Nifty: Daily Price Analysis

[SwingKing]

Trading Systems

I have got a few requests to name some good resources on creating Trading Systems.

Well, for those who are interested, I'd recommend just two books for all those guys interested in creating trading systems. These books do not give away systems but it gets your concepts right. The books are titled,

"Trading Systems that Work by Thomas Stridsman"
"Trading Systems and Money Management by Thomas Stridsman"

Many readers find this book tough to read. The language is too technical and it will test your basic knowledge in Statistics. For those who are interested in developing some serious systems, these two resources are indispensable.

P.S. - These books give away NO systems. These are dull and boring books and that is why these are highly highly recommended.

Tc

 

[SwingKing]

My stand regarding the markets still remain the same. I am expecting to see 4400 - 4500 kind of levels.

Hi Raunak,

This analysis help lot.
What is the expected timeframe for the levels inidcated by you?

RRmhatre,

There is no definite time frame. But on a day to day basis I will keep updating on how markets are shaping up. This should alert you in time.

I don't predict, I just analyze. It might be that in future markets show us something else and we might end up being bullish. This is how it goes.

Tc

 

[rrmhatre72]

RRmhatre,

There is no definite time frame. But on a day to day basis I will keep updating on how markets are shaping up. This should alert you in time.

I don't predict, I just analyze. It might be that in future markets show us something else and we might end up being bullish. This is how it goes.

Tc

Thanks Raunak,

I had specific reason for asking this.
I am sitting on cash which I redeemed from MF due to some issues.
I wanted to re-invest them in MF.
But I also have belief that market will come down to ~4500 level.
I have two options
1. wait for that level.
2. Start investing through SIP.

Yesterday I saw your comments which were very close to my belief hence was curious to know your views.

 

[SwingKing]

Nifty Daily Price Analysis 11th June 2010

Another good day for the market and going on global news, the Nifty ended the week on a stronger note. Today in this post I am going to tell traders how to position themselves in this market. Since we have been expecting corrections, I'll assume that like me there are other traders out there who are holding short positions. Hence, lets get started.

To begin with, we need to be as objective as possible. In being so, first thing that we need to prevent ourselves from doing is to close our short positions on resistance. After 4 days of up sessions, today was the first session where we witnessed markets taking resistance at 5130-5150 band. Going forward, the way I look, there are more resistances and fewer support levels. Hence, I find it reasonable to believe that markets will take some time to cross these hurdles if it has to. Also, the volumes picture still isn't close to being positive.

Let me disclose that I have been re-building short positions ever since market crossed 5050. I am averaging my positions as the market move forwards. Today in the last hour of the trade, I significantly increased my short positions considering the risk to reward ratio. There are a few levels I am watching before i would begin to think otherwise. Before going forward, let me get you acquainted with my trading personality.

I am essentially a medium term trader and long term investor. For me, medium term ranges from anything between 1-5 months and long term ranges from 6 - 12 months. I don't get too bothered with day to day gyrations as I consider them to be mere noise in the stock markets. However, I do track certain levels on a much broader scale and at times I do reverse my position again and again till i get the trade right. I use some broad based filters which prevent me from switching my positions more than 2-4 times in 6 months. Hence, my over all drawdowns remain low.

Since now you understand my style better, at present I am on the lookout for 10,500 on the Dow and 5220 on the Nifty. If the markets continue to move forward and close above these levels, then I will begin to consider reversing my positions. I would need some confirmation from non related indicators and I would track them too. The way I see it, we are no where close to getting out of trouble. Hence, even today rather than worrying about what is going to happen on Monday, I built up more positions.

Let's see what the market has to offer. Be confident. Be patient.

Tc

 

[simple_trader]

I too think NF will go to 4400-4500, but I think we would go to 5550 around first and fall from those levels. Though I am sure these may get proved wrong. The market will do less or more. I do not have any position based on these thinking. Would love play for down side in case market hit the upper band.

 

[AW10]

Just wanted to show the picture that I see and probably some people are missing to see.

Here is the content from NSE Site.

Index 		Current 	Pts Change 	% Change 
 
S&P NIFTY 	5119.35 	40.75 		0.80 % 
CNX NIFTY JNR	10914.00 	-16.15 		[B]0.15 % [/B]
CNX IT 		5739.25 	4.15 		0.07 % 
BANK NIFTY 	9451.75 	105.30 		1.13 % 
CNX 100 	5091.10 	32.70 		0.65 % 
S&P CNX DEFTY 	3788.20 	41.55 		1.11 % 
S&P CNX 500 	4247.25 	18.30 		[B]0.43 % [/B]
CNX MIDCAP 	7892.30 	11.60 		[B]0.15 % [/B]
NIFTY MIDCAP 50 2682.20 	-2.40 		[B]0.09 %[/B]

Look at the broad market indices - Nifty Junior, CNX 100, CNX 500, Midcap.. none of them have gained more then nifty.
You might say - So what ?

Here is the data from yesterday. And fact still remain the same that all broader indices are not moving as much as nifty.

Index			Pts 	%
			Change	change
S&P CNX Nifty		78.3	1.57%
CNX IT			64.7	1.14%
CNX Nifty Junior	141.15	1.31%
S&P CNX Defty		64.75	1.76%
BANK Nifty		108.25	1.17%
CNX Midcap 		97.55	1.25%
S&P CNX 500		56.95	1.37%
CNX 100		        75.9	1.52%
Nifty Midcap 50		42.5	1.61%

So what is my interpretation - When market is strong, everybody will participate in that and these secondary indices will show larger move then big elephants in nifty. but that is not the case.
Moreover volume on both the days is not something great to talk about.

So what do you make out of the current up-move ? I leave it to you to decide - just visualise the horse carriage of 100 horses going uphilll, where majority of horses are moving slower then the others. What will happen to carriage ? How much /how long stronger horse can pull the weaker ones ? Or what if weaker one decide to go downhill ?

Anything can happen tomorrow.. and things might ..but this is my reading as of EOD today. My guess is as good as yours on what will happens on Monday.

Happy Trading

 

[SwingKing]

Just wanted to show the picture that I see and probably some people are missing to see.

Here is the content from NSE Site.

Index 		Current 	Pts Change 	% Change 
 
S&P NIFTY 	5119.35 	40.75 		0.80 % 
CNX NIFTY JNR	10914.00 	-16.15 		[B]0.15 % [/B]
CNX IT 		5739.25 	4.15 		0.07 % 
BANK NIFTY 	9451.75 	105.30 		1.13 % 
CNX 100 	5091.10 	32.70 		0.65 % 
S&P CNX DEFTY 	3788.20 	41.55 		1.11 % 
S&P CNX 500 	4247.25 	18.30 		[B]0.43 % [/B]
CNX MIDCAP 	7892.30 	11.60 		[B]0.15 % [/B]
NIFTY MIDCAP 50 2682.20 	-2.40 		[B]0.09 %[/B]

Look at the broad market indices - Nifty Junior, CNX 100, CNX 500, Midcap.. none of them have gained more then nifty.
You might say - So what ?

Here is the data from yesterday. And fact still remain the same that all broader indices are not moving as much as nifty.

Index			Pts 	%
			Change	change
S&P CNX Nifty		78.3	1.57%
CNX IT			64.7	1.14%
CNX Nifty Junior	141.15	1.31%
S&P CNX Defty		64.75	1.76%
BANK Nifty		108.25	1.17%
CNX Midcap 		97.55	1.25%
S&P CNX 500		56.95	1.37%
CNX 100		        75.9	1.52%
Nifty Midcap 50		42.5	1.61%

So what is my interpretation - When market is strong, everybody will participate in that and these secondary indices will show larger move then big elephants in nifty. but that is not the case.
Moreover volume on both the days is not something great to talk about.

So what do you make out of the current up-move ? I leave it to you to decide - just visualise the horse carriage of 100 horses going uphilll, where majority of horses are moving slower then the others. What will happen to carriage ? How much /how long stronger horse can pull the weaker ones ? Or what if weaker one decide to go downhill ?

Anything can happen tomorrow.. and things might ..but this is my reading as of EOD today. My guess is as good as yours on what will happens on Monday.

Happy Trading

AW10,

A very well compiled set of data. Clearly reflects that the broader set of the market is not participating as it should. At every peak the A/D ratio seems to be diminishing as well. The odds are stacked in favor of us as of today. In future however, lets see what the markets have to offer.

Signing off. It's time for some "Soft drinks".

Cheers!

Tc

 

[columbus]

Just wanted to show the picture that I see and probably some people are missing to see.

Here is the content from NSE Site.

Index 		Current 	Pts Change 	% Change 
 
S&P NIFTY 	5119.35 	40.75 		0.80 % 
BANK NIFTY 	9451.75 	105.30 		1.13 %

AW10,

Just take 2 indices ,namely, Nifty & Banknifty.The lot sizes are 50 & 25
respectively.The ratio of points of Bank nifty/nifty should be ideally 2 keeping
in the view of lot sizes.However it was 2.58 (105.3/40.75)in favour
of Bank nifty.I think it is profitable to trade in Bank Nifty.

 

[AW10]

Columbus, you are right. After NF, BNF is second most popular indices.. But in my view, it is more senstive to the move of 2 big players..

Table below gives the rough weightage of them as per today's trading..

SBIN		29%
ICICIBANK	26%
HDFCBANK	17%
AXISBANK	14%
KOTAKBANK	3%
PNB		3%
BANKBARODA	2%
CANBK		1%
IDBI		1%
ORIENTBANK	1%
UNIONBANK	1%
BANKINDIA	1%

Due to skewed composition, it is comparatively very easy to manipulate the move. It is not that easy for Nifty which is broader then BNF.
Generally it gives wider swing then NF. So if you trading needs to play more volatile instrument, then this is the place to be.

Also keep in mind the margin requirement.. which will be slightly higher for BNF (i might be wrong here).

I prefer to trade NF cause there are more professionals who track it and use it as benchmark.

Happy Trading.

 

[AlokTewari]

Just wanted to show the picture that I see and probably some people are missing to see.

Here is the content from NSE Site.

Index 		Current 	Pts Change 	% Change 
 
S&P NIFTY 	5119.35 	40.75 		0.80 % 
CNX NIFTY JNR	10914.00 	-16.15 		[B]0.15 % [/B]
CNX IT 		5739.25 	4.15 		0.07 % 
BANK NIFTY 	9451.75 	105.30 		1.13 % 
CNX 100 	5091.10 	32.70 		0.65 % 
S&P CNX DEFTY 	3788.20 	41.55 		1.11 % 
S&P CNX 500 	4247.25 	18.30 		[B]0.43 % [/B]
CNX MIDCAP 	7892.30 	11.60 		[B]0.15 % [/B]
NIFTY MIDCAP 50 2682.20 	-2.40 		[B]0.09 %[/B]

Look at the broad market indices - Nifty Junior, CNX 100, CNX 500, Midcap.. none of them have gained more then nifty.
You might say - So what ?

Here is the data from yesterday. And fact still remain the same that all broader indices are not moving as much as nifty.

Index			Pts 	%
			Change	change
S&P CNX Nifty		78.3	1.57%
CNX IT			64.7	1.14%
CNX Nifty Junior	141.15	1.31%
S&P CNX Defty		64.75	1.76%
BANK Nifty		108.25	1.17%
CNX Midcap 		97.55	1.25%
S&P CNX 500		56.95	1.37%
CNX 100		        75.9	1.52%
Nifty Midcap 50		42.5	1.61%

So what is my interpretation - When market is strong, everybody will participate in that and these secondary indices will show larger move then big elephants in nifty. but that is not the case.
Moreover volume on both the days is not something great to talk about.

So what do you make out of the current up-move ? I leave it to you to decide - just visualise the horse carriage of 100 horses going uphilll, where majority of horses are moving slower then the others. What will happen to carriage ? How much /how long stronger horse can pull the weaker ones ? Or what if weaker one decide to go downhill ?

Anything can happen tomorrow.. and things might ..but this is my reading as of EOD today. My guess is as good as yours on what will happens on Monday.

Happy Trading

Very nice & Objective analysis. However there is another way to look at it also. If all the horses pull the carriage at same time, it will probably climb the hill at break neck speed for some time & to some distance, often called as Frenzy, which may last only so long. If some horses take the carriage to some point & then other horses take over, This arrangement can take carriage to longer distance. So much for the Horses & carriage. Coming to world market, no doubt Eurozone problem is far from over & no doubt more will come after every few days. But China inspite of all the talks of bubble growing is not doing too badly. Our own Growth is right on track & with monsoon being favourable, good IIP nos & Govt 's war chest loaded with collection from 3G auction & BWI, Economy is on right track. Since we are not decoupled from world economy, Our markets will not be up in a straight line but curve is surely sloping upwards.

Cheers !!!

Alok Tewari