Monday, September 6, 2010

Weekly Update: Another range bound week with wild swings



What the markets did last week ?
Last week it was written markets would move in a larger range but would be confined within with an increase in volatility and markets after testing a low of 5350 closed the week at 5479 levels.

What does the options data indicate ?
Options data has already seen a very strong increase in the open interest in all the near strike call and puts, with 5400 puts crossing over 1 crore much earlier in the series. Equal build up is seen in 5600 calls as well. The PCR has increased to 1.28, pointing to mild bullishness at the beginning of the week.

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 and vice versa. Markets are likely to be confined between 5296 and 5611 for the week.

How to trade for the week?
The same strategy as that of last week to trade the range for the week with a buy at lower support levels and a sell at higher resistance levels.

Weekly resistance levels : 5531, 5587, 5611

Weekly support levels : 5444, 5352, 5296


-Happy Trading

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