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.

THE SEPTEMBER BEAR IS DEAD………WILL THE OCTOBER BEAR GET ACTIVE NOW?

The fierce upmove late today has taken everyone completely by surprise, but as usual, I am a bit cautious.

I am not sure that the rise was due to action by bulls, and would like to think that this rise was purely due to short covering. How else can one describe ICICI Bank cash on NSE which was trading near 850, suddenly jumping to 890 for a brief moment and within minutes, the high registered was 927.6 !! The volumes in that 1 minute bar when ICICI Bank jumped from 850 to 890 were 2,22, 180 shares! Why would any bull buy at this rate, in such a big quantity? Was it plain short covering? Moreover, the 840 September ca never went above 20-22.

Keeping all this in mind, I feel the rise today was only engineered by bears (short covering).

I am reminded of a similar event in July 2007, when on the last day of that settlement, Nifty had closed near highs, 4624 and on the first day of the August 2007 settlement, market had crashed (Nifty was down 3.8%).

Are we in for something similar tomorrow, well, I would not be surprised.

NIFTY HAS NO FEAR OF HEIGHTS..ONLY US HUMAN BEINGS HAVE IT

Attached is a long term chart of Nifty, right from its inception.

We CANNOT impose our WILL over the market and must learn to understand what the market is intending to do. What better tools than charts to do it. Moreover, Fibonacci retracements are very easily forgotten, and people concentrate on the shorter term and ignore the broader picture.

In the shorter term, yes, market is overbought, has run up quite a bit............so WHAT......says Fibonacci.

From the attached chart, which I repeat, was pointed out a few times earlier, Nifty has crossed the all important 61.8% retracement level of the crash of 2008, and I had explained last week, how the same level of 4780 - 90 was attacked a number of times by bears over a couple of days, and bulls took it way above this level to safety. The level of 4920-22 was also important as mentioned last week (although not as important as 4780-90).

However, Nifty was smart enough to cross that level and close well above 4920.

This cushion of 1-1.2% above 4920, will act against any weak global cues over the long 3-day weekend, and in the event of a gap down open, bulls can step in at this level. If they fail, they have another big support level at 4860, and THEN, finally the all important long term level.

In spite of any weakness, I feel (saying again), we might not see 4780 - 90 again........(ever????....time will tell).

If we have a gap down open, and 4920 is held, that is a good stop for longs, if it fails. buy lower, with a stop loss of 4850. I see an expiry close near 4950ish levels. One can create positions in October series, and I see 5295 or even 5540 in October.

Long term targets for Nifty remain............hold your breath.........8010=====>>>>10110=====>>16190........difficult to believe, yes, for me too!!!

I still feel, Gold will fall, and equities the world over will rise (I can hear a lot of people chuckling :)

We must remember, no high is high in a bull market, and no low is low in a bear market. It is only us humans who have fear of heights, not the market!!!

NIFTY - nadiya ke us paar

The Nifty kaBULL express has only Pit stops on the way.

It is amazing how the market follows Fibonacci levels.

Going back to pre-election days - May 2009 - there was an all important level 3820 which was the 38.2% retracement of the previous year's fall. Bulls had sensed that they might face a stiff resistance at 3820, and as I have been constantly saying, there is only one way to cross such levels --through a gap up, which is what happened on the historic day - 18th May. We have not seen 3820 ever since, and the lowest level thereafter was 3919.

In this case, at least there was a sound reason for such a huge gap up - stable government!!

Over to September 2009 - the next and MORE crucial 61.8% level - 4789 was approaching. Bears had mobilized their forces at 4730, keeping a cushion of 60 points and fought hard. Bulls realised this and they had no choice but to resort to the standard trick of overnight gap up, which is exactly what they did with a gap up from 4782 to above 4800 on 8th September.

Bears had not given up, and they still kept fighting hard but the amount of firepower available with bulls is amazingly clear now.

In the last 20 trading hours, the band 4784 to 4790 has been tested FIVE times intra day and every single time, bulls defended that band with all their might.

I do not think this level can break intra day now, and bears also would have realised that. The only escape for bears now is short covering, and the next level where they can think of attacking is 4922-25, which is the feeble 23.6% of the entire rise of Nifty from the beginning to the all time high of 6357.

We never saw 3820 again. Will 4789 too meet the same fate? Time will tell.........

Another chart attached shows the parallel channel on weekly basis.

No wonder, the extent of retacement by our stock market is equalled only by Brazil and other stock markets are lagging way behind.

Nifty rules the world...............

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