NIFTY FOLLOWING LEVELS SO FAR

Nifty has followed the road map charted a few weeks back and is at a very crucial resistance band.


5180 - 5220 is a band which will be extremely difficult to cross, in the same way that 5090 - 5110 acted as a support.

However, the fall might not be fast, since lots of traders are stuck with short positions and they will cover on every drop, thus supporting the market.

A close near the lower band - as close to 5100 as possible - will be an invitation for bears to attack overnight, taking Nifty below 5090.

As seen on numerous occasions, such levels are generally crossed only with the help of a gap down.

Time for caution to hold longs overnight, since bulls might run out of steam any day.

EDGE OF THE CLIFF

The stage is set for the bears.

Will they? Won't they?......

They need to ensure Nifty gapping down below 5060, else be ready for a fightback.

AAL IZZ WELL.....Is all really well??

A lot of people have a wrong understanding of the science and art of Technical Analysis.

Technical analysis is not a tool for prediction, like what astrologers attempt to do. TA takes help from historical data and shows what are the possibilities for the future. There are those who just follow the trend and and prefer to get stopped out, or there are some who pay heed to the various possibilities and take action in 'anticipation'. The former use TA only as a science and the latter understand the science behind TA and use their mental creativity as an 'art.

Hence, I always maintain that TA is a science and also an art!

It all depends on perception. It was this perception that did not allow any shorts till 4830 was being held before the budget, and the result is a 6% rally in Nifty in 4 days.

However, now, there are some roadblocks ahead. Although TA as a science says to be long, TA as an art suggests caution.

A glance at the daily chart shows a striking similarity between the chart when Nifty was 5310 and now. What happened after 5310 is known to all - whether the same will get repeated is something no one wants to even think of at this stage. The post budget rally has brought in a sense of euphoria and the market is HOT now. The bears are known to strike when the market is HOT.Is all really well??

If the similarity between the first week of January and now holds true, we might have already seen the short term top, or are very close to one.

The hourly chart also shows a lower top in Stochastics and also a sell on MACD, and hints that Nifty is headed down.

If Nifty cannot cross and close above 5115 - 5135 on Monday, it is safe to say, we are headed downwards.

Downwards to where?? Everyone knows the huge support at 5050 - 5070, and if the bears cannot break this intra day, they will try and do it overnight.

Below that, the level 4960 -70 is also a critical level, and if Nifty holds this level, it is safe to take longs again, with a stop of 4930 and stay long for this month!

An interesting combination to go long will be Nifty near 4970 and the leader near 980 once again.

It might sound funny that I am cautioning against fresh longs and advising possible shorts - especially when the US market squeezed the shorts on Friday, and FTSE of UK made a new 2010 high.

But yes - the risk: reward ratio is certainly not in favour of fresh longs at this red hot stage !

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ANNOUNCEMENT - A full day course has been planned - on the Science of Technical Analysis and the Art of trading stocks and Nifty futures - in Pune; The date is Saturday, 3rd April.

Those interested in more details can get in touch on the yahoo id timethemarket@ymail.com

FOLLOW CHARTS AND IGNORE NOISE.....

As mentioned, the 2 key stocks that held the 200 dma outperformed the index by a long way - Tata Steel and ICICI Bank.

It is amazing how, if one just follows charts, and keeps the 'noise' out, a completely different picture emerges. I have heard many are still going short or averaging earlier shorts, believing that this is just a pullback rally. So what is it is just a pullback rally!

A rally is a rally is a rally; it is no untouchable that one is not supposed to trade long in it.There will be enough signals when this uptrend ends, to sell longs and go short.

The long call at 4870, with a stop of just 40 points is 150 points ahead, and a reversal will also be spotted within 30-40 points from the top, if not earlier. The 2 key levels that all will be looking at now are 5060 - 80 and 5160 - 5180; however, there is another important level which will come into play tomorrow - no, it is NOT 5050! If Nifty manages to cross this level smoothly, the writing is on the wall, and Nifty will follow the levels posted 2 weeks back - yes, who says the trend changes every day?

The low on Nifty spot today needs to be keenly watched, and if bulls manage to hold this well, bears are in serious trouble in this 'pullback rally'. It is too early to talk about the importance of the low today, and it will explained at an opportune time.

Amongst the key stocks, the 'leader' of the Indian stock market is fast losing its credibility and it has to do something as early as tomorrow - readers will know which stock is being referred to; and a 3% rise is expected in this stock sooner rather than later.

So, ride the uptrend till it lasts and be ready to sell and go short.

You can get 'live' updates on

http://twitter.com/ap_pune or

http://twitter.com/TimetheMkt


A full day course is being planned - on the Science of Technical Analysis and the art of trading Nifty futures - in Pune; The tentative date is Saturday, 3rd April.

Those interested in more details can get in touch on the yahoo id timethemarket@ymail.com

Bulls on ventilator support

Apologies for the long absence, will be updating regularly now.

It has always been observed that once the 200 dma is crossed upwards comfortably (in April 2009 this time), the market invariably comes down sooner or later to test the 200 dma.

As is said, bulls live above the 200 dma and bears live below it - however, these are testing times for bulls, and they need to utlilise all ammunition at their disposal - for survival above their lifeline.

The job is that much harder when some key stocks have settled below the 200 dma.

A quick check shows that Bharti, Rcom, Hindustan Unilever have settled well below the 200 dma, Reliance, ONGC, SBI and NTPC are just below the 200 dma, but for more than a week now. Bulls have very little ammunition left!!

Out of the index heavyweights, only ICICIBank and Tata Steel have managed to survive above the 200 dma.

This doesn't augur well for the near future, unless the key stocks go well above the respective 200 dma very soon.

Looking at Nifty - after making the low of 4675 very close to the 200 dma, Nifty managed to claw back upwards, however, bears became active again near 4830 and 4930.

A glass can be seen as half full or half empty.

Looking at the optimistic side - after managing to hold the 200 dma, Nifty took a pit stop at 4830, and another at 4930.

Now, without going below the low on Friday. Nifty needs to cross 4950 fast and close above it. Bulls seems to have some backing from the international cues, with the DOW closing well on Friday and Nikkei futures were trading at + 190 around 11pm on Friday IST.Hang Seng has been battered and bruised and one can expect the bulls in Hong Kong to retaliate on Monday morning.

The indication is that we should have positive cues from Asia on Monday morning, and it needs to be seen, if these positive cues are enough for Nifty to cross 4950, which is just 2.2% away from current levels.

If 4950 is crossed successfully, I would not be surprised to see 5150 - 5170 in February, maybe on the day of the budget.

If 5200 is not crossed, by Friday, it opens a big window of opportunity for bears - and we shall see what they intend to do next weekend....

However, MISSION 4950+ first.

Why brokerage houses hate us.....

Just 3 calls........says it all......

5th November ---- Buy 4800 ce near 75, sl 60, booked at double in a few days.

18th November--- Buy 5100 pe near 75, sl 60, booked at double in 2 days

20th November --- Buy 5000 ce near 40, sl 30, still holding at 125!!!

No wonder brokerage houses hate us, since their clients hardly trade, but still make money.

It is more surprising that some traders also hate us, saying number of calls are less; but.....

just imagine the above trades starting with 1 lot.....

4800 ce (75 x 1 lot) - Rs. 3750 becomes Rs 7500

5100 pe (75 x 2 lots) - Rs. 7500 becomes Rs. 15000

5000 ce (40 x 7 lots) - Rs. 14000 becomes Rs. 43750, and still counting.

Add timethemarket@ymail.com on yahoo messenger and stop trading for your broker to earn money and stop trading every day.

Final frontier?

It is amazing how Nifty, after crossing the 61.8% Fibonacci retracement level of 4789, has managed to go further ahead thus creating a huge barrier for any fall in the future. Let us see what has happened to the other 2 indices Nifty Junior and Nifty Midcap 50.

Nifty Junior crossed this 61.8% level (9539) last week and has closed well above it (10003.8). Next in line is the Midcap 50 index, and a look at this chart gives an hint as to why action has mainly been in midcaps and not the main index stocks. Nifty Midcap 50 index is currently at 2642, and the 61.8% retracement level of the 2008 crash is at 2857, still a clear 8% away.

It would be safe to say now that the action in midcap stocks will continue till this level of 2857 is crossed.

It needs no Einstein to predict which stocks should be on one's radar - yes, the Midcap index constituents.

Readers can take a pick from the list from here

http://www.nseindia.com/content/indices/ind_niftymidcap50list.csv, and enjoy the ride to beyond 2857.

That does not mean, other stocks will remain sideways - this is just an attempt to identify the ones that are more likely to rise more in the near future.

Chart of Nifty Midcap 50 attached.

DIWALI DHAMAKA

I guess bulls want to prove me wrong when I said this might be a month of consolidation.

If Nifty futures decisively crosses 5150 and stays above it, it has a clear 220-230 points path to travel.

Who better to lead this lap than the leader himself - Reliance Industries. On crossing 2240 decisively, RIL can go to 2375 - 2400. Some other targets -

Tata Steel - 612
DLF - 533
Powergrid - 127
ICICI Bank - 4 digits

As I said in my last post, bulls are systematically raising the bar (support levels).

Once they crossed 4790, they created a base at 4850, then 4920, and now 5070. It will need some real bad fundamental news, or some disaster to break such strong levels.

I also mentioned, after the red Diwali of last year, bulls would like to celebrate in style this year.

The platform is ready, the stage is set, and bulls are just waiting for the director to call...lights, camera, action.......once the BIG B of the Indian stock market - RELIANCE INDUSTRIES crosses 2240.

Is this is a dream? Cannot be, since, it is just 9.30 pm and I am wide awake.

Month of consolidation

Nifty respected the crucial level of 4920 - 4930 by opening well above it on Monday, and shook off intra day bulls who were trying to trade with tight SLs and marched away to glory to close above 5040.

However, options data for this month suggests that bulls want to consolidate either for the full month or at least a few days, and might be also playing games with bears, who start going short merrily on a fall of 20 points, to get trapped later.

Those familiar with the sport - High Jump in athletics, will draw a similarity with what Nifty is doing for the past few weeks / months - raising the bar (support level), and creating fresh supports almost every week.

Stocks to watch - RIL again - a close above 2225, can target 2375, HUL above 295 can target 305 - 312 - 322 and ITC going for 282.

ON THE EDGE OF A CLIFF ?

NIFTY is at a do-or-die level and standing on a cliff. As seen from the chart, the low on Friday was bang on the trend line right from the March 2009 lows, from where this rally began.

Bulls have a huge task on their hands right now, and they will try to protect this level with all their might. Interestingly, 2 main index heavy weights – Reliance Industries and SBI are also poised at extremely critical levels.

NIFTY has to cross a big hurdle at 5000 – 5010 first and then close above 5040 to ensure safety of the uptrend.

The DOW has helped on Friday night by closing above an important level, and NASDAQ has a logical target of 2215 (2139 now).

After having done all the hard work over the last 7 months, Nifty needs to protect Friday lows on a closing basis, to head for the logical targets of 5175 – 5250 – 5295 and finally 5545.

The Vidhan Sabha elections in Maharashtra will not help bulls, since a holiday in between with global markets working, leaves our markets vulnerable for a gap down.

Keeping all this in mind, Nifty needs to close ABOVE 5040 tomorrow. If it fails, traders would be advised to remain light before the holiday and take a fresh look on Wednesday.

It was quite a forgettable DIWALI for bulls in 2008. Will they make it sweet in 2009? The next few days will have an answer to this question. Watch RIL and SBI over the next few hours.