Nifty: Daily Price Analysis

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SwingKing

Well-Known Member
#11
Hey Raunak the volume today is very high and isnt it similar to what happened when the budget was announced? I see a lot of absorption volumes and high level of manipulation. If you see on budget day we almost touched 5000 but closed well below the high around 4918 even that time volume spike was massive. I believe we might have a short term up move as we did go down to 5209 from 5256 but then to close at 5230 shows that this was a mere test of supply to absorb as much as possible. Again my view and I might be wrong. In last 2 trading sessions, we have moved from a low of 5160 to a high of almost 5260 to close at 5230 which to me sounds further upmove. Contrary to this when market touched 5388 and decided and went down below 5300 on the same day it was a good short call but I believe for now the correction maybe over and soon we ll have a move up.

The other reason I believe market fell today was with the increased Interest rate the Rupee goes up which is very logical hence the IT stocks suffered which brought the index down look at Infy TCS they were all positive in the morning but these stocks exerted substantial pressure and closed towards the low thus forcing nifty to shed its gains whereas if u see banks and other Interest sensitive stocks they were buoyed by the positive expectations and closed towards their days high which is a strong signal that they might further continue their up move.

As far as monsoon goes I think buying Bajaj Hindustan might be a good bet to protect your portfolio as if the monsoon don't go as predicted the sugar crop will suffer and prices for sugar will rise again making these companies a good investment also the stock has fallen a lot and taking good support at 130 levels. I think stop loss of 128 this stock can be a good buy especially now with a price to book value almost being close to 1.

For me I thinking we ll be weak if we fall below 5150. Until then I m going to be sector specific and ride the upmove.
Some valid points put forward by you Nimish. Thanks for that. Market's cannot fall in a straight line. There has to be some up moves accompanied with down moves. However, for me, as far as 5373 does not get broken, I'll not reverse my position. One needs tremendous skills to ride the up's and down's successfully on short term basis. Somehow though, I fail to have these skills. I like to take a position from a 1-3 month perspective. But yes, if you have the practice in following short term reversals, then your idea of riding the trend till it ends will definitely work well.

Tc.
 

SwingKing

Well-Known Member
#12
Nifty Analysis 21st April 2010

It's almost becoming a repetition of my previous posts, but the fact is that market's are indeed very weak. Today was the second day in succession when the market's closed in the green. But, the fact remains that both the days were indecisive in their direction and closed with long upper shadows representing internal weakness. Given the fact that Asia was trading in the green (1.5%+), our market's for most part of the day were trading below yesterday's high.

Previous two sessions have been inside days to the session on the 19th of April. This brings us to a very interesting setup. For the very short term we need to look for the mid level of the 19th April's candle session. If tomorrow's opening is above this mid level and the high is greater than today's session, then we can go long (reverse for short) keeping stop loss as low of today's candle. This strategy works well when the structure of market is very positive and was first introduced by Toby Crabel (Look at the figure below). However, keep in mind about the broader term bearishness in the market.

European markets traded sluggishly today and as of now S&P 500 is struggling to get started. The crucial level for the same is 1214-1216. We need to see if this gets taken off (Level created by evening star pattern). As of now, we still remain largely dependent on global cues. Let's see how things shape up.

 
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trader.trends

Well-Known Member
#13
Raunak

When you look at spot Nifty it is true that last two days where inside days compared to 19 April. Spot on 19 April had a open and high at 5279.05 which was higher than the close of 16 April at 5262.

When you look at Nifty Futures of April on 16 it closed at 5263 and open on 19 was 5200 and high was 5226. On 20 and today we have made higher highs, higher lows and higher close on NF.

When the spot (whose opening is adjusted by the exchange) and the derivative which is what is traded (and hence considered more authentic) are showing different results how do we reconcile??

I appreciate your efforts to post your views daily.
 

SwingKing

Well-Known Member
#14
Raunak

When you look at spot Nifty it is true that last two days where inside days compared .....

I appreciate your efforts to post your views daily.
Trader.Trends,

Excellent question I must say. And thanks for bringing this up.

I agree that Spot prices are adjusted by exchange and futures are traded. But, in my personal opinion, "Futures" always remains derived on an underlying Index or security and hence I feel analyzing and Index or security is far better than analyzing futures. Futures is also subject to manipulation, arbitrage, deviation (premium & discount) and so many other factors. Also, Statistically, if you test any strategy on spot or futures, spot should yield more consistent results. The difference though is marginal.

Psychologically, (again this is my view that most of the analyst) follow the levels of Nifty Index and not Nifty Futures.Also, in some instances I rely on what other pioneers in this field have researched. And you if you read the book of John Hull (Futures, Option and Other Derivatives) you'll find him mentioning this particular aspect of spot and futures several times. As far as I am concerned, I have always tested my strategies on underlying instruments. I have absolutely found no disadvantage in doing so. If the underlying instrument moves, futures will automatically move. For me that remains the bottom line.

How to use futures - There is one aspect of futures trading which I'd like to discuss. This is purely based on my experience and have read no research paper on it. When we start seeing bearish/bullish patterns on the Index, one very good way to foresee whether this pattern will last or not is to constantly monitor the spot - futures relationship. Usually, when we r in a bullish wave, Futures is always trading at a premium. Once we observe something on the chart which points towards bearish moves, futures start fluctuating between discount and premium on regular basis. (This for me is a very important observation). Also, during these days, when the market's move up (with the bearish pattern in formation), even on 'up' days you will see significant fluctuation of futures in premium - discount zone. Last two days has depicted this. Though we were up, the futures have been constantly fluctuating. Some people attribute this to futures expiration date. But I have observed that mostly on expiration, when market's are very strong, the futures don't fluctuate a great deal. Hence, when the market's are weak and futures fluctuate a lot, for me it is a very important signal. This is the only way I observe the futures and spot relationship. And for my analysis, I always use the underlying security.

Hope this helps.

Tc
 

SwingKing

Well-Known Member
#15
Nifty Analysis 22nd April 2010

What an eventful day we had today. For the short term, Toby Crabel's strategy did work and anyone who would have followed it would have easily made 50-60 points on the Nifty today. Coming back to the bigger picture now. Well, If today's session does not depict weakness, then I don't know what else can. Market's were trading at levels of 5330 when it started to reverse. We again observed the futures prices fluctuate between premiums and discount. Finally the futures prices (April and May) both closed in discount. In futures, a day of very high activity means that the market is sensitive to react. Also a sharp increase in volume can be a predictor of change, or at least of higher volatility. Hence, going forward, seeing the volumes we witnessed today, there is bound to be some action in coming sessions (and expansion of volatility).

Today was a bearish high wave candle. Now typically a high wave candle depicts uncertainty, but when high wave candle forms the way it has done today, then this has to be considered a high wave bearish candle. Today was the third consecutive day that we made a high, but all the three sessions have had long upper shadows and have failed to close above the high of the 19th April bearish candle. Tomorrow if we have a deep correction, then we could see the completion of the classic Tower Top pattern (19th April session was the left side of the tower, followed by 3 candles of opposite colors closing largely within the range of first tower) Such patterns occur at significant top levels and it has to be seen if we can form this tomorrow.

As of now, things are not looking that great for tomorrow. The Greece 'News' is again playing its colors now. This is precisely why news is so deceptive for trading (Some day everything seems fine for Greece. Next day the same thing begins again). European market's and Americal market's are trading in the red. Let's see how things shape up.



 
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AW10

Well-Known Member
#16
In my opinion, Greece story is not going to complete over anytime soon. They got to raise 18 billion EUR by 19th-May (and many more in following months). So it is rolling story. Moreover, Portugal, Italy, Spain bonds are also feeling the heat now.
Seems EUR is going to be under pressure for long time. Don't know how will it impact the EUR treasury bonds held by other countries outside EU zone.

In NIFTY chart, I like to look at the right side of it. So quite possible, we have formed Right shoulder of H&S pattern. After high action day of today, most likely we might have a dull rangebound day on Friday. Lets see what mkt shows us tomorrow and in next few days.

Happy Trading
 

SwingKing

Well-Known Member
#17
In my opinion, Greece story is not going to complete over anytime soon. They got to raise 18 billion EUR by 19th-May (and many more in following months). So it is rolling story. Moreover, Portugal, Italy, Spain bonds are also feeling the heat now.
Seems EUR is going to be under pressure for long time. Don't know how will it impact the EUR treasury bonds held by other countries outside EU zone.

In NIFTY chart, I like to look at the right side of it. So quite possible, we have formed Right shoulder of H&S pattern. After high action day of today, most likely we might have a dull rangebound day on Friday. Lets see what mkt shows us tomorrow and in next few days.

Happy Trading
On a broader scale I think you are right regarding Greece. We can never estimate what is actually happening underneath the financial system. It takes just a couple of bad sessions to completely change the underlying structure of the market's.

I hate to guess the direction of the market's. But I sense that we will form a low in May around the 4850 - 5000 band and will go on to make a new intermediate high in the month of July - August. I have been building up significant amount of shorts in my portfolio and will be surprised if market's go on to make a new high in the coming sessions. Any surprise that the market throws is always a new learning experience and hence I won't mind loosing money on it. So, let's see how it goes.
 

AW10

Well-Known Member
#18
Today, Greece has revised their budget deficit number to 13.6 % of GDP for 2009.
Earlier they told that this deficit is 12.7%. And immediate result of this is - Moody downgraded Greece's rating by 1 notch to A3 now.

Happy Trading.
 

nimish_rulz

Well-Known Member
#19
Today, Greece has revised their budget deficit number to 13.6 % of GDP for 2009.
Earlier they told that this deficit is 12.7%. And immediate result of this is - Moody downgraded Greece's rating by 1 notch to A3 now.

Happy Trading.
This didn't happen today this happened yesterday and hence Japan went down almost 1.4%. The news came out when US closed on Wednesday. Moody downgraded them yesterday morning and hence our market tanked from 5330 because as soon as the news came FTSE turned from +40 to -40. The news has already been discounted yesterday.
 

nimish_rulz

Well-Known Member
#20
Also because of the same reason Greece fell almost 3.3% yesterday today its green because news has been absorbed and they will probably get a bailout. The greece issue is just crap the entire debt is smaller than the weekly issuance of the US treasury bill I dont understand why people are making such a big fuss similar thing happened with Dubai what happened? Their debt was 10.8 Billion Greek is 26. I dont think much will happen. I truly believe markets will go up and these are just news so that small investors stay away and smart investors keep absorbing the stocks. This bull run is gonna last very long especially with $14 trillion spent by the government around the world almost the entire money has gone in stock markets. Look historically after LTCM bailout markets rallied marked made a new high nasdaq went up to make 5000 as high. Then after tech bubble markets went up for 4 years. I sense the same is going to happen. But again my views.
 
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