Morning Update at 0800hrs for Intraday Market Level

[pranayk]

Morning update at 8 am 09 july 09

last night dow after slipping down to 8087 recovered nearly 90 points to close at 8178 a gain of 14 points from tuesdays close. European markets which had closed early when dow was trading negative, closed .5% to 1% down with uk ftse closing down by 1.1%. Brazil closed .5% down. Asian markets have opened mixed and may close flat to mildly +ve by end of their trading.

For indian markets, expect a flat to mildly bullish opening. Then on, the markets will act on the condition of asian markets & news events. Nifty on its up move may find resistance around wednesdays last hour high of 4141 levels & only a decisive cross over of this level can take nifty up through the wednesdays opening gap to fill the gap till 4200 to 4210 levels. As indian markets have performed the worst during this week compared to other world markets, expect a dead cat bounce in next 1 or 2 days which should be fully used to short during intraday trading. However carry over of short or long future positions should be avoided. Markets being oversold, thursday may see a good bounce up although the day may be highly volatile again.

Option traders may buy 4100 or 4000 puts on intraday rise of markets and buy 4200 calls on intraday falls to previous days lows & besides doing intraday trading in these options, traders may carry both calls & puts over night. Keep a close watch on the intraday movement of ril for niftys intraday movements as ril is the key stock for the up or down movement of nifty.

 

[pranayk]

markets for 10 july 09 on thursday,

the indices closed flat and a flat close after few days of big falls generally signify further falls. Till such time one does not see a higher high, higher closing and higher lows for two consecutive days, one may continue to see markets drifting lower day by day with lower lows day after day. Although the markets look oversold and are ripe for a bounce, these bounces should be fully used for intraday shorting only, because till middle of next week this bearish sentiment is likely to continue. Even if there is a bounce, it will be sold off and the markets will fall to close flat or mildly bullish to again fall the next day.

Fridays trading initially may depend on results of infosys which is not likely to be exciting enough to lift the markets from the existing bearishness. Although the indicators in the daily charts are nearing oversold zones and are ripe for a bounce, yet, traders may take advantage of the intraday swings to do intraday trading only without carry over of long or short future positions as one is not sure what is in store for overnight world markets that may surprise when our markets opens next morning. Since the short term trend is bearish, it is wiser to trade on the shorter side on every intraday rise for better gains.

For intraday trading on friday, nse index has initial support around 4070 followed by thursdays lows of 4040. Below 4040 nifty can slide to 4020 which may invite profit booking by shorters to get into intraday buying mode. On the higher side nifty faces initial resistance around thursdays high of 4115. Only a decisive breach of 4115 can take nifty to wednesdays trading high of 4141 that will invite profit booking by intraday long traders to get into shorting mode again. Only a decisive breach of 4141 and sustaining above it can take nifty into wednesdays opening gap zone to at least hope for completing the gap till 4200 levels.

Last week ending 3rd june closing was at 4424 & last weeks low was at 4267. Even its previous week ending 26th june had weekly closing at 4375 and weekly lows at 4143.so incase nifty closes below 4143 on friday, it will close below the lows of two previous weeks that will be a solid bearish signal for some more days. So, at the best nifty can move up to close above the lows of last two weeks around 4143 to induce the false hope that the chances of falling to complete the lower gap till 3700 is perhaps over.

 

[pranayk]

weekly markets analysis for week ending 17th july 09

the budget week entirely spoiled the bulls 4 month party and from mondays highs of 4480 nifty fell to the fridays low of 3977, a fall of 503 points in 5 trading days. Having breached the 26th may lows of 4092 nifty has entered into a confirmed medium term bearish trend that may perhaps continue till end august to coincide with the devastating astrological impact, likely to affect stock markets across the entire world around mid august. Although there will be dead cat bounces in between, but the overall direction of markets will definitely be downwards & how far downwards should not be thought over at this moment as one should now focus on ruthlessly shorting futures on every intraday or overnight rise in markets.
This slow but steady downward move is not showing how far down it can go. Everyone is now thinking of the gap till 3700 levels but the way the events are shaping up across the world, one should not be surprised to see nifty falling towards the 200 day moving average around 3366 level. So, as long as nifty does not move up to close above 4232, shorting may be the only way to gain in markets till at least the support around 3535 or till 200 dma at 3366 is reached.
As long as nifty was flirting with the 26th may lows of 4092 to 4100 levels, there ware some hopes for the markets to move up to thwart the head & solder formation but the way nifty crashed towards end of friday 10 july after deceptively breaching thursdays high of 4115 to move towards 4130, has terminated all the hopes of revival & a slow but steady decline towards 3700 followed by 3535 that may clear the path even towards 200 dma around 3366. Till friday sensex had not entered the gap zone but towards the last hour of friday sensex also breached the neck line of the h&s formation and decisively entered the gap zone. However should the situation across us & other world markets change for better and nifty turns up to close above 4232 (which now looks highly unlikely), then we may change our presently established bearish view in favor of resumption of bull run, other wise we will look for nifty retesting 200 dma around 3366 levels by mid or end august.


weekly technicals for week ending 17th july 09

the big fall of 10% during the weak has forced most of the weakly indicators to turn highly negative. The way weekly stochastic, roc & w%r have shaped downwards, may take nifty further down by at least 250 to 300 points before these indicators turn up to give signs of revival. Rsi although at 56 is slipping down faster. Macd too, although slipping down, has not yet given confirmed down signal. Nifty having decisively breached 100 week moving average around 4266 is moving down towards 20 week moving average around 3660 and 50 week moving average around 3466.
In the daily eod charts the important daily indicators are looking hopeless with daily macd line & signal line having breached the zero line. Daily rsi, roc & stochastic having entered lower zone are looking highly dangerous for bigger falls. Nifty having decisively breached both 20 and 50 dma is eyeing for 100 & 200 day moving averages placed around 3606 & 3366 respectively. The clear h & s formation with head at 4693 and neck line breached around 4141 should see at least a 550 point fall from the neck line to 3500 levels. However there is possibility of a good dead cat bounce from around 3900 levels to be followed by the next slide towards sub 3700 levels.
Amidst these gloomy pictures about the markets, there are some +ve indications to keep the hopes of bulls alive. The markets are highly oversold having fallen by more than 10% in 5 trading days. 20 dma now at 4282 is fast moving down to breach 50 dma around 4200 levels. As has happened many a times earlier, this cross over point has tremendous pulling power to pull nifty up towards it before repelling it downwards again. Thirdly 20 week ma has moved up and breached 50 week ma which should repel nifty upwards as nifty approaches the cross over point. Last but not the least, in the 15 year long term weekly charts 50 week exponential ma at 3727 has moved up after breaching the 200 week ema at 3636 confirming that the long term bull run is still intact and every big fall towards 3500 is a good buying opportunity for long term investors.


elliott wave count for week ending 17th july 09

nifty having made a high of 4693 on 12 june 09 is presently in a major downward correction in the form of a,b & c zigzag that may correct the entire bull move from 6th march lows of 2539 till 12 june highs of 4693.in this a,b & c down correction, wave "a" was completed at 23 june low of 4143. Wave "b" went up till budget day highs of 4480 after which the down wave "c" has started. This c down wave will have 5 waves of which 1st down was from 4480 till 8th july lows of 4062 & 2nd wave flat of 3 days between 8th to 10th july are over with the highs at 4142 and from last hour of friday 10 july the 3rd down wave of wave c has started. This 3rd down wave of wave c is the longest down wave and is generally 1.62 times the 1st down wave. Most likely this a,b & c zigzag correction will end around 3600 to 3400 nifty levels.



fibonacci levels for the week ending 17th july 09

the entire up move from 6th march low of 2539 till 12 june high of 4693 covered a total of 2154 points. So, as per fibonacci rules of retracement 38.2% fall may bring down nifty to 3870, a 50% retracement can bring down nifty till 3616 levels around which is also the 100 day moving average, and finally a 61.8% retracement may bring down nifty till 3361 levels where also remains the 200 day moving average.



weekly trading range for week ending 17th july 09

the above down side levels of 3700 or 3500 or 3366 given for nifty are not for 1 week but may be reached by end august. Both sensex & nifty having decisively entered the gap zone on friday 10th july, it looks like at the worst case nifty may move down to cover the gap this week till 3700 if world markets continue to show weakness. However since the markets have fallen by 10% last week there is a possibility of some upward retracement after initial fall on monday before further down swing starts to take effect.

So keeping the above factors in mind the broad trading range for nifty may be between 4040 to 4080 on the higher side and 3800 to 3700 on the lower side. So, in case nifty moves up, then index level of 4070 to 4080 could be good shorting point and shorts may be held till 3800 levels with index levels of 4141 to 4150 as the must quit point for the shorts. As long as the indices keep on making lower lows without closing above the highs from where last days down swing started (4130 to 4141), it will continue to drift lower and make new lows.

 

[pranayk]

markets for 13 july 09

the new week opens on monday with the hope of some sort of mild recovery in the indices after the savage fall during the last hour of friday. Well, the only hope for some recovery on monday could be due to the fact that the markets are in oversold levels and the closing on friday was near the lowest point of the day. Though technically it is an extremely weak signal for further falls, yet one has noticed during many previous occasions that a days low point closing generally lifts the markets the next day.so even if there is an initial fall, one can expect a dead cat intraday bounce after initial fall.

Incase asian markets start the week with a buoyant note, then also one can expect a mild dead cat bounce in the indices to 4033 to 4040 nifty levels above which only nifty can inch up a little higher to move up towards 4077 levels that will invite vigorous shorting by bears. However without any encouraging news from the home front coupled with weak asian markets can easily smash any hope of recovery in indian markets & one may find nifty sliding further down towards 3900 levels after a flat opening or after reaching 4033 to 4040 levels.

With an overall bearish view in mind, traders should wait for initial opening rise or any intraday rise to boldly short the futures and hold the shorts to book profit around own level of satisfaction. In case nifty moves up further, then add more shorts with must quit point above 4141 nifty levels.

Option traders may hold on to their 4000 puts and add more puts on every intraday rise of nifty and then reduce half puts to buy a 4000 call as nifty approaches nearer to 3900 levels for intraday trading purpose or for hedging the put. Traders planning to carry shorted futures over night, must hedge by buying calls or shorting lower puts so as to avoid getting trapped by a gap up open the next day in case of buoyant us or asian markets or as it is our markets are highly oversold compared to other world markets & any thing can trigger a sharp short covering rally, although to be again followed by another series of down swings.

 

[pranayk]

morning update at 8 am 13 july 09

us markets were generally flat on friday night with nasdaq mildly up but dow down by only 36 points. European markets were down by about 1% with uk ftse down by .75% & dax down by 1.1%. Brazil was flat being up by .1% only. Asian markets have opened mixed with a mildly negative bias & may continue to remain mixed.

For indian markets expect a flat to milder opening. Nifty may test the lows of friday at 3976 or even fall to lower levels. The big fall during last hour of friday will be be corrected upwards to some extent after initial fall. Nifty which had closed around 4004 on friday after making a low of 3976 may retrace upwards up till 4033 to 4044 levels. Further shorting interest may be generated gradually on each of these levels if at all nifty moves up towards any of these levels. On the lower side 3976 followed by 3966 to 3944 are support areas for the day where intraday buying interest may be generated around or below 3950.

It is wiser for traders to wait till 1230 pm to 1 pm to start fresh trade as one will be in a better position by that time to judge whether to go short or intraday long in the markets. For future traders, tendency to bottom fish as far as possible should be avoided & done if puts are already held & should have tight quit points for futures or hedge them by buying puts or writing higher calls. Option traders holding puts may hold on to the puts but as the markets are in the oversold zone, they must buy 4000 call on market declines towards 3950 levels and hold the calls with puts.

 

[pranayk]

markets for 14 july 09

the markets continued with its downward march to recover towards end due to short covering and profit booking & closed at 3974 below the fridays lows of 3977 clearly indicating further falls to firstly cover the entire gap till 3717 followed by completion of head & solder formation around 35oo levels in coming days.

If one has a look at te intraday chart above, one can notice the initial support line around 3890 followed by 3830 levels. On the higher side nifty has resistance around mondays high of 3991 or 3999 levels. A decisive cross over and sustaining above 3999 may generate some short covering to cover a portion of upside gap of friday till 4025 levels where nifty meets the resistance line coming from budget day high of 4480. A decisive cross over with volume under extremely bullish environment induced by overnight us markets followed by strong asian markets can enable nifty to cross this strong resistance around 4025 to go up till 4080 levels where ruthless shorting may be encountered again.

For intraday trading on tuesday 14th july the day may be similar to monday with a negative bias. Profit booking by shorters and some buying may emerge around 3900 or lower levels and heavy selling may be encountered above 4000 to 4025 levels. Traders may take advantage of any low volume short covering rise towards 4020 to boldly short futures and buy more of 4000 puts. As nifty breaches mondays lows to move towards 3900 or lower levels, they can book profit on puts and buy 4000 calls. As markets move up, again buy 4000 puts to hold calls and puts for wednesday.

Carry over of un hedged future positions should be avoided. As long as nse index remains below 4141 levels, intraday trading on the short side or holding shorts & bought puts are likely to be more beneficial than holding long futures and bought calls & chances of fall towards 3700 or even 3500 looks brighter in coming days

 

[pranayk]

morning update at 8 am 14 july 09

as expected us markets were highly bullish on monday night and dow was up by 185 points by closing at 8331 much higher than the critical resistance of 8200, a rise of 2.3%. So traders should be ready to see a correction in dow to compensate this big rise. However traders trading or holding over night positions as per dow charts should not take this up move in dow lightly as the daily & weekly charts of dow are showing signs of revival and a decisive crossover of 8666 can take it to much higher levels. European markets were up by 2% to 3% with uk ftse closing up by 1.8%. Emerging market like brazil surprisingly closed flat around less than .1% up. Asian markets after the big fall yesterday, have opened higher seeing the overnight big rise in dow & asian markets will remain +ve for the day.

For indian markets, as the indices were in highly oversold levels & as a dead cat bounce was expected any time, dows overnight big rise may come as a boon for a sharp recovery in indian markets to be followed by next leg of the fall after the dead cat bounce, to cover the gap. After opening gap up above 3999 nifty levels, nifty will enter the fridays last hour fall zone to move towards 4025 followed by 4044 levels that will be 2% rise from yesterdays closing of 3976.the level of 4044 to 4050 may generate further shorting & on decisive cross over of 4044 to 4050 & sustaining above it can take nifty towards the critical resistance level of 4090 to 4100 levels to encounter further shorting, as this level will be more than 3% rise for nifty.

For intraday trading, traders should hold both the over night bought call of 4000 as well as put of 4000. As nifty moves up above 4050, add more of 4000 put but must hold on to the call as long as puts are held. Option traders may also book profit on the call in case nifty moves towards 4044 to 4050 levels but must by back to hedge the held puts. Carry over of 4000 calls & 4000 puts in equal ratio is advised and with this, it is ideal to short 4200 call on market rise as well as short 3700 puts on market falls to hold both sets of bought lower calls with shorted higher calls along with bought higher puts and shorted lower puts, if margin permits option traders.

Reliance industry holds the key as to how far nifty can move up & reliance having been highly oversold and having entirely covered the election verdict gap of may 18th, is ripe for a sharp rise that also may take nifty up

 

[pranayk]

markets for 15 july 09

a big rise in indices, firstly induced by overnight bullish us markets coupled with buoyant asian markets saw the indices making highest gains after the budget. A low volume big rise triggered by short covering took nifty above the critical level of 4092 below which the so called famous gap zone had started. However nifty in spite of all out efforts towards the end of the day to cross and close above the neck line of the head & solder formation, failed to reach the level of 4133 the low of the budget day. Most likely nifty will make another attempt to cross this critical level on wednesday to prove the point that in this operator driven markets gaps or neck lines have no meaning at all & it is the operators power to joggle with index heavies like reliance or icici bank etc, only matters for the up & down movement of nifty.

As earlier said, the cross over of 20 dma & 50 dma is just about to materialize around the nifty level of 4225 that also played its magic roll in pulling nifty towards it. On reaching nearer to it , nifty will be repelled down as had happened many a times in the past. In the hourly chart above, nifty looks highly over bought as the important hourly indicator slow stochastic has topped out & is likely to come down. However the +ve divergence may take nifty further up towards the critical level of 4141 that may propel nifty to much higher levels towards 4232 a cross over and a decisive close above which can terminate all hopes of any further downward correction.

For intraday trading on wednesday, with flat us & asian markets, there will be a tough battle between bull & bears to take nifty above the critical level of 4141 to induce further short covering to push nifty nearer to make or break level of 4232. However without any push from us or asian markets, nifty may find it tough to cross 4141 & will fall below 4100 levels. Nifty has intraday support around 4073 to 4070 followed by 4046 a breach of which, nifty will enter the tuesdays "gap within the gap" zone to fall & cover the entire tuesdays opening gap till 3974.traders holding both calls and puts in equal ratio may continue to hold both to do intraday trading in these as per intraday volatility of nifty.

From the budget day high of 4480 nifty fell to mondays lows of 3919. On tuesday nifty managed to retrace almost till the fibonacci 38.2% levels of 4130 that should normally see some downward correction on wednesday to fall again till 38% down side fibonacci levels between 3919 to tuesday high of 4128 towards 4050 levels. However incase the initial 38% fibonacci level of 4130 is decisively crossed, then nifty can move up to next 50% level of 4200 above which is the most critical 62% fibonacci level of 4266 the final decider whether the correction is over for resumption of bull run or the start of the next leg of the downward correction.

As mentioned, on tuesday it was reliance which was responsible for upward move of nifty & it will be reliance again which will play a major role if nifty has to move up or down. So have a close watch on the intraday chart of reliance to trade nifty futures.

 

[pranayk]

morning update at 8 am 15 july 09

last night although dow cl0sed flat around 27 points +ve at 8359, its daily eod charts are showing strength to move up till 8666 in next few days where it may find resistance. A cross over of 8666 can take dow to june high of 8911 followed by 2009 high of 9175.european markets closed nearly 1% up with uk ftse closing up by .85%.brazil closed down by .6%.asian markets have opened mildly strong but may close flat to mildly bullish with korea showing good strength, which was flat yesterday when other asian markets were strong.

For indian markets expect a bullish opening. Nifty will initially rise to reach the critical level of 4141 which is the deciding level whether to move up towards 4200+ levels or fall below 4100 levels. On monday nifty had made a low of 3919 breaching last weeks low of 3977. Last weeks high being 4480 , there is every possibility of nifty moving up till at least the half way mark till 4222 to 4232 levels to touch the cross over of 50 day moving average by 20 dma coming from top to thwart the bearish signal generated by this ma cross over. Indicators in the daily eod charts are giving bottoming out signals and are showing strength for further up move. Reaching of 4200+ levels by nifty and closing above it by end of the week also will nullify the negative indications shown by weekly indicators.

Traders should remain long keeping the critical level of 4040 as stop loss for targets of 4200 till 4232 in next day or two. Option traders must have one set of both 4000 call as well as put fixed with them & can trade in another set of 4000 call & put as per intraday volatility of nifty.secondly, by holding on the first set of 4000 call and put, option traders may also enjoy the luxury of shorting 4200 call as nifty moves up as well as short 3800 put as nifty falls, to pocket the premiums on these shorted call & put by holding on to 4000 call & put.

Most likely markets will move up in coming days to generate a higher base for the expected big fall in august. So, expect further up move if mondays lows of 3919 is not breached on a closing basis. For intraday trading on wednesday critical levels on the higher side is 4141 and on the lower side is 4070 initially & then 4040.

 

[pranayk]

markets for 16 july 09

on wednesday nifty crossed the earlier mentioned critical level of 4232 and closed above it at 4233 which is a mega bullish signal & perhaps the initial symptom of end of the present short term correction with the lows pegged at 3919 levels. The closing above 4232 has given a free ticket to nifty to have a hassle free joy ride till critical fibonacci level of 4266 which may not be visible & be completely ignored on thursday due to the gap up open on thursday. The only level which may have the ultimate say on the further up move of nifty is the critical level at 4292 a decisive cross over of which may straight head for the budget day high of 4480 in next next 2 to 3 trading days.

Most likely both the critical resistance levels at 4292 followed by 4480 will be breached by nifty to head for 12 june high of 4693 by end july. The reason for such up move in july is based on the assumption is that markets have to move up to a reasonable level to accommodate the astrologically induced mega fall during august 09. Well, if the markets dont move up now, then when they fall in august 09, it will be devastating. So the present rise is likely to have a cushioning effect so that after the big fall of august, there is something left in the indices.

Traders and investors should not bother for august fall from now onwards, as many a times astrological predictions have failed to give the desired results. One should remain +ve with reasonable quit points till at least end july or first week of august, otherwise a great opportunity of minting money till july end will be lost. Technically from the 12 june highs of 4693 nifty was in the a,b & c zigzag correction with budget day high of 4480 as the peak of wave b and perhaps 13th july low of 3919 as the bottom of wave c as well as the bottom of the present correction. So in case nifty breaches the highs of wave b at 4480, then one can even forget the 12 june high of 4693 and think of 5000 levels by first week of august before the expected mega fall likely from 2nd week of august. On wednesday nifty closed exactly around the cross over point of 20 & 50 dma. Although this cross over point has great repelling power, yet should nifty manage to decisively overcome the repelling power and close high enough above this cross over point of 4233 then it will be a mega bullish signal for at least another 200+ point up move.

For trading on thursday , expect another mega bullish day to be induced by buoyant us & asian markets. Even if asian markets dont respond to the call of dow, indian markets will move up. Nifty may test the critical level of 4292 from where pitch battle will be fought between bull & bears to decide whether to cross this critical level to clear the path towards budget day high of 4480 or have a pause around 4292 levels to induce another bearish sentiment only to move up sharply after the pause, towards 4480 on another gap up open early next week. 62% fibonacci level of 4266 will provide support to nifty, in case after moving above it, nifty retraces downwards. Critical cross over point of 20dma & 50 dma around 4233 will also provide next support to nifty. Traders must have 4233 as support level and continue to hold long future positions & calls along with earlier put. Again have a close watch on market magic stock the reliance industries to decide the direction of nifty.