Weekend Views On Nifty!!!

Been a little busy with my business, hence couldn’t update the blog for some time. I am into the business of selling flowers (Wholesale) and the time for me to make my bread and butter for the entire year is from September till February end! Anyway that was about me, and now let’s talks about the market; the last week has been a nerve wrecking one, it has not only destroyed the wealth of the investors but more sinister effect has been on their psyche. This will take a lot of time to heal and should also serve as a very good lesson on market mechanics for times to come. Once again it has been a humbling experience and I presume will make a few of us wiser (those who choose to learn from History) and for the people who tend to forget things quickly they shall be condemned to suffer again.

We as usual begin by looking at the weekly chart and see what the broader picture looks like. We are moving down very nicely inside the falling channel and seem to have taken a support there; a breather or maybe as some might describe it as a brief stopover. The indicators are highly oversold and warrant a quick pullback. The MACD histogram is showing a good bullish divergence (so far so good) and nice rally to 3550/3800 is not ruled out. As for the downside I shudder to comment on supports because every support so far has just plopped, but a safe guess can be the 2006 lows at 2890 which might break the fall. It might not do it for technical reasons, maybe for psychological reasons! Any way I have inlayed my weekly chart with a scarier picture (scary! It aint scary anymore since we all have become comfortably numb!)

This brings us to the daily chart; the price as drifted too far apart from the moving averages and should pullback to align with them. This can be achieved in two ways; either the price makes a sharp pullback and tries to kiss the 20 periods MA or at least make some sideways movements and let the MA come near its vicinity. ADX is showing good strength and with +DI below the –DI there isn’t much to say. Again I repeat there isn’t much we can guess about the supports and as regards to the resistance, we have had so many gaps lately that the overhead path is strewn with these gaps providing solid string of resistances.

The hourly chart below presents a more microscopic view of Nifty. A very nice illustration of pivot play; LL’s and HL’s, it is also observed that right through the last few days we have been consistently trying to pullback and try and kiss the falling 20 period MA (the green line). Therefore in all probability if manage to surpass this hurdle tomorrow we may have some good up move for us.

I am not particularly in favor of day trading (the reason is personal because I have often been very uncomfortable with it) but presently day trading looks like the only thing to do. With so much of news (muck) floating around it’s becoming increasingly difficult to hold on to your swings or your beliefs or for that matter your SANITY!

SBI!!!

SBI is another stock which carries good weightage in Nifty and if this performs well (and ONGC giving the push) then we can still stall the fall in Nifty without worrying about the performance of RIL.

How much ever I want to believe in the inverse H&S on the weekly chart below I won’t be convinced till it breaks above 1600 and closes above that. The shaded area on the chart resembles a small double top and break of 1300 might not augur well for SBI (1300 to 1600 has been the range for it for some time now).

The daily chart below(on the right) corroborates the above view, but what makes the SBI the favorite among traders is the RS chart (on the left) which shows that SBI has been pretty strong vis a vis the index!

"Mistakes are the usual bridge between inexperience and wisdom."

Phyllis Theroux

RIL!!!

RIL has been really underperforming and Nifty can’t do much without it. The weekly chart below shows the price has broken the lower channel line and closed below it. Anything which can be called a support is now at 1625/1650 level. Once again here also we have a nice triple bullish divergence happening on the MACD histogram. The weekly trend should change if we start trading above 1985 and a breakout will be signaled on the break of 2135!

The daily chart also shows some kind of exhaustion, the prices are way below the moving averages, a pullback not ruled out (MACD histogram showing a positive divergence). The last volume bar is a cause of concern though; a buy can be initiated above 1800 with a stop of 1750 for a target of 1900/1950!

"Our greatest joy is not in ever falling, but in rising every time we fall."

Confucius

ICICI BANK!!!

ICICI BANK has been a much battered stock off late and rumors were flying thick and fast that this might be our first casualty in India courtesy sub prime fiasco! Well I don’t know the inside story but lets see what the charts have to reveal to us.

The weekly chart below had a nice H&S top which broke down and price snapped back towards the neckline only to fail and head back lower once again. Now the status quo is that the price is way below the value zone so an attempt to go back to the MA’s is not ruled out. Adding to this short term bullish argument is the MACD histogram shown in the lower pane, it seems to be tracing a triple bullish divergence. In the last three weeks amid much muck floating around on ICICI BANK the bears haven’t really been able to push the MACD histogram below zero line. The weekly support looks good at 425/435, where as the overhead resistances lay at 550/600/650.

The daily chart below also had a nice H&S continuation pattern which has achieved its logical target. The price is inside the falling channel hinting a drift to the lower end, though right now the price is already hugging the lower channel line and far away from the MA’s, shorting won’t bring in much in way of profits.

My take on ICICI would be since both the weekly and Daily have red impulse bars this only warrants a short trade (and I am not keen on shorting it!), therefore I would wait for the daily bar to turn blue at least for me to take a small swing trade (shoot and scoot types) against the weekly RED bar. A buy above with 515 with a SL, a point below 500 is such one trade!

"If opportunity doesn't knock build a door."

Milton Berle

Nifty Recap For The Day!!!

It’s been a volatile week so far, much of the action is dependant on how the U.S will implement the bailout plan and what would be the REAL cost of such a bailout plan. Bonfire of the Vanities, yes that’s what’s happening in U.S now, the old financial order has collapsed and a new one must emerge in its place. Change; as they say is PAINFUL and INEVITABLE! I have been busy with my business of late and not able to contribute daily. Plus I also feel that when Nifty gets into the range then it doesn’t contribute much by writing the same levels daily.

The intraday action is summarized in the hourly chart below, we have reclaimed the 20 & 50 periods MA’s and right now the price seems to be nestled between them. The overhead resistance based on the hourly charts is 4000/4050 and 4125/50 whereas the supports are at 3850/3800.

The daily chart has strong resistance at the upper trend line of the channel (it’s also the long term falling trend line from Jan Highs). The ADX is getting stronger and we have +DI below the – DI. 3800 and 4050 seem to be the range as of now, play it if you can!

Don’t learn the Tricks of the Trade. Learn The Trade!!!

Anonymous