Tuesday, August 31, 2010

Markets to test further support before a strong up move

Yesterday markets faced stiff resistance at the first level of 5469 and corrected below 5400 levels intraday to close at 5415.

Options data indicates heavy accumulation in all the near strike puts of 5400, 5300 and 5200 with some build up in 5600 calls also. This indicates market is confined in a larger range and any further down move will be equalized by a powerful up move.

Markets have opened weak today and overall market is likely to test further support levels for the week and a move towards 5352 is possible.

Resistance levels : 5449, 5469

Support levels : 5394, 5352

-Happy Trading

Monday, August 30, 2010

Range bound moves with a larger range and an increase in volatility

What the markets did last week ?
After the neutral expiry close on thursday, Nifty corrected significantly on friday to retest the support below 5400 levels and closed the week exactly at the july expiry close of 5409 levels.

What does the options data indicate ?
Though it is too early to read options data for the september series, the main thing to note is that the accumulation in near strike puts and calls have already reached a very huge number, with 5400 puts topping at 89 lakhs in OI. The PCR stands at 1.31, still favouring bulls to a certain extent and the implied volatility of calls is low at 14 and that of puts at 21.

What can be expected this week ?
Overall it looks like markets will still be confined to a range, a larger one with volatility increase seen going forward. Any strong correction is likely to be neutralized by an equally strong up move.

How to trade for the week?
It is better to trade the range for the week with a buy at lower support levels and a sell at higher resistance levels.

Weekly resistance levels : 5469, 5531, 5587

Weekly support levels : 5394, 5352, 5296

-Happy Trading

Friday, August 27, 2010

Range bound moves to continue for sometime after the neutral expiry

After the neutral expiry close for august with wild swings intraday as written in previous post, markets are right now under the influence of option sellers for the past two months.

The historical volatility is slowly increasing with heavy accumulation seen already in the near strike puts and calls.

It looks like markets can remain range bound for some more sessions before breaking out and the implied volatility of calls being low at 12, compared to that of puts at 24 could suggest a strong upside move also on any major correction for the month.

As of now, the trend is not yet clear and Nifty is resting on its 20 DMA and it is better to wait and watch for a few sessions before initiating further trade.

Resistance levels : 5485, 5509, 5523

Support levels : 5462, 5448, 5432

-Happy Trading

Thursday, August 26, 2010

Monthly Chart - August 2010

-Happy Tradingwww.tripleint.com

A neutral day with wild swings to end the august series ...

Yesterday bears could push markets further down towards the 20 DMA level 5457.

Options data saw turnaround yesterday with 5500 puts unwinding and 5500 calls adding 13 lakhs in open interest. The OI in 5400 puts remains at 1.2 crore.

The data points to the fact that Nifty might close between 5400 and 5500 for the august series and more so a neutral close around 5457 after testing 5430 levels and also 5500 levels on the higher side with intraday swings between these levels.

How to trade?
A long can be initiated on a test of 5430 levels and shorts on a move to test 5500 levels for an expiry close near to 5457 levels

Resistance levels : 5485, 5509

Support levels : 5448, 5432

-Happy Trading

Wednesday, August 25, 2010

A neutral day in the penultimate session for August series

Markets corrected yesterday to retest the support of 5485 levels.

Options data saw unwinding in 5500 put and a huge increase in open interest in 5400 put. 5400 call has a low open interest and so a strong down move is not seen before the expiry of this series.

Any down move below 5500 can see a bounce back towards 5500 levels.

Resistance levels : 5523, 5546, 5565

Support levels : 5485, 5469, 5448

-Happy Trading

Tuesday, August 24, 2010

Markets still under control of bulls...

Yesterday bulls were able to close Nifty slightly higher gaining what was lost in the previous session.

With options data still seeing unwinding in all the near strike calls and heavy selling in 5500 puts, it looks like markets will stay above 5500 levels for this series and any down move below that will be followed by a swift up move.

Resistance levels : 5550, 5565, 5581

Support levels : 5523, 5509, 5485

-Happy Trading

Monday, August 23, 2010

Entering the expiry week...Bulls have a strong upper hand...

What the markets did last week ?
Last week markets were able to reach the weekly target of 5523 levels and also tested the last resistance of 5545 before closing for the week at 5531, a gain of 1.44%. Markets also closed above 5500 mark after a large span of 2 1/2 years

What does the options data indicate ?

Options data towards the end of the week saw huge increase in open interest in the near strike puts and unwinding in all the near strike calls towards the end of the week. The PCR ratio is at 1.33 which is again a bullish sign.

What can be expected this week ?

This week being the expiry week, could see Nifty swaying in a range and bulls still have a very strong upper hand for the expiry and any down move would be nullified by a powerful bullish move going forward. Friday's data indicate an expiry above 5500 levels for this series.

How to trade for the week?

Stay long for the expiry this week on a test of further support levels. A buy on any correction below 5500 levels is recommended.

Weekly resistance levels : 5545, 5565, 5581

Weekly support levels : 5523, 5496, 5447

-Happy Trading

Friday, August 20, 2010

Consolidation after reaching range high and weekly target ...

Yesterday markets had a strong up move crossing the barrier of 5500 and making a new year high. It reached the weekly target of 5523 and also closed at the last resistance level of 5545.

Options data saw huge increase in open interest in the near strike puts including 5500. 5600 calls also crossed 1 crore mark. Overall it looks like markets might consolidate between 5485 to 5565 levels for the rest of the series. The range expansion which came in yesterday is likely to shrink back.

Resistance levels : 5545, 5565

Support levels : 5523, 5485

-Happy Trading

Thursday, August 19, 2010

A move towards the weekly target of 5523 levels...

Bulls were able to push the markets to higher levels towards the day's target of 5485 yesterday after consolidating near the crucial level of 5430.

Options data saw huge increase in OI in 5500 puts and unwinding in both 5400 and 5500 calls. pointing to a bullish move above 5500 levels for the day and likely to reach the weekly target of 5523 levels. 5600 calls has a OI of nearly a crore and could be a deterrent for any further upmove beyond 5545 levels.

Resistance levels : 5485, 5523, 5545

Support levels : 5462, 5448, 5434

-Happy Trading