates that bulls have some fight left in them.

So, watch where INDY closes when you get up tomorrow.

INDY hourly chart :

 





Thursday, September 4, 2014

Nifty reversal ?

Nifty is overbought on hourly, daliy, weekly and monthly timeframes (stochastics above 95)

Nifty daily candle formed a DOJI yesterday (at the top), and is now trading below yesterday's low.




This can be a potential reversal.

How can this be traded now?

Buy 8000 PE on dips, with sl below recent low (42.5), for a possible T1  of 100.

If this PE crosses 120, 150 is also possible.



Happy trading !! 


 

ITC trade (360 CE)

ITC is holding up well in this fall, and can move up.

A low risk trade is to buy 360 ce on dip near 2.5, with SL below 2, 

Targets 6 - 10-12



Happy trading !!

Wednesday, September 3, 2014

SBI trade (2400 PE)


SBN 2400 PE, buy 20-22, SL 15.
 
Some people might be wondering why this trade was given. 

Following is the trade setup :SBI cash and futures both made a doji on daily charts yesterday, and have given a low below the low yesterday. There is also a trendline shown in the chart acting as a resistance.

The PE chart gave a low risk setup, SL below recent low.

SBI futures daily chart:


SBI 2400 PE hourly chart :



Potential targets: T1 40-45; T2 60-65; T3 75-85, and maybe 95 too

 


 

Sunday, August 31, 2014

Potential road-map for September

I have a favourite pastime of studying charts over the weekend, and letting my imagination run wild.

After spending a few hours over various charts of, Nifty spot, Nifty futures, and various Options charts, following is the possible path for September that comes to my mind.



For a conservative or traditional trader, the stop loss is below 7850 (all levels are of Nifty spot).

However, Nifty might make a top somewhere on that trend line that is sloping upwards. For aggressive traders, it is worth buying some cheap Puts (say 7700 or lower), for a possible target of the lower trend line. If that happens, the Puts would be multi baggers.

Another possible hint of a top can be provided by the CE charts.

Hourly chart of 8000 CE given below:


Typically, the first week in a new settlement is bullish, and this CE chart can be used to trade Nifty in this first week.

Corresponding levels for other CE charts also can be used.

Happy trading !!

Thursday, May 15, 2014

Irrespective of the Poll results, what do you think Nifty will do ?


online poll by Opinion Stage

Saturday, May 10, 2014

Abki baar Modi sarkaar or Abki baar Nifty Saat Hazaar..a poll


online poll by Opinion Stage

Saturday, April 19, 2014

A potentially big trade - SAIL

I had tweeted a few days back about  a lot of PSUs looking good.

Here is one that has the potential to give an excellent trade if managed well in futures.

SAIL can be bought (an aggressive entry) at current levels, with a stop below 67-67.5, or for a conservative entry above 76.5 (problem is stop loss remains the same and is very far off).

SAIL has the potential to rise to above 90, maybe even 100+ over the next few weeks.

 
Based on the Options charts, SAIL 70 CE too can be bought on a dip with sl below 1, for a target of 6-7.

If one goes long in May futures and it starts rising, it can be hedged on a rise by selling the April 70 CE near 6-7, with a stop above 8.

SAIL April 70 CE :


For those not willing to risk a trade in futures, SAIL can be bought in cash with a stop below 67 for a target above 90.

Sunday, April 13, 2014

TRADERS CARNIVAL AT GOA IN AUGUST 2014

Traders Carnival 2014 is being held in Goa from 15th to 17th August. This is the third edition of the carnival after the first one in Bangalore in 2012 and second one Pune  in 2013.

This event is entirely the brainchild of Dharmaraj from Bangalore (a.k.a DJ) - @ra1nb0w on Twitter).

It is a 3-day residential conference, where traders from all over the country and some from abroad will be attending.

More details can be seen at www.traderscarnival.com

I have been asked the question quite a few times; " Is it for me?"

As long as you are trading in the stock market or even in the commodities market YES, this carnival is for you.

Some traders are under the impression that they will be a misfit, and might not understand anything. That is certainly not the case.

Anyone who is into trading, be it part-time or full-time, has learned something from the supreme teacher "Mr. Market" and it is this that he/she brings to the table there.

The market teaches everyone a different lesson. There is no trader who has made profits right from his / her first trade and is still making huge money continuously. There is always something more to learn. There will not be a single trader there who can claim to 'know all'. That is impossible !!

The beauty of this carnival is -  one will get to meet and interact with 150+ fellow traders from the age 25 to 60. Every single person has learnt lessons from the market, and will be sharing that 'lesson' with others, be it as a speaker or just a participant. From my experience, there is something to learn even from a beginner, someone who is in the market for just 1-2 years. There is no one at the carnival who wants to keep his trading style / strategy a secret, because they all believe that only when they share, will they learn something from others.

If you wish to learn from the experience and mistakes of others, this is THE place for you.

However, if you feel after attending this carnival, you will start making a potful of money from the day you return home, the answer is a BIG NO !
This carnival is not one of those ‘formal’ events where the speakers are from abroad and charges are also very high.

What suits someone might not suit you. But, you will certainly get different ideas, and will be able to decide which idea can benefit you, which one needs a bit of tweaking at your end, to suit your temperament.

I will be speaking on 2 topics:

1.    Low risk setups for trading in Options (purely chart based), and


2.    This is more of a group discussion with some starting points from my side – on the requirements of  being a full time trader (something that everyone dreams of).

Wednesday, March 19, 2014

What might be the lower level in Nifty we might not see by December 2014


online poll by Opinion Stage

Wednesday, March 12, 2014

2 index stocks to watch out for in coming days

Although Nifty is at all time highs, 2 leading index stocks are doing something different.

Tata Steel :

The bears will keep an eye on the red line, whereas the bulls will keep an eye on the green line.

In any case, once it breaks 335, Tata Steel might be headed lower and fast. It needs to go above that red line to become safe.



INFY :

It has been rising at an angle of almost 45 degrees for almost 1 year now. However, it has broken the trendline as seen on the chart.

There seems to be some negative news after market hours today and the ADR on Nasdaq has given a strong negative reaction (down 6.7% as I type this).

If Infy opens  below 3550 cash here tomorrow, it can slide further.



Watch these 2 stocks tomorrow and in coming days to get an idea about what Nifty might do
 


A Bubble rally or Not? Please give your opinion


online poll by Opinion Stage

Sunday, February 16, 2014

The leader of the next bull run ?

The title might surprise quite a few when they see the stock that has been mentioned below.

However, one basic shortcoming of following charts only over the past few years can tend to mislead into believing that this stock is not doing anything for the last 5 years.

The stock is Reliance Industries Limited. This stock was the darling of investors once upon a time, especially in the Gujarati community, who will still be loyal to it. (I have also heard that there are some traders, who never go short in RIL, as a mark of respect to the tremendous wealth it has generated for them in the past).

The duration of a trade is directly proportional to the time frame on which one studies the chart ! 

In my view, to get a long term view of this chart, one should not look at the performance of the stock price only over the past 5 years. It is clear as shown below, that this stock has been sideways over the past 5-6 years (weekly chart below)



A very long term monthly chart also does not show much promise and it can also be termed bearish (monthly chart below).


The above monthly chart is on a linear scale. The same monthly chart on a LOG SCALE now gives a different picture as shown below:


The monthly chart has a support of a trend line (blue) near 780, and a very long term trend line support near 550 - 570.



A look at the yearly chart of RIL:


In my view, after the steep rise till January 2008, the stock is only consolidating, and might do so till it touches the long term trend line. However, since nothing can be said with certainty, it is better to buy some quantity for the long term near 780- 790, and then finally near 560 - 570.

A text book pole - pennant formation can also be seen on the long term chart, and if the support at 550 - 560 holds, I would expect this stock to give a breakout for a target of minimum 3000 over the long term.

I am sure, people will be afraid to buy this stock especially due to all the negative news regarding gas prices among others coming in the media on a regular basis.

However, old timers in the stock market will be aware that this stock thrives on a dose of bad news, and the best time to buy this stock is when the news get really bad.

If one believes in the India growth story and the fact that our stock market is headed for much higher levels in the next 3-5 years, I firmly believe RIL will be one stock to watch out for.



Friday, February 7, 2014

Reason for being bearish on Tata Motors

I am no expert in Elliot Waves or in Harmonic patterns, but follow simple basic TA.

As seen in the chart below, Tata Motors had a good support near 359-360 since the last 3-4 months, and that support was broken recently.

Although the 200 dma gave support near 332, as long as 360 is not crossed, the lower levels can be revisited.

A short opportunity has a very low risk near 357--360 cash levels.

 

Monday, February 3, 2014

Nifty - a possible scenario

After the flop show before expiry, here is something that bulls can look forward to:

This has happened in the past, and 'might' happen again.

On 30th January (expiry day), Nifty spot made a low of 6027.25, and Nifty futures made a low of 6025.1. This was Nifty January futures.

Nifty SPOT chart:
 



On the same day, Nifty February futures made a low of 6062.35.

Nifty futures chart:

 

This was mainly due to the premium on February futures. It has happened a few times in the past, that once the next month becomes current month futures, it visits the previous low again.

Nifty futures made a low of 6034 today, whereas Nifty spot went much below the low of 30th January (5994.95 low today).

A lot of people might be waiting to see what happens at the 200 day moving average, which is just a bit below today's low and also the double bottom near 5975 (spot).

It is possible that Nifty futures might just test 6025 and bounce from there, thus keeping the '200-dma-bulls' waiting.

If at all Nifty does give a bounce from Nifty futures 6025, the bounce retracement levels are 6130-35, or 6170 - 75, or even 6215- 20 on Nifty SPOT.

Watch Nifty futures 6025 closely tomorrow and in coming days !!

Tuesday, January 28, 2014

First signs of expiry at higher levels on Thursday

It was not without reason that I mentioned of a possibility of expiry being above 6200.

If the charts shown below are right, we might be seeing a repeat of what happened in August 2013.

Nifty made a low at 5118 just a day before expiry, and some action started in Nifty options that gave a hint of the big rise that followed till expiry.

The August 5100 CE chart is shown below with the Open Interest of that CE option. (this is a 5 min chart).

5200 Aug CE made a low near 20 on 29th August, and after 1 pm, the Open interest in this CE option started dropping drastically.


The 5200 CE rose all the way from 20 to expire at 210 in just 10 hours !!

If one looks closely at the 6100 CE chart of today, a similar pattern can be seen emerging.


The 6200 CE also shows a similar pattern:


If this shedding of open interest continues tomorrow, Nifty can rise.

As regards levels in Nifty, the high before the RBI policy today 6171.8 needs to be crossed fast tomorrow, for bears to panic.

This is just an initial sign and needs confirmation tomorrow by way of drastic fall in Open interest of the 6100 and 6200 CE options.

Monday, January 27, 2014

A gap fill, or a huge island reversal ?

On looking at the daily chart of Nifty futures closely, it can be seen that there isa gap from 25th November (high 6141.5) which was never filled till date.

Even today, the selling took Nifty futures to 6142.5, still leaving a gap of 1 point.

Bulls can say the gap has been filled. If Nifty futures does not go below 6141, we can see a bounce in the market (maybe to try and fill the wide gap left today).

However, should Nifty futures open with another gap down below  6141 tomorrow, this can be a huge island reversal !! (extremely bearish till it remains below 6141).

Watch the open and low tomorrow.

 

Sunday, January 26, 2014

In case of gap down on Monday, what to expect

With the way US markets closed on Friday, it is almost a certainty that our markets will open with a gap down tomorrow.

In case of a gap down, the support zone marked on the chart might come into play, and if held, longs can be initiated.

I still believe expiry will be near 6250 or above (I can be wrong, please do your own research before going long).

Options data will provide a clue about expiry levels as Monday and Tuesday progress.

 

Thursday, January 23, 2014

Sesa Sterlite - an interesting trade coming up ?

Sesa Sterlite broke out of a Pennant formation on 20th January on hourly time frame and completed the text-book target.

The stock is now repeating the same pattern and a break out above the pennant (211 fut), has the potential to take it to 226-230.

The pattern might play iteself in the first hour itself tomorrow, and once the breakout happens, a 220 CE can be bought near 2-2.5 for a target of 6-8.

Thursday, January 16, 2014

Where is Nifty heading in January ?


online poll by Opinion Stage

Thursday, January 9, 2014

An unique Pair Trade

This is a combined chart of Tata Steel 410 CE and Tata Motors 360 PE.

The pair is showing a bottoming out formation near 11.

One can buy BOTH for a combined total near 13.5, with sl below 11.

Below the Sl, one can exit the leg which is going against the trade, and ride the one going for.

PLEASE IGNORE THE LABELS AND TITLE ON THE CHART ! 

 

Wednesday, January 8, 2014

A poll on Infy stock movement before the results are declared on 10th January


online poll by Opinion Stage

LT update, first target 975 ?

Updated chart of LT, after the break in the long term trendline.

First target 975 possible on futures.




Tuesday, January 7, 2014

INFY short trade update

A potential short trade was posted on 3rd January. 

An update below:
 
Infy might be at a support now, and the PE too has reached the target. 

Advisable to cover the PEs


INFY 3400 PE chart :



Infy will weaken further only below 3440 or if the PE crosses 110.

Tata Steel - one more stock breaks a long term trendline

Tata Steel might be headed downward, with the break of the long term trendline.

It is a short on any rise, with a stop above that trend line now.

 


Friday, January 3, 2014

Infy pre-results trade

As is known, Infy becomes very volatile before and after results.

Based on charts, Infy has formed a potential triple top near 3575, and the 3400 PE has formed a double bottom near 74.

The 3400PE gives a low risk trade, if bought near 74-77, with a sl below 70.

Infy cash hourly chart:

 
Infy 3400 PE  chart :


This pattern becomes invalid if Infy closes above 3580 cash.


Thursday, January 2, 2014

Nifty update based on Options data

Although Nifty was very strong in the first half, and the PCR at 6300 strike price went to as high as 1.8 (very bullish), the fall in the second half has damaged the Options positions and the PCR at 6300 crashed to a low of 1.07 towards the end, thus putting the 6300 level under threat for this expiry !.

Bulls need to be really worried if this falls below 0.9 in coming days, after which they can forget 6300 for this expiry.

If 0.9 - 1.0 is protected, bulls can expect another rise above 6300 next week, before the results season kicks in.

 

Wednesday, January 1, 2014

Results of Poll on 28th November regarding Nifty close on 31st Dec


online poll by Opinion Stage

Which level will we see first on Nifty SPOT


online poll by Opinion Stage