Nifty Recap For The Day!!!

Freddie, Fannie, Nanny…oops sorry no Nanny, the NSG waiver all contributed towards today’s candle. No rally for us in stricter terms coz after the initial gap up opening we just hung around there for most of the day before giving up on the gains and surprisingly, even managed to close below the 2^nd of September’s close! Today’s was purely a news based candle with some euphoria thrown in, sometimes candles like these tend to distort the real picture and really challenge your beliefs. In my weekend views post I had mentioned that 4550 is IT and so it WAS! Anyway days like these are used B(y)E the pros and B(u)Y the amateurs, a smart trader would have taken some money off the table(BYE BYE!) whereas an amateur in his throes of ecstasy would have done the opposite (BUY BUY!).

The hourly chart below has two identical tops now, not using the word Double Tops since a DT is confirmed if the low between them is broken, and no wonder the term DT is more often misused and misinterpreted by novices. The MACD histogram is already flashing a negative divergence, and hinting at some retracement towards 4450/4420 levels.

The Daily chart below has no new insight to offer, the 20 period MA support is at approx 4420. No clues from ADX it’s in comatose state at 13. Tomorrow any attempt by bulls will be resisted at 4500/4525/ and all important 4550, a close above 4550 would make the bears sit up and rethink their strategy.

"The worst part of success is to try to find someone who is happy for you."

Bette Midler

CNX BANK INDEX And SBIN !!!

Banks have performed well over a last few weeks, maybe this is in anticipation that the worse is over for the Banking and Financial sectors. Maybe because the can of worms is now empty or maybe just that they were so beaten down that this relief rally was what the doctor ordered! Nevertheless let us see what story the charts are trying to tell or rather what I personally can infer from them.

As usual I start with a weekly chart of CNX BANK INDEX. First the obvious; yes we have a kind of slanting inverse H&S and a very nice trend line in this case the neckline. The price is in the sweet zone between the two EMA’s. MACD histogram is above the zero line and MACD lines have given a bullish crossover. Bank Index needs to break and close above 6650 for an immediate target of 7000/7200. The immediate supports are at 5950/6000 and breaking of pivot low at 5650 negates any bullish view we might want to adhere to.

Moving on to the daily chart, we can observe compression in prices we have had two inside bars vis a vis the bar we made on the 2^nd of September, the highs and lows of this bar can be used as stops for trading the Bank Index for shorts and longs respectively. The supports on the daily are at 6150 and 5950 where as the overhead resistance is at 6550 and a breakout is confirmed if we trade above 6620 with volumes.

Since we just discussed the Bank Index, why not take a peek at SBIN a pivotal in Bank Index. Below is a collage of 4 charts (didn’t have patience to mark them individually), the charts going clockwise are hourly, daily, RS (gray background) and the weekly. First the weekly gets dissected; yes we have an inverse H&S here too! After the previous week’s hammer we have a long bullish candle accompanied by volumes. Last few weeks action is concentrated between the 23.6% and 38.2% retracement levels of the January high and July low. So I presume we have are make or break levels between these two points. With 1300 has a strong support SBIN needs to break above 1550, to take the path to 1625/50 and eventually to 1700. In the daily chart the price is nesting just below the trend line resistance waiting to breakout. We have a Doji on our hands (also an inside bar if using bar charts) a break above 1550 initiates a long trade (conservative play) with stop at 1450. The Hourly charts looks a bit tired and would be no surprise if it retraces to 1485/1500. The final chart with the RS line shows that SBIN is slowly gaining strength vis a vis the Index (Nifty Index in this case)

Weekend Views On Nifty!!!

India gets the NSG waiver; this ends three decades of nuclear isolation for us. This also opens door for almost $100 Billion worth nuclear commerce. This news is most likely to be celebrated by bulls on Monday. Uncle Dow has closed positive from being down under and all we need is some positive push from cousin Nikkei in the morning. I have been often saying that now a days Nifty is reacting to global cues and looking for fresh triggers and speaking of triggers all we have to offer now is the onset of September quarterly results. Having discussed external news, now let’s take a dekko at the charts and see what do they have to reveal?

Our first pit stop; the weekly chart, we have two interesting things going on here, first we have a DOJI and second we have closed above the falling trend line channel. Another solace for the bulls is that we have closed in the vicinity of 38.2% retracement of the recent rally. Strictly speaking a weekly close above the highs or below the lows of this DOJI would signal further direction. As of now levels to watch still remain the same; 4250 and 4650!

The daily chart below has yet again moved below the 20 period MA but comfortably above the 50 period MA. The MACD lines seem to be converging for bullish crossover, again the matter of concern is the ADX, and till the time it picks up we really won’t know the strength of the prevailing movement of the prices. Daily chart reveals the support at the following levels 4325/4300/4270 and 4250 and finally the LINE OF CONTROL 4200 where it all changes hands from bulls to the bears! Where as the road to higher grounds is paved with the following resistances 4370(don’t we know this by heart now!), 4420, 4450 and the finally 4550!

From traders point of view the levels are clearly marked for swing play; sell the resistance and buy the supports and for the positional players it’s only PATIENCE, PATIENCE and more PATIENCE!

Is being wrong really so bad? A very nice write up by my fellow blogger and a friend Ilango, please read all about it here!

"Doing the best at this moment puts you in the best place for the next moment."

Oprah Winfrey

Well OILed Nifty Slips on Dow! Nifty Recap For The Day!!!

Bulls rode a well OILed Nifty on Tuesday, where as DOW slipped! Slippery when wet I guess! I have been often saying that domestically we don’t have any triggers to move the markets we are just towing the global line. Since we were closed on Wednesday and today morning we just took cues from weak Asia and a confused DOW, Europe didn’t help much either, and with Inflation figures to come up in the evening, traders, I presume decided to book whatever profits they had courtesy Tuesday’s move.

A quick glance at the hourly chart below, we see after making that big red candle we just hung around saving the supports. The MA sequence is lined pretty well, with 20 above 50 and 50 above 200. Nifty needs to break 4520 to justify the uptrend on the hourly chart, the lower side looks like 4420/4400 and once again 4370 where the 50 and 200 EMA’s are nesting.

Moving on to the Daily chart, we took support at the 20 period MA and 4360/70 is strong support. The HH and HL pivot is still in play. Another interesting observation is that if we break our HL pivot at 4200 this time it will complete a bearish H&S on Nifty! Too early for these presumptions but one should know their levels crystal clear before initiating trades. ADX is still not showing signs of waking up from its slumber. Again at the risk of sounding clichéd, Nifty can be saved if only RIL takes out 2220/40, above that 2270 and then 2230.

If tomorrow we gap down courtesy DOW and still manage to hold above 4370 then one can take a small trade with a 20 point stop.

"Failure is a part of success. There is no such thing as a bed of roses all your life. But failure will never stand in the way of success if you learn from it."

Hank Aaron

RELIANCE! Will It Tango???

I have been often mentioning that for Nifty to dance, RIL needs to do a SING(H)! Let’s do a quick review of RIL and see if we can come with something.

A brief dekko at the hourly chart below, the price is at the value area or as some like to mention it as sweet spot/zone (between the two MA’s). Breakout is above 2168, which on hourly is the resistance provided by the falling trend line marked in solid red, Hourly target is the upper channel line at 2195 and then 2200/05.

The daily chart below has now two successive inside days. The previous Big Red bar high (2168) and low (2052) are clear levels for both longs and shorts and can also serve as conservative stops depending on which side of the trade you are. RIL on break of 2168 is likely to find resistance at the EMA’s (2190/95). Above that the roadmap should be 2220 and 2270.

Having said this I am real skeptical of RIL as of now and I have a reason; the reason is the chart below. This a RS chart of RIL, the main window has line charts of both the NIFTY (Red Line) and RIL (Green Line), the bottom pane has the RS line of RIL vis a vis Nifty. As you can see that the RS line has broken to the downside from the triangle. RIL is just not showing strength and without RIL, NIFTY just can’t move much. While you are at it, please look at the RS chart carefully, and see why it is a very important tool, in a trader’s arsenal. If you follow RS charts then you will find that RS line more often gives breakout signals well ahead of the Price. A caveat here, remember that a Falling RS doesn’t mean that the Scrip is technically weak (for that you need to study the charts), it just means that the said scrip is now underperforming the Index and it is time now to take out your money and employ it on some other scrip.