Food for Thought........!

S S

Well-Known Member
Hi

In my last message, I had started by saying “Spot Nifty hurriedly moved to the level of around 8969 as mentioned in my last message”

So, almost for 2 weeks that the target of 8969 was being viewed and reviewed by the spot Nifty, but without attending to it.

Even during this week, the spot Nifty did the same thing for the first three sessions, but on the fourth session on Thu 2nd Mar 2017, it straight away opened almost at around 8983…. Much above this barrier of 8969 level, and managed to remain above this level during the whole session on that day.

But on the last day of the week, that is on Fri 3rd Mar 2017, it did come down from the levels of the previous day, and yet closed above this level of 8969, which is now likely to act as a support, to some extent.



One can see that even now, the spot Nifty is above the 10 DMA Red line. It had hit the Upper Bollinger Band on Thu 2nd Mar 2016, and had had a rebound from that level, but still, the Upper Bollinger Band does NOT seem to have acted as a strong resistance on that day.

I feel that even now, there is some steam left in the Nifty, which shall push it upwards to the level of around 8992, the high on Thu 2nd Mar 2017. In case it manages to go above it and stays above it, then the earlier All Time High of around 9119 stands a good chance of getting touched/violated.

However, in case the Spot Nifty cannot manage to cross the level of the last high of 8892 and stay/close above it, then there is a strong chance of a correction. In such a case, the Nifty may get dragged down to the earlier strong support of around 8570.

My opinion based on my understanding of the markets and the charts, and I could be wrong.

Cheers!
SS
 

S S

Well-Known Member
Hi!

So….. BJP gets more than 3/4th seats and a Total of 325 seats along with it’s allies in the recent UP State elections, routing the other three political parties. This shows, how the common citizen from that state has supported the demonetization, in spite of having cash crunch on day to day basis for about 50 days. How a common citizen was happy with the demonetization because the corrupt politicians, bureaucrats, landlords, etc, who were sitting on large sum of black money panicked as that money got converted to worthless paper due to demonetization.

Indian Paid Media, as usual had made demonetization a strong anti Modi and anti BJP issue, and these results make them fall flat on their faces.

Even today, the BBC World News reported, that the most populated state of Uttar Pradesh voted to support Modi and his political party BJP ‘in spite of his blunder of demonetisation’. The paid BBC media person from India must have reported it.

However…. All is not only well, but All is Great for the markets and suddenly the target for the spot Nifty appears to be around 9290, which can be seen in the chart below.



The Fibonacci lines are drawn from the low of around 7894 on 26th Dec 2016 to the high of around 7992 on 2nd Mar 2017, and it shows the next target of around 9290.

This is surely not in a straight line, but the markets could have a strong and large gap-up opening on Tue 14th Mar 2017.

Be careful because sometime during the next week, there is also a chance of Profit Booking, as the markets are at their highs. Buy on dips could possibly be a good idea because the uptrend appears to be strong.

I will not be surprised, if the spot Nifty opens almost 100 points up or even more in Tuesday. For investors, they need to watch for the dips and pick up good stocks, which could be from Banking, Housing and Finance, and similar categories, which get benefitted by the government policies more, for their implementation, now also in UP & Uttarakhand.

Keep an eye on SG Nifty futures before the markets open on Tue 14th Mar 2017, because that would give a good idea about the level around which the markets shall open.

My opinion based on my analysis and I could be wrong.

Happy Holi, and enjoy. It is time to celebrate now.
Cheers!
SS
 

S S

Well-Known Member
Hi!

With the celebration of Holi festival along with BJP’s celebration for it’s victory in UP & 3 other states (to form the government in 4 of the 5 states, where elections were held), the markets too celebrated, taking the spot Nifty to it’s All Time High of around 9218.

While the celebrations may continue, I smell a trap, possibly because I try to be cautious always. Consider the chart for the spot Nifty, as at close of the trading session on Fri 17th Mar 2017.



The formation of last two candlesticks, is known as “Dark Cloud Cover” which is a Bearish signal. It means that the markets should fall subsequently.

But NO.

I expect markets to be in their normal bullish mode on Mon 20th Mar 2017, and the experts and advisors on most of the TV channels shall keep advising the viewers to invest/go long in one or the other scrip.

That should take the markets up in the beginning of the trading sessions, and people shall buy/go long. But as the day progresses, the markets, in my opinion, should turn downwards, making everyone watch the Stop Losses getting triggered, for their respective deals.

Then, the Selling of Long Positions shall push the markets further down, and there shall be a Total Chaos.

But in the chart above, you shall see a channel formed by two dotted/hashed lines. The upper level being at around 8992, which was the high of 2nd Mar 2017, and lower level being around 8900, the low on 1st & 9th Mar 2017.

I expect this channel to try and give support for the falling markets, which means that spot Nifty should stay above the upper level of around 8992.

Because if the Nifty breaks this level and comes down on a closing basis, then there is a strong chance for the Nifty to get trapped in this channel for some time.

One must also understand, that March being the last day of the Financial Year, different Brokers and broking Houses would have different plans to book their annual profits/losses and/or finding the need for extra cash to invest for tax savings.

Under such circumstances, there also remains the possibility of the spot Nifty breaking the entire layer of the resistance formed by the two levels mentioned above, and come down to close below the lower level of around 8900.

Difficult, but not impossible. And if that happens, then the markets shall turn downwards and the target could be around 8570, as could be seen in the chart, which I had posted in my earlier message dated 12th Mar 2017.


In the event this does NOT happen on Mon 20th Mar 2017 and people continue to keep going long, it would most probably happen on Tue 21st Mar 2017, that shall lead to a real massacre.

The next two weeks shall decide the beginning of the next Financial Year, and how the markets make the start shall be an interesting point to note.

My opinion based on my understanding of the markets and the charts, and I could be wrong.

Happy Trading-Investing, Trade Safely.
Cheers!
SS
 

S S

Well-Known Member
Hi!

Let us start with the Spot Nifty as at the close of the trading session on Fri 24th Mar 2017.



You can see a new channel formed for last six trading sessions, which actually is not a channel but ‘Darvas Box’. The spot Nifty shall have to break this box on either side to take a fresh directional action.

Based on the Equity stock holdings, the valuation at the end of the Financial Year might be considered, and further moves shall depend upon the large players, who possibly shall be in at least two categories.
First, who wish to maximize the value of their holdings and thereby wish to maximise their notional gains, and shall try to push the markets up as much as possible.
Second, who are satisfied with their gains so far and would prefer the market to be sideways, so that the upward movement takes place after the closure of this Financial Year and those notional gains due to further up move would then be considered for the next year.

We have no idea about their positions. But from the RSI chart at the bottom, (which currently is around 65), I feel that there is more chance that the markets shall remain sideways for few days.

Therefore, during the next week, it is possible that the spot Nifty rises to take the RSI to it’s value of around 70, and then falls to re-test the lower level of Darvas Box, which currently is around 9020.

In extreme cases, it may even fall to test the upper level of previous Darvas Box, which is around 8992.

Therefore,the range for the spot Nifty for the last week of the current Financial Year shall be 8992 to 9218, but in reality, it may only operate in the middle region of around 9020 to 9150.

My opinion based on my understanding of the markets and the charts, and I could be wrong.

Cheers!
SS
 
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S S

Well-Known Member
Hi!

So, the spot Nifty came out of the Darvas Box and moved upwards as can be seen in the daily chart at the close of trading session on Mon 3rd Apr 2017 :



Now, it is anticipated that the region around 9170-9200 shall act as a strong resistance if the spot Nifty decides to fall to some extent. However, because there was a positive gap-up opening on Mon 3rd Apr 2017, it is more likely that the spot Nifty shall now move upwards to it’s next target.

To find it’s next target, let us view the weekly chart, as it shall cover more time span :



If we draw the Fibonacci lines from the low of around 6825 in Mar 2016 to the high of around 8968 in Sep 2016, we find the fall thereafter was to the level of around 7895 in Nov-Dec 2016, which was 50% retracement completion. Then, it once again climbed to the level of around 8968 by 23rd Feb 2017 (see the daily chart above) and moved sideways till 10th Mar 2017. On 14th March, it had a gap-up opening and it broke the barrier to move upwards to have an all time high opening and closing on Mon 3rd Apr 2017.

Now, if we refer the weekly chart, we find that he first upward target (appearing in the top right corner) is around 9550, which is at 127.2% of the total upward move from around 6825 to 8968.

Surely, this is neither going to be achieved overnight nor shall it be in a straight line.

Hence, so long as the spot Nifty does not break 8968 and comes down again, happy days are here again.

My opinion based on my understanding of the markets and the charts, and I could be wrong.

Cheers!
SS
 

S S

Well-Known Member
Hi!

Earlier, the spot Nifty had risen from the low of about 9019 on 22nd Mar 2017, to the high of around 9274 on 5th Apr 2017. Thereafter, it corrected to the low of about 9145 and finally closed around 9150 on Thu 13th Apr 2017.

And the 50% of this earlier rise is at around 9146, which indicates that the spot Nifty could have taken support from this level. But one cannot be sure.



For a healthy correction, it is said to be of 61.8% of the total rise. However, 50% correction is not taken non-healthy. Therefore, it is uncertain at this point, whether the spot Nifty shall remain above the level of 9146 or shall be below it, as the markets open on Monday 17-04-17.

Other factors to be considered are the Momentum, which is not negative and the RSI is around 56%, which leaves some place for further selling.

The spot Nifty has just come below the 10 DMA Red line on Thu 13th April, and day’s candle is at a distance from both the Bollinger bands.

However, in the current circumstances, it is very likely that the spot Nifty recovers and starts moving upwards. In such a case, it shall first try to cross the 38.2% correction level around 9177, and then go above the 10 DMA Red line, which would have then moved upwards and could be around 9190.

And if that happens, then the spot Nifty shall make another attempt to reach to the recent high of around 9274. It is very likely, that this move may get truncated due to profit booking and the spot Nifty may soon come down.

Alternatively, if the spot Nifty does NOT recover on Mon 17th April, then it shall correct to the 61.8% level at around 9117.

If this level supports it, it shall turn around and then follow the path described above.
If not, it shall keep falling down, when an entirely different analysis shall have to be done.

My views and opinion based on my understanding of the markets and the chart, and I could be wrong.

Cheers!
SS
 

S S

Well-Known Member
Hi!

Sorry. Did not feel like posting anything because the target of 9550 mentioned in my message dated 4th Apr 2017 was yet to be reached. However, after touching the high of around 9532 non 17th May 2017, the spot Nifty appears to have taken a breather, as can be seen in the chart for the spot Nifty as at the end of trading session on Fri 19th May 2017.



One can see the three clear targets. They are around 9358, 9305 and 9250. It is not a must that all the three targets should necessarily be achieved. It is possible that the spot Nifty may turn around after any one of these targets, once achieved.

But if the fall which we have seen in the last two trading sessions continues, then possibly the spot Nifty may head to touch/cross 9300 levels.

Nifty largely depends on the Bank Nifty, which, on Friday’s closure was like –



One could see the Darvas Box with it’s lower level at around 22630, where the Bank Nifty had taken support on Fri 19th May 2017. However, if the Nifty remains in a negative mood, it shall affect the Bank Nifty too. The PSU Banks, which were running high on the expectations of reduced NPA, have not met the expectations, and hence are now falling. This shall pressurize the Bank Nifty also to fall to some extent. In case it does break the Darvas Box and goes below 22630, (which is very likely), then it may head towards it’s first target of around 22370.

Overall, it does not appear to be a situation for going long at this point of time. One may wait, watch and only after confirming the direction of the market, one may take appropriate action.

My opinion based on my understanding of the markets and the charts, and I could be wrong.

Cheers!
SS
 

S S

Well-Known Member
Hi!
So…. During the week, the first target of around 9358 was crossed downwards, but then, the markets turned around and moved upwards, as can be seen from the chart for spot Nifty at the close of the trading session on Friday 26th May 2017.



The lower targets are visible, but in addition, the two targets for bullish moves can be seen at around 9657 and 9817. After two upward candles, there is a strong chance that the next candle to be formed on Mon 29th May 2017 may also be positive and may try to touch/cross the level around 9657.

I have my doubts, whether the markets shall then continue towards the upward target of around 9817. There is more chance that the markets may take a breather to book profits, and in such a case, the lowest target of 9250 can also be tested.

During last week, while the IT sector moved upwards and so did the Bank Nifty, the PSU banks had seen a fall. The Large Caps had been surging ahead strongly, but the Midcaps are falling down. This ensures a certainty, that the Large Caps too shall follow the midcaps and fall, taking the overall markets down. But it does not mean that it has to happen in the immediate future. One needs to keep this info at the back of the mind while trading on daily basis. Better be sector specific and stock specific. Always keep an eye on the number of stocks advancing and number declining. It would give some indication of the direction that market is, at that particular point of time.

My opinion and I could be wrong.

Cheers!
SS
 

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