Nifty: Daily Price Analysis

[SwingKing]

HI Raunak,

The neckline seems not correct, the line should join the bottoms formed from the head pattern. i.e end of left shoulder and beginning of right shoulder.

That is why I have used the word 'complex'. Complex can have two shoulders or can also have a neckline which is not ideally formed by one of the shoulder. Its more of a judgement kind of thing. Not text book though. Majority of World Indices have formed similar pattern.

Tc

 

[SwingKing]

Nifty Price Analysis 12th May 2010

Nifty moved up today marginally with modest gains. The volumes were good but the market breadth remained very weak. We are witnessing a situation where particular stocks are doing well and outperforming the Index consistently. Going forward this could be the theme of the market's.

What's actually happening is that Europe is taking lessons from America in order to avoid crisis. They have already announced packages and if all goes well and EU can keep a balance between monetary policy and sovereign debt then EU could possibly avoid the crisis situation. All the measures which were taken by US post 2008 crisis are currently being taken by EU pre - crisis. One must keep in mind that EU with UK is almost as big as US market. Hence, this situation needs to be in check for the World economies to progress further. India can decouple and outperform the world market's if the World remains stable or grows slow. But, in the wake of a global crisis, there is no market which will escape the brunt.

Broadly speaking, the range remains as highlighted earlier. Resistance is around 5220 - 5240 levels. And long positions should be built only if the trading range/channel is broken decisively. Stock positions could be taken as there are quite a few stocks in the market which are showing tremendous strength.

 

[nimish_rulz]

Nifty Price Analysis 12th May 2010

Nifty moved up today marginally with modest gains. The volumes were good but the market breadth remained very weak. We are witnessing a situation where particular stocks are doing well and outperforming the Index consistently. Going forward this could be the theme of the market's.

What's actually happening is that Europe is taking lessons from America in order to avoid crisis. They have already announced packages and if all goes well and EU can keep a balance between monetary policy and sovereign debt then EU could possibly avoid the crisis situation. All the measures which were taken by US post 2008 crisis are currently being taken by EU pre - crisis. One must keep in mind that EU with UK is almost as big as US market. Hence, this situation needs to be in check for the World economies to progress further. India can decouple and outperform the world market's if the World remains stable or grows slow. But, in the wake of a global crisis, there is no market which will escape the brunt.

Broadly speaking, the range remains as highlighted earlier. Resistance is around 5220 - 5240 levels. And long positions should be built only if the trading range/channel is broken decisively. Stock positions could be taken as there are quite a few stocks in the market which are showing tremendous strength.

Couldnt agree more with you Raunak. EU economy is equivalent to US economy. However, have you noticed once thing there are far too many sell calls by big analysts and big banks downgrading lot of firms etc. To me this a very bullish and ominous signs in the market. However, I am still out of India market after it closed below 5150. Germany today went up quite a bit and is only 150 points down from its 52 week high. I think there is something cooking for maybe ECB Has directly intervened in the markets.

However the most important reason I find out for todays rally is this:

Spain passing its austerity measure and the bond yields of European region has fallen by:
UK yield fell by -0.36%(Fears of hung parliament retreating) which means price went up good signs,
French -0.1%
German +0.02%(Shows exiting safer bonds)
Greek -1% (Huge upmove for bond prices)
Italy -0.25%
Spain -0.03
Switzerland +0.02(Shows exiting safer bonds)
US +0.05(Shows exiting safer bonds)

Looking forward FTSE has a resistance at 5400 and a massive one at 5500 and 5630. Can form a head and shoulder pattern.

My view this week we might rally falling on friday onwards as Greece needs to renew its loan and pay its creditor on 19th of this month Big date!
For now long with narrow stops.
Got stopped out of FTSE still riding the Swiss 30. Copper still long exited 90% of the positions. India some futures contract no positions in Nifty unless it takes out 5220 closing basis which might be tomorrow.

FIIs are silent in the cash segment but buying lot of options derivatives position for FIIs is 34% of total outlying derivatives positions.

Even they are not sure hence using derivatives to protect and speculate on the market movements.

 

[SwingKing]

Nifty Price Analysis 13th May 2010


Another mediocre day for the market and another set of modest gains coming with selling witnessed at higher levels. I can't be more pleased to say how well the neckline highlighted is working. Today the market's precisely turned down after "touching" the neckline on intra day basis. Advance decline ratio was good and volumes were a touch low than yesterday's level. Upside crucial level remains at 5220-5240 and downside level remains 5070-5080. Today's close was also near a important resistance level of 5180. It just shows that market's are taking resistance at nearly every level and hence this signifies potential weakness.

I like to be clear in my views and my stand on the market's is towards the shorter side. I still believe we are going to see lower levels further in May/June. Broadly, advance decline ratio is not at all favorable, key indicators are now showing very bearish divergence and leadership in market's is missing. We need to see how things shape up.

 

[pegasus]

sir, what according to you can be the expected triggers for an upmove or a downmove in the present stagnant seeming market? Dont you think that the fire european problem has been cooled for the time being at least till the so called package fails . And Rbi policy review is not expected to surprize the market at least with a probable 25 basis points hike. And surely we are waiting for the gracious rain gods for a timely monsoon.

 

[SwingKing]

sir, what according to you can be the expected triggers for an upmove or a downmove in the present stagnant seeming market? Dont you think that the fire european problem has been cooled for the time being at least till the so called package fails . And Rbi policy review is not expected to surprize the market at least with a probable 25 basis points hike. And surely we are waiting for the gracious rain gods for a timely monsoon.

Pegasus,

Greed is one trigger which can take the market up and fear is another trigger which can take the market down. As far as rest factors are concerned, I don't believe in any one of them as they ultimately lead one to 'greed' and 'fear'.

I don't think investors are scared at the moment. Every time the market is falling, it is bouncing back indicating "strength". Investors are putting money in stock specific stories and are not bothered as such about index. However, my opinion is that we are in the fag ends of this current up move and can witness significant down side before we start to move ahead. Investors have forgotten the lessons of 2008 and they state that this time things are different. Well, indeed things are different. Market's don't fall the same way as it did earlier. Hence every time things become different. However, there are certain broad based indicators which are literally the " same " in every down move and up move. And most of them are suggesting a down move from current levels.

Just to answer your specific query now,
1. Monsoon - We have rarely been able to predict monsoons in our 65 years history of Met department. Can we say for sure this time ? Well you decide that.

2. RBI policy - Again uncertainty surrounding it is just too much. Who can predict what's going to happen?

3. European Crisis - There's a research paper written by Akerlof, Spence and Stiglits regarding Information Asymmetry. I think EU crisis is perfect example of that. NO one knows what is actually going to happen because there is a lot of information asymmetry lurking in the system.

So what do we do ? - Stick to charts, be alert and gather all the clues thrown by the market. This is done because "Charts Don't Lie, People do "

Hope you get my point.

Tc

 

[pegasus]

Pegasus,

Greed is one trigger which can take the market up and fear is another trigger which can take the market down. As far as rest factors are concerned, I don't believe in any one of them as they ultimately lead one to 'greed' and 'fear'.

I don't think investors are scared at the moment. Every time the market is falling, it is bouncing back indicating "strength". Investors are putting money in stock specific stories and are not bothered as such about index. However, my opinion is that we are in the fag ends of this current up move and can witness significant down side before we start to move ahead. Investors have forgotten the lessons of 2008 and they state that this time things are different. Well, indeed things are different. Market's don't fall the same way as it did earlier. Hence every time things become different. However, there are certain broad based indicators which are literally the " same " in every down move and up move. And most of them are suggesting a down move from current levels.

Just to answer your specific query now,
1. Monsoon - We have rarely been able to predict monsoons in our 65 years history of Met department. Can we say for sure this time ? Well you decide that.

2. RBI policy - Again uncertainty surrounding it is just too much. Who can predict what's going to happen?

3. European Crisis - There's a research paper written by Akerlof, Spence and Stiglits regarding Information Asymmetry. I think EU crisis is perfect example of that. NO one knows what is actually going to happen because there is a lot of information asymmetry lurking in the system.

So what do we do ? - Stick to charts, be alert and gather all the clues thrown by the market. This is done because "Charts Don't Lie, People do "

Hope you get my point.

Tc

that last line of yours was quoted by my medicine professor slightly differently as "lab tests don't Lie,people do" I more or less agree to that.truly uncertain and truly untrue people are playing the markets how do these charts predict the emotions and madness of the people? moreover you said assymetry in the system.then about the blessing from rain gods! such assymetrical, unmathematical and uncertainties how do they unite, to be predicted by mathematical charts....I don't mean your work is fruitless...dont you feel betting on the charts is too difficult a call...

 

[AW10]

Pegasus,

Greed is one trigger which can take the market up and fear is another trigger which can take the market down. As far as rest factors are concerned, I don't believe in any one of them as they ultimately lead one to 'greed' and 'fear'.

I don't think investors are scared at the moment. Every time the market is falling, it is bouncing back indicating "strength". Investors are putting money in stock specific stories and are not bothered as such about index. However, my opinion is that we are in the fag ends of this current up move and can witness significant down side before we start to move ahead. Investors have forgotten the lessons of 2008 and they state that this time things are different. Well, indeed things are different. Market's don't fall the same way as it did earlier. Hence every time things become different. However, there are certain broad based indicators which are literally the " same " in every down move and up move. And most of them are suggesting a down move from current levels.

Just to answer your specific query now,
1. Monsoon - We have rarely been able to predict monsoons in our 65 years history of Met department. Can we say for sure this time ? Well you decide that.

2. RBI policy - Again uncertainty surrounding it is just too much. Who can predict what's going to happen?

3. European Crisis - There's a research paper written by Akerlof, Spence and Stiglits regarding Information Asymmetry. I think EU crisis is perfect example of that. NO one knows what is actually going to happen because there is a lot of information asymmetry lurking in the system.

So what do we do ? - Stick to charts, be alert and gather all the clues thrown by the market. This is done because "Charts Don't Lie, People do "

Hope you get my point.

Tc

Very well said Raunak. I fully agree with you.

Happy Trading

 

[AW10]

dont you feel betting on the charts is too difficult a call...

Pegasus.. in my view, it is lack of knowledge, experience that makes it difficult to read charts. Like any domain, if one spends the time in puts in focused effort, then nothing can be difficult..

Just ignore the media/news/ and what others are saying and subjectively listen to your own work/own analysis.. (not to your emotions).
You might be worng when trying it.. but over a period of time, with effort and further investigation, I am you will develop the skills to read the charts.

I am sure, the kind of objective analysis that Raunak is providing here, does not come from reading 1 book like "Master technical analysis in 24 hrs"..

In trading - famous quote is "Trade what you see.. Not what u think ".
All the best.
Happy Trading.

 

[SwingKing]

that last line of yours was quoted by my medicine professor slightly differently as "lab tests don't Lie,people do" I more or less agree to that.truly uncertain and truly untrue people are playing the markets how do these charts predict the emotions and madness of the people? moreover you said assymetry in the system.then about the blessing from rain gods! such assymetrical, unmathematical and uncertainties how do they unite, to be predicted by mathematical charts....I don't mean your work is fruitless...dont you feel betting on the charts is too difficult a call...

Pegasus,

Let me tell you something, "Ask a Doctor if performing Surgery is easy" or "Ask an engineer if constructing a sea - link is easy". They'll tell you one thing; With perseverance, discipline, dedication and correct education, they increase the odds of successfully completing their jobs. The answer to your question is the same as written above.

As far as chart's representing everything is concerned, I think you need to visit some books to understand why this is possible. Please remember, partial knowledge is more destructive than no knowledge at all.

Hope you get my point.

Tc