Wednesday, April 29, 2009

Monthly Chart - April 2009


Picks to watch for 29 Apr

Scrip: ABAN
View: Short
Entry: 394.90
Exit : 376.80
SL : 417.50

Happy Trading

Bullish undercurrent finally turned out as a move to trap the bulls ?!

The bullish undercurrent that we could sense for the past three days finally turned out to be a move to trap the bulls themselves and NIFTY corrected significantly (exactly by the same amount of an expected upmove).

All this time, the concern that this rise has been with low volumes indicated that the move is not genuine and this was expected to happen anytime soon, but the expectation that this will not happen for this expiry proved to be wrong.

What now?

Given this situation, it might again be premature to say for sure that market is going to crack from this level too soon. It has to again penetrate through all the well known support levels, initially a test of 3334 followed by 3300 levels.

Any break below 3256 will clearly confirm the downtrend and a break below 3120 going forward would mean disaster. The question now is that can this all happen again so fast as it happened on the upside.

This is not clear at the moment and NIFTY could also be range bound from 3200 and 3447 levels before the next big move is triggered.

So it is wait and watch for the time being.

Resistance levels : 3403, 3423, 3447
Support levels : 3334, 3303, 3256

Happy Trading

Tuesday, April 28, 2009

Picks to watch for 28 Apr 2009

Scrip : ALBK
View : Long
Entry: 53.95
Exit : 54.90
SL : 52.60

Happy Trading

Bullish view intact ! Markets to see higher levels before expiry

Markets made a new high for this month series yesterday and bulls could do it despite all the global weakness yesterday. Considering the move from sub 3300 levels to reach the peak of 3517 levels reiterates the fact that this expiry is again under the control of bulls.

A gap up to 3500 levels is also not ruled out and a run up till 3580 can take place today itself.

All the key levels remain exactly the same.

Happy Trading

Sunday, April 26, 2009

Picks to watch for 27 Apr 2009

Scrip ABIRLANUVO View Long Entry 563.1 Exit 589.5 SL 539.5 Scrip ADLABSFILM View Long Entry 236.3 Exit 248.1 SL 223.2 Scrip LITL View Long Entry  243.7 Exit    260.7 SL      223.4
Happy Trading

Bulls strongly positioned for this expiry also ?!!

The move in the last two session came as a complete surprise and also as a severe blow to the late entrant bears. The move was so clear and the trend was very much up without much of retracement and so gave very little chance for even the intraday bears to escape unhurt.

The fact still remains that those bears who enjoyed last week's intraday profits by shorting whenever nifty reached its 200 DMA are yet to believe that NIFTY is now so strongly placed above its 200 DMA and has made a strong 4.4% upmove in the last two days. Most of those to whom I talked with are still unable to take their stops and are simply sitting with a hope that NIFTY will tank before expiry and bail them out.

Given the current scenario and the way we have seen the moves of the strong bullish undercurrent, NIFTY has to see much higher levels before this expiry. A move above 3510 will be the first shock for the bears which can immediately push NIFTY to test 3580 levels and there is also a strong possibility of testing 3630 levels tomorrow itself or atleast a day after.

Tomorrow is again a big deciding day. If NIFTY gaps up and moves past 3510 immediately, then the rest will automatically fall in place.

Happy Trading

Friday, April 24, 2009

Bullish undercurrent finally proved its power! Bears completely trapped !!

The much expected move happened today atlast and proved the fact that the bullish undercurrent was very much alive !
This was the view that was being maintained for the last three sessions and it looks like bears have totally lost out for this expiry also. The last chance for them was to cover at the momentary sub 3300 level yesterday and it is highly unlikely that bears will benefit going further for this expiry.
The way the market zoomed past 3400 levels after trapping the bears, at 3373 levels indicate that 3400 or 3373 is going to act as a very strong support going forward and there is a high possibility that the 3400 puts also expire worthless for this expiry.

The only concern for bulls is that the volumes have not yet picked up and today the up move was also with very low volumes. Having seen this, this could very well end up being a false move for this expiry and NIFTY can collapse in the early weeks of May itself.

Whatever it is, right now, bulls in this process have regained the 200 DMA territory.

How far this rally can extend? This now becomes the key question for this expiry. There is a very strong possibility that the previous high made at 3511 will be conquered with ease and bulls can also ferociously move NIFTY to 3562 and 3604 levels.

This might also end up as another expiry where even the late entrant bears would not gain anything. 

Given this force, tomorrow could well be a gap up day after around 3440 or higher and can also push NIFTY immediately to further highs.

Happy Trading

Thursday, April 23, 2009

Picks for 23 Apr 2009

View: Long
Entry: 61.90
Exit: 64.20
SL : 58.65

Happy Trading

Consolidation phase...Still bullish undercurrent seen ?!

Again the trend is continuing, lower highs and lower lows everyday and a retracement from the low levels to close almost near the previous session's close. This has been continuing for nearly four sessions, NIFTY honouring the 200 DMA as the resistance level and testing support levels one by one each day.
Will this trend continue?
This is where my view differs and each day it tests a new support and gains strength, the bullish view gets further strength. The fact remains that the key level of 3256 is not yet broken and majority of the bears are trapped below that level.
Also this consolidation has been with very low volume and most of the heavyweights are taking support at key level (either 20 DMA or 200 DMA) and are ready to move higher.
The fact that the undercurrent is still very much bullish, how long this consolidation phase will continue. This is the important question and the expiry of April series has another 6 trading sessions left including today and the question remains as to whether there will be a breakout either side before this expiry.
My view is still that we might not see a breakout on the downside and NIFTY should not even test 3256 levels for this expiry.

Resistance levels : 3357, 3392, 3415
Support levels : 3304, 3256

Happy Trading

Wednesday, April 22, 2009

Bullish undercurrent to show upperhand ...?!!

Though NIFTY is making lower high and lower low each day for the last four session, the fact remains that it almost closed at the same levels for the past three days. There has been lot of expectation on a correction overdue but NIFTY has certainly not broken and closed below the key levels of 3334 and 3256 yet. More than that, NIFTY is showing strength to bounce back every time it is pulled down.

The scenario is such that the late entrant intra-day bulls are not given profit opportunities, but bears are escaping the next day if they are shrewd enough to cover when NIFTY makes a new low. This is bringing in a sentiment that market is going to fall more than recover and the correction overdue also seems to be a good fit for this story.

But the undercurrent is still very much bullish. There is a strong potential to move past 3500 levels very much before this expiry.

Today's session would be able to decide further course of action to a great extent. If at all bears manage to bring down NIFTY to 3256 levels and further, then pessimism would set in and can pull NIFTY to levels of 3150 in the short term.

On the other hand, if bulls manage to break the high of 3415, then there might emerge strong buying and will push NIFTY to further highs and currently I favour the bull story.

Resistance levels: 3395, 3415, 3440

Support levels : 3324, 3304, 3256

Tuesday, April 21, 2009

Lower high and lower low...Yet to test 3303 and 3256 levels

Nifty tested the support level of 3334 yesterday and also made a lower high. The view remains exactly the same as written yesterday. NIFTY might test 3256 levels and can bounce significantly from that level in the short term.

Only on a break below 3140 will bearishness set in and that is again unlikely for this expiry.

Happy Trading

Monday, April 20, 2009

yo-yo market at 200 DMA...Bulls to regain control in a couple of days ?!

It looks like the strong fight has started between bulls and bears and most of the time it ends up as the late entrant bulls are being attacked and killed by the hiding bears.
The view from here is that bears may gain control for a day or two till the levels of 3334 and 3256 is reached and after that we can see bulls taking control again for this expiry. A retest of 3500 and above is also not ruled out once NIFTY reaches the above levels. 
The reasoning is simple. NIFTY has been struggling to convincingly close above 200 DMA after it did the first time and bears seems to take control at EOD and when bears take further control and push NIFTY down to 3256 levels, the view would certainly change to bearish and suddenly we might see pessimism setting in and that is where I expect another rally to take place atleast till 3500 levels before this expiry. 
Only on a convincing break of 3140 will bears be able to take further control and I dont expect that to happen in near future, atleast it will not happen for this expiry.
The resistance level to watchout for the day are 3419, 3467 and more important are the support levels at 3334 and 3256.

Happy Trading

Friday, April 17, 2009

Bears showing strength to fight back..May not gain control too soon ?

Bears gave a tough fight yesterday and brought back NIFTY into their territory. While this certainly has created a small panic among late entrant bulls, this does not mean bears have won completely. It is a tough and a hard way for bears to gain further control.
Atleast for this expiry, NIFTY should not dip below 3256 or may get enough strength at 3303 level and we can see bounce from those levels.
The key resistance levels for the day are 3385, 3415 and support remains at 3334 and 3303.

Happy Trading

Thursday, April 16, 2009

Bulls rejoicing after conquering 200 DMA! Bears hiding behind the bushes to fight back?

It was indeed a remarkable acheivement for the bulls to have conquered convincingly the 200 DMA and it is certainly party time for the bulls. 
The moment bulls get drunk, bears are silently preparing themselves to pull the victorious bulls below the 200 DMA into bear territory and rip them apart for sometime.
The question is, "How soon this will happen?" and how long bulls can simply rejoice having conquered the 200 DMA. 
First, why there is so much talk about the 200 DMA. The reason, is historically above 200 DMA is bulls territory and below 200 DMA is where bears have a strong upperhand. 
Having said that, from deep down inside the bear territory, bulls have fought a violent battle and have got into their own terrritory and little did bears realize that this was going to happen too soon. 
Initially bears were complacent, then they were taken by surprise, then they tried to fight, got hurt, ran for cover and right now they are forced to hide behind the bushes, but certainly not dead.
They are simply watching the bulls rejoicing and the hysteria can be seen for another session or two, but then it will be time for bears to take control slowly without bulls realizing it (as they are already drunk partying) and will suddenly pull NIFTY into their territory i.e significantly below the 200 DMA (which currently stands at 3420 on extrapolation) and there will be a fresh fight hence forth.

Happy Trading

Tuesday, April 14, 2009

Higher highs and higher lows in the last 3 sessions. Bulls still strong but bears to take control ??

In the last 3 sessions we saw NIFTY making higher highs and higher lows clearly signalling that bulls are still strong. Bulls made a strong attempt to touch the 200 DMA in the last session, but were not able to do so, may be due to the holiday today.
The three day pattern and the way bulls are holding NIFTY strong indicate that it has to certainly touch and break the 200 DMA barrier atleast in the next session which stands at 3425 currently before deciding the further course of action.
In any case, a retracement till 3250 levels is not ruled out in the very near term and only on a break below that level will bears be able to take further control. Till then it is very much under the control of bulls, but they might also not be able to push it much higher from this level without NIFTY correcting further.
It might be best to short further upside moves over and above the 200 DMA and play for the retracement till 3250 or atleast 3303 levels for the very near term.

Happy Trading

Sunday, April 12, 2009

What to expect further? Yet to touch 200 DMA and a doji in the last session

It was such a perfect doji in the last session and the fact still remains that NIFTY has not yet touched its 200 DMA.
Is it like biting the elbow.. so near yet so far for the bulls ?
In any case, the current view is bearish, but bulls reaching the 200 DMA milestone and rejoicing around that level for one day or two is also not ruled out before bears can take control.
It is better to look for shorting opportunity if 200 DMA is breached and may be also employ a martingale strategy of accumulating the shorts at higher levels. If it seems risky to do so, then it might not be as risky as we perceive it now.
A near vertical break of 200 DMA and a further bull run without even testing 3250 levels does not seem like a possibility at all at this stage.
Another way of looking at this is to simply wait till this steam of buying subsides and a reversal pattern is made and then enter on the short side. In any case I still hold the view that a break below 3140 seems to be remote atleast for the April series, but a pull back till 3250 seems like a good possibility.

Happy Trading

Thursday, April 9, 2009

Bulls ferociously went on a rampage! Are we nearing the intermediate peak ??

Bulls fought a very ferocious battle today braving all that was against them with a Dow correction, Asian markets all trading weak, a very weak opening, down 100 points, over bought indicators and what not.

In the end, it really proved that the undercurrent was very much bullish and bulls could rise against all odds. The moment the key level of 3140 was not broken and that most of the end-of-the-day bears were all sitting in pain already added fuel to the fire and bulls took complete charge and proved their might.

Now that it is history, what next is the big question?

The 200 DMA is now very near at around 3437 which is another milestone for the bulls. But then if that is reached will the bulls be able to penetrate through that with full might and reach further high levels.

This is where my view is extremely cautious.

9 out of 10 analysts have all gone bullish and the retail sentiment has started to fly high and there are headlines seen as to sensex could see 21 K levels again and so on...

The weighted volume for NIFTY that we saw today is the highest in the past six months and it looks like everyone is getting sucked into this as if there will be no gravity tomorrow and going forward.

Now if we have a close eye on the technicals, NIFTY has had a consequtive 5 day bull streak and most of the indicators are in the over bought zone which might start showing its impact going further.

It might be high time to think in terms of a bearish trend reversal, though it will certainly be premature to initiate a trade in the direction. The best strategy would be to go for a 'bear call spread', selling 3500 calls and buying 3700 calls for a net credit if at all NIFTY breaches the 200 DMA tomorrow as my take now will be that, there will be a reversal atleast in the short term before this expiry and the 'bear call spread' seems to be a safe bet.

Happy Trading

Chart courtesy:

Tuesday, April 7, 2009

Will the bullish undercurrent lose steam or is there a last leg up ??

NIFTY touched 3300 levels and closed comfortably above 3250 in the last session. The low made on 6th April was the close made the previous session which saw a gain of 4.92%. So even in the last session, most of the end-of-day bears are still held captive. 
Though this rally looks over extended the undercurrent is very much bullish and from the low of 2500, this looks like the third leg of the upmove which can relatively be much ferocious than the previous ones.  The 200 DMA also looks near and can be breached by another 5.7% move in NIFTY.
It looks like the last leg up should be still very much intact and the negative sentiment may not drift NIFTY to a level below 3140 in the near term. The last leg started breaking the 3085 barrier on the upside. Reversal will be confirmed only on a move below that and if that happens then as mentioned in the earlier post it becomes a level playing field and would be better to sit and watch.
Having said all this, at the time of writing DOW is already down by 2.3% and is filling the gap made three days ago. In any case, I still hold the view that the 3000 and below strike puts that were already bought earlier at lower levels might go worthless for this expiry. The next two days of trade remaining in this week is also crucial and might indicate if the bull run will continue or bears already waiting to take revenge will start taking the upperhand slowly

Happy Trading

Saturday, April 4, 2009

How do we justify the current market move ?? Fundamentals -> Technicals -> Psychological.

For any short term market move or for that matter, any move in markets, if you cannot justify using fundamentals, then technicals can throw some light, like markets remaining in over sold or over bought for a while etc.,

What if technicals also cannot provide a solid reason?

This is where psychology comes into picture and can throw some light on
why markets move the way market moves?

I generally prescribe to the fact that it is rather meaningless or futile to find out a reason for each and every one of the market move.

If you happen to read the headlines of top sites providing live market updates, they feel obliged to provide some reason for every market move and if markets starts moving contrary to the reason they have specified in the existing headline, then they are forced to change the headline. (they cannot change the markets anyway :-)

Indian markets move in line with global markets !! and also
Indian markets decoupled from the rest of the global markets !!

The fact is that, you cannot make money or atleast I cannot make money if I have to depend on either one of the headline above to earn my daily bread.

There are innumerable and countless variables involved and trying to fit the market move based on all or a subset of these variables becomes way too complex or at some stage becomes totally inexplainable.

So what moves the markets then ??

Assuming market is a zero-sum (infact a negative-sum considering the slippage and commisions) game, we need to get our money from one of our fellow participant. We cannot all win at the same time over a long period of time and especially if we have a time-bound contract (derivative) for instance, then at the expiry of the contract some people lose and some win. But the fact remains the former 'some' is much larger when compared to the latter 'some'.

So if we are able to tune ourselves and position ourselves on the side of the winning 'some', then there is a chance that we will not only earn our daily bread but also earn a fortune in the long run.

Given this scenario, majority of the people are bearish after Apr 10th, reasons aplenty, results start coming out, election uncertainity etc., etc., It is common view and every person participating in the market thinks that way. This is also proven by the fact that the implied volatility of 'put' options were much higher than that of the 'call' options and people are frantically buying 3000 and below strike puts which in my opinion might all go worthless and April could also be a month for NIFTY closing higher than last month.

Using this reasoning as a base, when will I accept that I am totally wrong. If NIFTY falls below 2960 at any point in time before this expiry. Because at that time the majority of the bulls would have got trapped from the levels of 3200 and higher and it then becomes a level playing field for both the bulls and the bears and there might not be any edge to enter into the arena then. So the best would be to stay outside and watch the action if at all that happens.


04 Dec 2009
Was just browsing through Yahoo and found contradictory headline for the same news. ultimately one of them will be removed based on the market action...

Thursday, April 2, 2009

Is NIFTY heading higher?? Bears totally trapped and weak bulls shrugged off.

A really surprising move was made yesterday and it looked very much like the shock treatment given to bulls on the 31st March trade continued, as NIFTY opened remarkably lower contrary to everyone's expectation. Even SGX NIFTY was trading higher then. 
The opening was another shocker for the already weak bulls and looked like NIFTY is going to go completely lower from that level. Bears were all very happy and were rejoicing at the open, but that is where the trap for the next bigger move was made, that too mildly and silently so that bears didnt even realize that they were being taken for a ride. At the end of the day, even the weakest of the weak bull that remained silent on March 31 and on yesterday's open survived.

What does this indicate?

The strongest of the strong bear is trapped and so it is time for bulls to rise ferociously as mentioned in the ealier post. The immediate level to watchout for is 3110 and a move above 3125 will make all the bears (fresh ones and those who rolled over their shorts from earlier expiry) to run for cover pushing NIFTY further up.

The only glitch is that some of the heavy weights like RELIANCE, ONGC and INFOSYS are already near their 200 DMA and might not be able to break through that barrier and move higher straight. The other candidates being bank stocks like ICICI, SBI still have a huge potential to move upside and so if at all the theory is held that NIFTY has to move higher, then they could contribute significantly.

Happy Trading