Double Whammy for Bears - Abhijit Phatak

A bounce from the 200-HMA typically gives a 10-15 percent run, which gives a Nifty target in the region of 5300+. Added to this pattern is the highly bullish W pattern which also gives a fairly smooth run. So, what do we have then: A double WH(200 hma) ammy for Bears?

Climb a WALL of WORRY and slide down the SLOPE of HOPE. This is precisely what stock markets around the world, including our very own, have been doi ng. The first warning signal is when this 'worry' turns in to belief that the bull run is here to stay. This is when the first strong hands start getting out, and also the strong bears start going short. Before the poor retail investors realize, the climb has reached the end and the slide has already started.

At this point, 'hope' creeps in to the minds of the poor retail investors, who start hoping the market would begin climbing again. Alas, the market has no mercy and the poor retail guys have no choice but to convert their 'hope' in to 'prayers' and BTST (buy-today-sell-tomorrow)'s into long-term deliveries.

However, for now, as long as there exists worry all around us, enjoy the ride. There will be enough indications on charts which will give a hint of change in direction, whenever it happens. There is no point in 'anticipating' a change in trend and taking action in advance.

Of course, there is no pattern that is without a chance of failure, hence, it is imperative that traders have a proper stop-loss in place. Proper is the key word here, for we have many traders who always complain that their stop-loss gets triggered and the stock moves up, which only implies, was not a 'proper' stop loss.

Some trading ideas for next week, which is shortened to only 4 days; one of which is already shown on the chart. Other trading ideas are IFCI, RPL, RPower, Reliance, Tatasteel, Ispat and many more.

Enjoy the ride, with your safety belt (stop loss) in place.

200 HMA-gic: Magician at Work

Is there some magician who has cast his spell on the stock markets? Looking at the amazing lows of the Nifty today, it appears very likely. Today's low on Nifty spot is again bang on the 200 Hourly MA that was mentioned a couple of days ago.

A support level becomes a serious support level after getting retested. This is exactly what happened today. If bulls are standing at this level, what will bears do?

They have two alternatives:

• Retreat back a bit, take a start a la Shoaib Akhtar and make one more attempt on this level;
• Just run away (as in start covering shorts).

It would be curious to see which one will take the markets up now, if this level holds. Will it be bears who will take the market up, or fresh buying by bulls? Unfortunately, this answer will be available only after 9.55 am tomorrow. If long overnight, use 4940 Nifty Spot as a stoploss level and stay long. It does not matter who you are riding with: retreating bears or new bulls.

Interestingly, the Dow is behaving exactly the way Nifty is, up 100 points after just 25 minutes of trade today. If Dow closes strong, expect a strong opening tomorrow, and enjoy the 200 HMA-gic.

Potential Nifty targets are marked in the next chart, which at this point in time would be very difficult for most people to believe.

Keep the faith and enjoy the Nifty tomorrow. The 200-HMA magician could conjure up some really good tricks for you.

Cheers.