Nifty in Range, Bullish Until 5400 Holds - AP

Nifty stands poised for a breakout. With the budget on the horizon and expiry, things could get unpredictable, volatile. If 5650 is crossed, then one could expect 5950-6000. This is valid until 5400 holds.

Nifty Could Test 4900, if 5550 Not Broken - AP

The Nifty is at the top of the channel. If it breaks 5550 and 5625, we are then looking at a new trend and the targets would be higher. However, the bias is toward the lower end of the channel. If the above channel's upper trendline is now broken, then within a few weeks Nifty could test 4900 levels soon.

Jan 2008 Top Not Breached - AP

Despite all the visible strength and the fact that BTST traders were not allowed to sell the stocks purchased the previous day, the intermediate top of 5545, which was reached in January 2008, was not crossed.

Further Caution Advised - AP

This is an inset of an old chart dated February 2008, when the bear market gained full steam. It accelerated with an Island reversal on 6th February. The island reversal gap is between 18312 and 18447. The high today is 18295.4. I have a feeling this rally can end in this zone. Be cautious untill Sensex closes above 18450.

The second image is a bigger picture of that same island reversal and what happened thereafter.
It should be noted that Reliance - the market leader is very weak! Infosys has almost made a double top today at an extremely crucial level.

The Importance of Protecting 3020 for Bears - AP

By not letting the Nifty rise beyond 3020, bears have saved themselves a massive 700-point headache.

Nifty can Dance Saala...to our Tune

Pardon the word in the title, but after all, every kid in India is singing the song that inspires the title. I find it amazing that Nifty is dancing to the few lines drawn on my post July 7, and following the upper and lower levels. The same chart is reproduced again with updated data until July 30.

The Nifty seems to be well on its way to 4740-4750 in August.

Drawing lines on a chart is child's play, ain't it?

Watch Tata Steel in August. It can be bought on any dips with a stop below 575 for a target near 700.

Do not Short the Open Monday - AP

In spite of the selloff on Friday, nothing much has changed on the chart and the levels that were posted over the last weekend. In fact, Nifty is exactly following the script that was written for it.

If one refers the chart and the levels that were posted on the July 7, it can be seen that Nifty hit the first target mentioned and is retracing now. The first target mentioned was 4190-4200, and Nifty did a freak high at 4215; the traded high was 4203.6. (It cannot get much closer than this on targets)

Now, what next. A gap-down opening on Monday is possible, thanks to the weak IIP numbers, as well as the selloff in US markets. As a matter of fact, Nifty stopped its fall on Friday, exactly filling the gap it had created in the preceding days (see chart). Such gap-filling is not bad at all.

Please do not short at open on Monday.

As long as Nifty does not go below 3930-3950, it has good chances of bouncing back, and one can buy Nifty 4000- or 4100-strike calls, with a stop of 3880 (risk in the option call will be less than Rs 40, whereas reward can be far higher.

I will update this trading position on a regular basis every day.

Happy trading till then.

Market Close to Long-Term Crossroads - AP

With the markets sliding almost every day, it is now time to sit back and have a broader look at where we are going.

All those who are familiar with candlestick charting methods will be aware of the basic concept of 'higher tops and higher bottoms'. A strong trend is said to be in place when higher tops and higher bottoms are formed on successive candlesticks.

On a 'yearly basis', we have seen exactly this happening ever since this bull run started in 2003. The high of every subsequent year was higher than the previous year and the low of every successive year was also higher than the previous year. This year too, the high made in January was higher than the high in 2007.

What happened after that is known to all. Now, we are precariously close to the low of 2007, which was 3554, and 12316 on BSE Sensitive Index. Today's lows were within striking distance from these lows of 2007.

I am not trying to suggest that the long term bull run is in danger. Not at all. However, it is a well-known fact that a strong trend of higher-tops higher-bottoms is broken when a previous low is breached. When this happens, it usually takes quite a while (a few bars = years, in this case), for the previous high to be crossed.

Thus, if the index goes below 12316 and Nifty below 3554, I do not think we will see the January highs being crossed at least for the next couple of years -- perhaps beyond 2010! It must be mentioned here, that almost two-thirds of the individual stocks have made lows that are lower than those of 2007. Many focus on 52-week lows, which in my view, is misleading.

As far as international markets go, most of the major markets - Dow, Nasdaq, Nikkei, FTSE, have aready gone below their 2007 lows. Thus, the million-dollar question now is whether we can protect 12,316 on the Sensex and 3554 on the Nifty. A low in 2008, lower than 3554 on Nifty can also lead to a 'bearish engulfing pattern' or a 'dark cloud cover', depending on where Nifty closes on December 31, 2008.

I cannot predict what will happen on December 31, but I can only say now, that 3554 on the Nifty should not be broken, if one hopes to see new highs in 2009.

In any case, 2008 will NOT see a new high.

Nifty Future - Potential Trade for Next Few Days - AP

Trading is all about taking risks and anticipating rewards. All traders look out for good risk-to-reward ratios. Here is a trade with a good risk-to-reward ratio and a potential trade for next few days.

Nifty Future - Band of Support - AP

It is amazing how a band drawn on Friday evening is acting as a support till Monday evening, in spite of the gloom and doom everywhere. Now, what next? If this band holds tomorrow as well, and Nifty spot crosses 4350, the next levels to watch would be 4405 and 4450-60, which could be reached before the June expiry.

Nifty for June 23 - No Respite from Selling - AP

The horrible effect of an island reversal was there for all to see. Both indices touched the lows of 2008 and this is certainly not the low of this year yet. The nearest support is seen at 4220- 4230, which in my opinion should hold at least for this month, June 2008. Hope the meaning of an ISLAND REVERSAL was explained loud and clear by bears.

A Tight SL Trade for Expiry - AP

If in the panic open today, bulls manage to hold the level mentioned in the chart, go long for F&O expiry.

Nifty Future - Dangerous Island Reversal on Cards - AP

Bulls have to try with all their might to ensure that Nifty future does not open gapdown below 4534, else we have a dangerous island reversal on the cards. Yesterday, Dow Jones opened with a bang, and closed with a whimper. Our markets did the same today, ignoring China and Hong Kong. This fall today brings the markets back to the edge of the cliff.

How Far will the Bears Run Today?

The bears are banking on the resistance at 4941 which is a gap resistance. But, bulls are known to be extremely vigilant about such levels, and if they manage to get an open above 4950, bears have just one protection, that of our old 200 HMA, which is at 4990-5005.

Too many bears were expecting a vertical crash yesterday and today, and since the May series will expire today, they will be forced to cover their shorts. This 'force' of short covering will alone determine whether 5000 level is able to be crossed intraday.

If one is long, keep trailing. Don't book at predetermined targets. Trailing stoploss holds the key today.

U-Turn is Possible on Nifty if 4800 Holds - AP

Yesterday's update still holds true. Watch the band between 4800-4858 for a U-turn on our markets tomorrow. If this happens, we can see a good rally in coming days.

One interesting observation again today. All intraday charts in Nifty spot show 4861.9 as the intraday low. However, data shows 4858 as low? Was someone desperate to get this low on the charts? What is the significance of this figure? How does it show up on the EOD (end-of-day) data if it did not show during trading hours? Food for thought!

A recap of what was said over the weekend:

I can see 2 scenarios, as mentioned on the chart.

• Nifty can take support either at 4910-4915, or finally at 4800-4810.
• If 4800 does not hold (quite unlikely), then we would head toward 4470 and 4200.
  

If 4910 holds, we might see a good bull run, which if 5200 is crossed, can go all the way up to 5925 (in few weeks, not days).

Why I Feel We Have Bottomed Out for the Week - AP

Buy Nifty May 4900 CA - AP

Buy Nifty May 4900 CA near 55-60, and sell on Wednesday at 10.30 AM

Startling Oil Spill on NSE - Exclusive - AP

Humpty Dumpty (bulls) sat on a wall; Humpty Dumpty had a great fall.

The battle on the edge of the cliff was clearly won by the bears yesterday, and the bulls gave up without a fight. This, in a nutshell, is the story of what happened yesterday. But, there seems to be more than meets the eye: All the TV channels and business newspapers say the Nifty fell by 78.9 points to close at 4946.55, but what you cannot see, and only chartists can decipher, are the market internals.


I am presenting a startling piece of information below, revealed only on Bhoomitrader, and this pertains to one of the topmost stocks in terms of Nifty weightage: ONGC.

• Traded volumes on ONGC yesterday were the 3rd highest ever in its history;
• Volumes were the highest since April 27, 2006;
• 86,12,528 shares were traded in ONGC yesterday, way above average daily volumes;
• Turnover in ONGC alone accounted for Rs 778 crore in NSE cash segment;
• Volumes in ONGC were 2301% above the 5-day average of 3,58,767.

This is not all. Out of the 86,12,528 shares traded in ONGC yesterday, 76 percent of this volume was traded in just 2 trades, during the day - first at 12.59 pm 45,15,526 shares (52 percent) and the other at 3.24 pm which saw 20,11,558 (24 percent). These 2 trades alone accounted for a turnover of Rs 600 crore.

In spite of such huge volumes, ONGC fell only from 910 to 900 in the first trade, and then 901.95 to 900, in the second trade. Moreover, there was hardly any change in volumes in ONGC futures, pointing to the fact that there was no corresponding hedging or arbitrage operations.

(Readers are requested to post their views on this amazing volume shocker)

Back to Markets

Coming back to our markets, what now, after the fall from the edge of the cliff? Interpreting a chart is like figuring the optical illusions that one often receives in email. You see some concrete facts, and then leave the others to your imagination skills.

I can see 2 scenarios, as mentioned on the chart. Nifty can take support either at 4910-4915, or finally at 4800-4810. If 4800 does not hold (in my view, quite unlikely), then we might be going straight towards 4470-4200. The bullish view is that if 4910 holds, we could see a good bull run, which if 5200 is crossed, could go all the way up to 5925. Such an expectation should be for a period of weeks, and not days, as some of our trading friends tend to expect.

One may start buying Hindustan Unilever, with a stop loss of 225, for a good move in the next couple of weeks.