Morning Update at 0800hrs for Intraday Market Level

[pranayk]

markets for 29 sept 09 ​

the new week opens after a long weekend of 3 days to be followed by only 3 trading days till thursday. Secondly the week opens on tuesday at the back drop of more than 2% fall in most of the asian markets on monday for the reasons best known to the traders in those indices only. For intraday trading on tuesday, the initial opening may depend on overnight us markets on monday night & to some extent on asian markets followed by extremely low volume trades in highly operator infected sgx nifty.

Indian markets had a lower closing last week and with only 3 trading days this week, may have a similar type milder lower closing this week also. Except for shivering asian markets, actually there is no other reason for indian markets to fall & if at all any intraday fall comes, it will be heavily bought into by eagerly waiting fund houses and retail long term investors sitting with huge amount of cash. Nifty will always have the strength to move up till such time it does not decisively falls below 4934 and after breaching 4934,is unable to rise above it again. So if nifty fails to sustain above 4934, there is every possibility of it falling towards thursdays last weeks lows of 4904. A breach of 4904 can take it towards 4880 or lower levels. On the higher side nifty faces initial resistance around the compression point of 5 emas between 4959 to 4965. Only a decisive breach of 4965 followed by resistance line at 4986 from the recent top of 5036 can take it higher towards fridays highs of 4994 followed by 5000+ levels to peep into last weeks high zone of 5036.

In the hourly chart above, support line around 4939 is likely to provide initial support, a breach of which can take it below 3934 the low of the hourly red candle housing 2 inside bars right of it. Around 4939 is also the lower fork of andrews pitch fork median line as shown in the chart above. Under normal circumstances nifty should bounce up from the lower fork around 4939. So initial breach of 4939 will be the first signal for a bigger fall towards 4904 or lower levels. Similarly on the higher side the resistance line coming from the top of 5035 may pose as a strong resistance around 4986 which if breached may cross the same hourly red candles high around 4994 to shoot past 5000 levels towards new yearly highs of 5036, the possibility of which looks highly remote again in september & may perhaps be left for early october to be crossed. So, critical intraday levels to be kept in mind for tuesdays trading are 4934 on the lower side and 4994 on the higher side & a decisive breach on any side may see a good move in the direction of breach.

 

[pranayk]

morning update at 8 am 29 sept 09

the new week opened on a highly buoyant note for us, european & other emerging markets. Dow bounced back after 3 days of falls and even after giving away 35 points from the day high of 9824 still closed 124 points up & most likely dow will hit 10000 mark by early october. Similarly european markets bounced by nearly 2.5% with dax rising by 2.8%, cac up by 2.3%.however uk ftse was the worst performer with 1.6% rise. Emerging market like brazil continued with its bull run by rising 1.7%.asian markets after their fall on monday morning have opened in the +ve and may rise to much higher levels today as the day progresses & will wipe off their entire loss of monday.

For indian markets, expect a strong opening & there is every possibility of moving up to cross fridays highs of 4994 to move towards 5020 levels where it may face pressure due to profit booking. However a cross over of 5025 may see a sharp up move towards much higher levels crossing past last weeks high of 5036.although people are scared of the month of october, yet they will be surprised to know that during bull phases. Month of october has been mostly a bullish month. During the last bull market from 2003 april till jan 2008,except for the year 2005, month of october during the remaining years of 2003, 2004,2006 & 2007 had given higher highs and higher closings than month of september. So one should be reasonably sure to see october 2009 to make a new high.

As the result season starting from mid october will show better than expected results, traders & investors must make best use of intraday falls to buy into their favorite stocks for good gains in october also. Option traders must buy 5000 calls after an intraday fall. As long as nifty does not fall to close below the last swing low of 4784, one should look for declines to buy only. Infra, sugars, pharma & metal stocks which had remained subdued last week may sharply move up during this week.

 

[pranayk]

markets for 30 sept 09

the new truncated week opened with a bullish note and went up till 5020 levels and just failed to cross the critical 5025 levels on both the attempts made by nifty. The encouraging fact for the bulls was that nifty closed above the psychological level of 5000 for the first time. The hidden mischief behind the closure above 5000 is that the volume was extremely low which can bring down nifty towards critical support around 4990 or lower levels on wednesday.

Since markets have moved up from 2nd september lows of 4576 to a high of 5036 and that too presently are high above the august high of 4744, there is a possibility that the operators may bring down the markets to thwart an out right bullish indication for next month and generate a false feeling that correction has started. However till such time bulls manage to keep nse index above the critical level of 4929, markets will move up every time after each pause or after every small intraday correction.

For intraday trading on wednesday, nse index has initial triangle support around 5000 levels below which bull may try to hold the rectangular support around 4990 levels. Below 4990 nifty may fall a bit faster towards pivot around 4959 where bulls may make their second attempt to halt the slide. A decisive breach of 4959 can bring down nifty towards make or break support around 4929 from where solid bounce may be expected. On the higher side, nse index faces initial resistance around 5020 to 5025 levels & a decisive breach of 5025 can see massive short covering to take nifty towards 5050 or 5066 levels by-passing last weeks highs of 5036 in just twinkling of an eye. Nifty has a very strong closing support around 4959 levels.

 

[pranayk]

morning update at 8 am 30 sept 09

as expected after a big move on monday, dow paused on a routine basis basis by falling 47 points out of which the last 30 points fall came during the closing minutes. Entire european market closed flat. Brazil too closed flat. Asian markets have opened mild but will move up as the day progresses.

For indian markets one can expect another range bound market with a +ve bias. Initially nifty may be confined within the small range of 4990 on the lower side and 5010 on the higher side. A decisive breach on any side may see a good move on that side. A fall below 4990 may bring down nifty to cover the tuesdays opening gap till 4970 where buying support is likely to come. A breach of 4970 can bring down nifty to 4960 followed by 4950 that will bring back bulls into action. Similarly on the higher side a decisive breach of 5010 can take nifty initially towards the critical resistance of 5025 followed by last weeks highs of 5036 a decisive breach of which can take nifty towards 5050 to 5066.the cross over of 5036 will trigger the break out of the neck line of the reverse head & solder formation as can be seen in the chart above.

 

[pranayk]

Chart Analysis

 

[pranayk]

markets for 01 oct 09


as was mentioned yesterday, the neck line of the reverse head & solder formation got triggered around last weeks highs of 5036 & there was no question of looking back for nifty. Indian markets moved up independently without the adverse impact of negative dow over night & negative asian markets. As we had mentioned earlier, the charts of sensex and nifty are unique and are completely different from rest of world markets and are all set to scale towards 5500 levels in coming weeks. Weak over night dow or even asian markets may just have a minor initial opening impact & you will notice every dow induced fall will be bought into because the same dow operators who induce the negative sentiment will buy indian markets after the opening fall.

The way the things are moving one should not be surprised to find a much better month of october. Although people are scared of the month of october, yet they will be surprised to know that during bull phases. Month of october has mostly been a bullish month. During the last bull market from 2003 april till jan 2008,except for the year 2005, month of october during the remaining years of 2003, 2004,2006 & 2007 had given higher highs and higher closings than month of september. So one should be reasonably sure to see october 2009 to make a new high.

For intraday trading on 1st october, the opening will again be dependent just for a few seconds on overnight dow and asian markets. The opening fall will be bought into by the bulls as the clear reverse head & solder formation will easily take nifty towards 5115 levels. Nifty may have initial support around 5066 followed by 5055 to 5045 levels from where good bounce should be expected. However a decisive breach of 5045 during actual trading may trigger a bigger fall towards 5000 levels. Similarly on the higher side, nifty may find initial resistance around 5090 followed by 5100 & 5115 levels. Above 5115 nifty can move up to 5135 where solid profit booking may be expected. As friday is a holiday, there may be some profit booking towards the end of thursday or if there is an initial dow induced fall, then the end may be better to surprise every one. It is wiser for traders to remain light for coming week & book timely profit as they come during the day. In case of a fall due to long week end considerations, then last weeks high of 5035 may become a good closing support for nifty.

 

[pranayk]

morning update at 8 am 01 oct 09

dow had a highly volatile day on wednesday. Initially it came down by 133 points. Seeing this plight of dow, european markets came from +ve to -ve. As european markets closed dow suddenly became +ve & traded at 30 +ve. Finally by end dow again came down & closed 29 points in the red to trap asian markets on thursday morning. With chinese markets closed for a week, dows whipping boys in asia will dance to its tunes by falling initially to influence other asian markets. Brazil continued with its bullish run with another .5% gain. Asian markets as usual following the overnight -ve dow have opened in the red but will move up gradually as the day progresses. Operators new favorite sgx nifty responsible to influence indian opening will continue to remain -ve with very low volume.

For indian markets, although technically both sensex & nifty look extremely strong for further up move, yet the up move may be restricted to some extent as the markets had closed around the highest point for the day & secondly external operators may bring down the markets through index heavies like reliance, icici bank or cairn etc for a pause till such time other indices catch up. The long weekend considerations may also prevent big domestic players to take big positions. So one should not be surprised to see a pause or a mild correction initially to see a bounce towards end to surprise the trades who think that profit booking towards end may bring down markets due to long weekend. Not withstanding, the above aspects, traders may trade light to avoid getting trapped by operators action. Option traders may buy 5000 call on market declines and buy 5000 puts on market rise and carry in the ratio of 2 calls to 1 put for monday.

 

[pranayk]

Chart Analysis

 

[pranayk]

weekly markets analysis for week ending 09 october 09

the new week opens at the back drop of october phobia coupled with 2 consecutive weeks of lower closings in us markets that too with four consecutive days of falls in dow. In fact out of last 8 trading days, dow was +ve only for one day and remaining all the 7 days have been lower closings. From a high of 9748, dow has fallen till he low of 9378. However one thing to be kept in mind is that as long as dow does not decisively close below the critical level of 9313, it will always surprise everyone with its deceptive action of bouncing back to cross 10000 in october itself. The main reason for such a big fall on thursday last week was due to record low monthly auto sales numbers & unemployment data. Having fallen for 7 out of 8 trading days, us markets are ripe for another sharp bounce during the week.
Contrary to the dismal auto numbers in usa, indian monthly auto sales numbers had a record gain both on a year on year as well as month on month basis. Well, us had its reasons to fall, but should indian markets follow the us markets blindly? Well if at all a dow or sgx induced fall comes on any day, it should be taken as a god sent opportunity to buy & hold to ride the bull run for a new all time highs during this financial year it self. Similar to indian markets, other emerging market brazil too defied dows 200 point fall on thursday to gain 1.2% on friday in the guise of 2016 olympic awarded to brazil.
If one has a lo0k at the daily eod chart above, one can clearly notice a reverse head & solder formation whose neck line around 4700+ levels has been decisively breached in sept 09. With the head around 2400 to 2500 nifty levels, the distance from the neck line being 2300 points, the breach of the neck line can easily take nifty towards 7000 levels in coming months may be some times early 2010 surpassing the previous all time high of 6357 made in january 08.so every fall should be counted as a bonanza for long term investors to pour in gradually as much money as possible to ride the bull run as this is going to be "once in a life time opportunity" for many.
Like every other previous bull market, corrections will be there as corrections are part & parcel of every bull market & these corrections should be used not to quit but add more long positions by long term investors. However short term swing traders & intraday traders should use market volatility to trade both ways and gain from corrections by entering short trades as well. As long as nifty does not decisively close below 4900 there should be no fear in the minds of medium term investors & similarly as long as nifty sustains above 4780 there should be no worry for long term investors.
As the result season starts from next week, markets may pause for some days within a range of 4900 to 5100 till the start of the result season or till mid october before another mega break out towards 5500 which may start from about mid or 3rd week of october. As most of the monthly auto numbers have beaten the street, one should not be surprised to see most of the quarterly results beating the street expectations in october.

 

[pranayk]

weekly technicals for week ending 09 october 09


for the month ending august, nifty had closed at 4662 & month ending september saw nifty closing at 5084. This nearly 9% rise on a month on month closing basis has made the monthly indicators further strong. Although the indicators have entered the overbought zone, if one observes the monthly charts of previous bull markets, one will notice that most of the monthly indicators continue to remain over bought for months together.
Most of the weekly indicators continue to generate bullish signals although in the overbought zone. In addition to the +ve weekly indicators , there are 3 distinct indications that depict strong bullish signal in the weekly charts. Firstly, this weeks weekly closing of nifty at 5083 & previous weeks closing at 4959, decisively above 4693 which was the high of the perfect doji which was formed for the week ended 12 june 09.this closure of nifty high above the doji was also accompanied by decisive breach of the resistance line which is a perfect bullish trade setup "hcd" & is a mega bullish signal to go long on every small decline. This trade set up can only be nullified by a fall in index to close below the resistance line as well as below the low of that doji at 4365 which can only happen under catastrophic circumstances. Secondly, 50 week ema decisively crossing 200 week ema in the 5 year long term weekly charts in it self can single handedly take the indices above the all time highs of 21207 & 6357 in coming weeks. Thirdly, the clear cup handle formation between 12 june & 28 august with base at 3919 & neck line decisively breached around 4744 can easily take nifty to cover the depth of the cup by moving up till 5555 magic levels.

These many bullish indications mentioned above are enough for the bulls to rejoice about without even thinking about the much larger reverse head & solder formation being made by joining the solder line between the weekly highs of 4680 for week ending 20 june 08 & high of 4731 for week ending 7th august 09 with head at the october 08 lows of 2252.well, bulls may think of it only after nifty falls to test the neck line around the 4700 levels to bounce back in lightening speed to shoot past the all time highs.

Most of the daily indicators continue to generate bullish signal. As long as nifty does not fall to close below 5010, nifty may continue with the upward momentum towards 5166 or even 5252 levels during the week. A fall to close below 8 day moving average around 5010 may bring nifty down to find support around last weeks low of 4984 or around 13 dma at 4966.