NIFTY FIFTY

Hi Kumar...
I'm not acquainted with the works of William O'Neil but what I can glean from my observations is written below.

As you may be aware, over a period of time all analysts making readings on the Nifty have suffered the egg on face syndrome.
The market has its own mind is no longer the cliché, but 'liquidity driven' is all it's about. Even that phrase is now a cliché. However, it's the simple reality of the times.
A cliché can only stand on reality, else it's fiction.

For a few words on distribution days and its implications, for distributions days to give indications of a correction, they will start to crop up in the market where the index closes lower on heavier volume than the day before. Also there will be increased instances of a strong market opening which fizzles into a weak close. We have seen a few of these as pointed out by you, and if the market wants to correct, that's a good set-up for it. This is especially so coming off an overbought condition, and the Nifty has consistently been way overbought. As for volume, we have consistently seen the Nifty rise on diminishing volume for quite some time now.
But really, over the past few weeks we have not had true distribution days, and the up days are far exceeding the down days. There has been little selling conviction in the face of the strong underlying strength of the market, and no key levels have even been threatened by a wide margin for quite a while. Distribution means the market is being controlled by sellers, but this is not the case currently.

At these high levels where the analysts have been baying for blood, it’s to be expected that any tug to the down, or a down day, is always going to be accompanied by increased volume as the nerves are now quite frayed. This increase in volume on down days is also very common when the day is quite volatile in each direction, as I have observed currently.
Also, the Nifty has been climbing on poor a/d ratios, so the up days are logically bereft of volume.
Notice the Open-High-Low-Close of the days you have mentioned:

March 6: 3147.25-3194-3147.2-3190.4.
This is an outright up day, with no volatility. Open is same as low, and close is right behind the high.
March 7: 3190.45-3192.95-3266.75-3182.80.
Close is lower than open, high is a tad above open, and low is a good 28 points below the high. A volatile session, even if the close pulled back 16-17 points from the low.

March 13: 3184.1-3221.3-3174.05-3202.65.
Volatile yes, but the close is 18 points above open, and 28 points above the low on a clearly up day.
March 14: 3197.20-3223.45-3184.05-3195.35.
A long enough bar showing volatility with a 39 point difference between low and high. For the rest a near perfect Doji with the open and close being nearly equal. Hardly a down day, but for the volatility.

March 20: 3234.2-3268.25-3234.2-3265.65.
A straight forward up day, a long white candle, no volatility, open is same as low, and close is just below high.
March 21: 3264.65-3292.15-3247.25-3262-30.
Another Doji as the open and close are nearly the same, but volatile with 45 points difference between low and high. Bears could well have had a field day but for a pullback.

From the above it’s clear that the down days have not really been well defined, and the increase in volume is more on account of volatility and of course poor a/d ratios.
Again, too many up days and week on week higher closes, six in a row, showing strength.
The distribution days theory is negated.
This is not to say a pullback in not on the cards, but when it comes, it will be on account of sensible profit booking rather than on technical grounds. The market is currently living out the fantasy of greed and is getting its arm twisted from the bullying of big money.

In conclusion, while it’s great to be diligently following TA, it must not become like the blinkers. Be aware of the details and the patterns that are being consistently played out.
As in all the doctrines of TA, a pattern is a pattern till it’s conclusively broken. This pattern is far from being broken as of now.
Fibonacci pullbacks, Elliott wave extensions, four day distributions, trendline breaks, RSI, ROC, negative divergence in Trix, all these and more have been futile in calling a correction on the Nifty.

That’s all I can think of saying and this is what I believe. Hope it helps.

wonderfull post and a detailed explanation.

terrific stuff.

Can not thank you enough for providing so much great information with so much generosity.

Regards,
Ashish

Not only can the big money arm-twist the Nifty, it can also hunt in packs with a great sense of timing.
Past 3 PM yesterday this was done, with several big players turning on the heat in perfect concert.
A perfect bear trap was laid, as the Nifty exactly at 2.30 PM, tested the near day’s low at 3379 (the real low being 3354, also the opening.).
A little before this, at 1.30 PM the Nifty had touched base at 3380 after testing around 3400. Then a feeble looking attempt was made at 3393, followed at once by a drop to 3379. Then another feeble attempt at 3387 followed by a drop to test 3378 a little before 3 PM. The highs were getting lower. An ordinary scenario on the last day of the contracts, with tugs and pulls from either side.
Then several counters began to move in concert.
I track ONGC, ITC, Bharti and Hind Lever as I hold these, and suddenly these and the Nifty of course began to move like all the meters on all the gas pumping machines at a gas station gone crazy all at once. Gallon after gallon after gallon. Pardon the Yankeeism.
In fact Hind Lever had been looking distinctly weak through the session trading below the previous close, right up till then.
The plundering took place between 3 and 3.15 PM, then at once, and as one, it turned direction.

The whys and hows of this kind of manipulation is another matter, but please, as written in a few news reports, if anyone says this was in anticipation of earnings growth, or a pre results rally, give us a break.
The earnings growth factor is not about to vanish into thin air all in fifteen minutes, so why the insane assault.
And it’s way too early to be a pre result rally, and the next few sessions would trash this theory I’m certain.

Dog continues to eat dog, and how!
To hell with all the ordinary players.
And this is the concern for the coming few sessions.
I’d be very surprised if the charge continues hereafter in the near term, so please keep your stops well protected just in the case the next chapter of dog eat dog is witnessed in reverse direction. There is little to fight over right at the start of the new contracts.

For supports the line is 3414-3410-3407-3404-3401-3398.
Then 3395-3392-3389-3386.
Followed by 3382-3378-3374-3370.

To the up, 3422-3426-3430-3434-3439-3444-3449-3454.

Thanks for the kind words, Ashish. As long it helps and there is something learnt, that's what's important.
Regards.

Dear Amit,
Thank you for your well defined reply. I learn much more from this forum than from books. You are doing a great job here and please keep it up. With warm regards.
Kumar

For the early part of the week going in today, the primary interest for me at least is whether the pre result rally is upon the market, or not yet.
We are close enough to the results as far as time goes, but not close enough to be calling last week’s action as a results related rally, I feel.
Results season or no results season, so many counters have risen quite beyond the call of the rationale, all in anticipation of earnings growth. But the extra something quite specific to results, is that something already here and unfolding.

The signals are quite mixed.
Several important Nifty movers are gaining momentum still, at high levels.
Certain heavies which have lain low or sideways, are now stirring.
A few seem ready for profit taking.

While the overall picture looks quite positive, is there any scope to cut things down a little, before causing a rise again with wider breadth and participation.
If so, then the chances of a sustainable rally going deep into the month improve manifold: Quality small and midcaps should all see action, besides the biggies of course.
If not, then will a continued rise allow for better participation at these high levels. Not likely, and then the argument for a deeper correction gains valid currency.

To replicate an earlier remark, keeping above negative triggers in a pullback has been the pattern and this pattern is unbroken still, and may well remain unbroken for some time to come.

Late last week this was written when the Nifty was a good 50 points below the current 3402 which in turn is lower than the highest at 3418:
At this point the immediate base support for the Nifty is at 3227 area.
Further below is 3177-3200 area.
Below here lie negative triggers.

For now the supports are 3398-3395-3392-3389-3386-3383-3380-3377.
Then 3373-3369-3365-3361.
More later if need be.

To the up, 3406-3409-3413-3418-3421-3424-3427-3430. More later if need be.

At this time the Nifty seems to be running between the lines, so to speak.
Congestion is seen at 3442-3446-3450-3454-3458.

If 3458 is taken, 3464-3466 is the next line, and above this, 3470-3474.

hi amit
as u have said rightly, nifty knows no bounds.
if she turns we turn
or else lets ride the wave.
regards

Looking at what’s been going on the last several days, including yesterday’s sterling move, I’m going back to the current analogy of the legend of dog eat dog:

One may be led to believe that one lot of dog has at last vanquished the other lot of dog. That there is no more dichotomous acrimony left amongst them. That only one single dog is left standing now, and there is no more dog left to eat.

Hmm…but knowing warring dogs, one would do well to not believe such hogwash (no insult intended towards pigs but pun at dog intended!).
Beware the return of the vanquished.

I’m certainly not in the camp of those who are screaming for correction, and I’m with those who are riding the wave.
I’m just putting forth a strong word of caution.
Please do not get heady and be lured into a trap.
Inevitably at some point the markets will change direction.
Pull out one must, when one feels one has taken enough.
Leave the hogs to crave for more.

Nothing more to say at this point. Not on pre result rally and not on money waiting in the wings. All that’s been said, and is over and done with.


Supports are at 3468-3464-3460-3456-3451-3448-3445-3442-3439-3436-3433-3430.

To the up the first line is 3478-3482-3487-3492. 3492 is a long range mark, so crucial.
Then 3497-3502.
3510 is another long range level and crucial too.