Weekly NIFTY and Stock Analysis

#1
Hi Guyz,

I am a swing trader using index and stock options as preferred instruments. I am going to start a new thread on technical analysis of NIFTY, BANKNIFTY and other liquid stocks. Please post your opinion or questions here. I hope we all benefit from each other's expertise.

Nifty has been trading in an ascending triangle with 2009, 2012 and 2013 lows proving a support while the 2008, 2010 and 2013 highs acting as resistance. Therefore NIFTY has been forming same highs and higher lows, and a breakout may be imminent. News flow and sentiment is strongly negative right now which may indicate a bottom formation pretty soon.



The bounceback in the last 30 minutes of Friday was expected because of this. NIFTY maybe very volatile till expiry but expect some upward momentum.

Price action means everthing so this analysis will be VOID if NIFTY decisively closes below the trendline on a weekly basis. In such a case, I'm looking at a target of 4500 on NIFTY.
 
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#5
I will try to write daily but weekly is guaranteed. Here is tomorrow's summary from my blog:

S&P500 closed below 1598 on Thursday night breaking an important support and making a lower low in the process. Index failed to capture 1598 on Friday (weekly closing) despite a moderate pullback from lows.

Despite a huge sell-off overnight in Dow (-340) and S&P500 (-40), NIFTY opened with comparatively moderate gap down (-30) and ultimately closed positive at 5668 after a lot of intraday volatility. There is an important support from weekly trendline from 2009 lows and it was held at least for this week. With the expiry around the corner, both the CALL and PUT writers were very active. 5700 Puts still have larger OI (7.6M vs 7.0M) than 5700 calls, so a break above 5700 is possible. 5600 Puts and 5800 Calls had more than 1.5M OI addition each and now have 9.6M and 10.0M OI respectively indicating that the expiry maybe somewhere between 5600 - 5800.

NIFTY traded in positive more than half the day. Howver, midcaps were under serious pressure during the second half. There was very strong downward momentum and stocks like IBREALEST, HINDALCO, RELINFRA, JPASSOCIAT, JINDALSTEL, BANKBARODA, RELCAPITAL were trading between 6 -10% down around 2.45 PM. Most recovered 2-3% in the last 30 minutes primarily driven by short covering. However, HINDALCO rallied almost 10% in the same time and closed above 100. DLF also briefly plunged below 175 to 170, but regained the level to close at 175.5.

Despite the short covering CNXMIDCAP closed 110 points down at 7319, within striking distance of March, 2013 low at 7240. BANKNIFTY closed at 11,340, down 35 points after bouncing back from 11,210, the Feb 2012 high. It should be noted that Large Caps usually bottom out before Midcaps. Stocks, like ICICIBANK, INDUSINDBK, SBI, DLF, that were threatening to breakdown closed safe.

FII again sold large amount in cash (~1,800 crores) but covered some shorts in index futures (6,000 contracts). INR recovered from life low and closed just around 59.3.

On Thursday, I wrote this and market held onto the support:

While sentiment and market momentum cannot be more bearish, the charts do show a strong support between 5600 and 5650 for NIFTY. Support comes from almost 5-year old weekly trendline that connects successive bottoms from 2275, 2600, 4500, 4800 and 5500. If the trendline is held, a bounce back is likely next week. If it gets broken tomorrow then very serious downside is possible (a retest of 4500 at minimum).

A short covering rally is possible next week so I booked all remaining shorts and initiated small amount of longs using same expiry CALL options. These options will lose time value very quickly, so unless they come in the money on Monday, they must be exited.

Formatted text here: http://livestock.cloudaccess.net/106-trading-snapshot-june-21-2013.html
 
#7
After a 4 day, almost 90 point drop from 1650 to 1560 S&P500 bounced back from previous all time closing high (1561) and closed above 1603 on Wednesday night. S&P has now recovered almost half of the decline created by FOMC's statement on beginning of the end to QE3.

NIFTY followed the exact pattern of previous day with gapup-selloff-bounceback-selloff. The last selloff came probably because INR broke 60 and slipped to 60.7 during the later part of the day. Strong close in HANGSENG (+400) and positive opening in European markets also could not hold NIFTY and it closed 20 points down 5588, just 1 day ahead of expiry. However, this time CNXMIDCAP led (traded stronger than) NIFTY throughout the day and closed flat. Several beaten down midcaps (UNIONBANK, IRB, RELCAPITAL, CANBK) recovered and closed positive but not before losing most of the gains.

The important support from weekly trendline from 2009 lows is still held for this week. With 1 day left for expiry, CALL writers were extremely active while PUT writers were running for cover. 5400, 5600, 5700 and 5800 Puts had significant unwinding. Even 5600 Calls (7.0M) now have higher OI than 5600 Puts (6.3M) indicating that 5600 is not as strong support as it was a couple of days back. 5700 Calls with 11.2M OI is a wall of resistance and pretty much means that expiry will be below 5700.

FII selling reduced to moderate levels in cash (~550 crores) and covered some shorts in index futures (10,700 contracts). INR made fresh life low and finally closed below 60 at 60.7.

On Thursday, I wrote this and market still narrowly holding onto the support:

While sentiment and market momentum cannot be more bearish, the charts do show a strong support between 5600 and 5650 for NIFTY. Support comes from almost 5-year old weekly trendline that connects successive bottoms from 2275, 2600, 4500, 4800 and 5500. If the trendline is held, a bounce back is likely next week. If it gets broken tomorrow then very serious downside is possible (a retest of 4500 at minimum).
 
#8
Update for July

Nifty bounced from the important technical support of 5-year strong trend line that connects bottoms at 2275, 2600, 4500, 4800 and 5500. Despite very negative global and local news flows and fresh life low on INR, Nifty miraculously held on to the support entire week. However, the expiry day movement doesn't count for much and bullishness will be confirmed by a weekly close above 5700. Otherwise, Nifty's struggle for the week will count for nothing.



Nifty hourly charts are already showing some strength. A breakout on the upside will be indicated by a close above 5700 and confirmed by a close above 5780, the upper end of the channel. Above 5700, Nifty should be bought with a SL of 5680.



Nifty daily charts are showing improvement with RSI and MACD deeply oversold and turning upwards. Nifty has taken support from bottom of the channel and bounced back. Top of the channel with the current arrangement is above 6300. Intermediate resistance will be provided by 200-SMA at 5840. Nifty should be longed with a SL of immediately previous low (5550).



Nifty weekly charts show an ascending triangle with 5-year strong trendline providing support. Breakout target from this pattern will be 10,000 on Nifty. However unlikely it may look right now, we need to patiently wait and see if the pattern is validated or broken. A decisive break below trendline on weekly closing basis will indicate breakdown and open downside in Nifty till atleast 4500. A breakout above 6300, will indicate upside till 10,000. Nifty should be longed with SL of 5500.

Banknifty is at a safe distance from the weekly 5-year strong trendline support, though it has broken down from 2-year old trading channel. Banknifty will likely gain momentum above 11500.

CNXMIDCAP which is known to lead Nifty, on the other hand, has decisively broken the 5-year trendline and is bouncing back from intermediate support at 7000. Is this a glimpse of things to come or a false breakdown of thinly traded index? Time will tell.

After a 4 day, almost 90 point drop from 1650 to 1560 S&P500 bounced back from previous all time closing high (1561) and closed above 1603 on Wednesday night. S&P has now recovered almost half of the decline created by FOMC's statement on beginning of the end to QE3. At the time of writing, S&P is trading midly in green at 1613. Positive global cues will give Nifty a chance to cross 5700 tomorrow, and whether Nifty can manage this remains to be seen.

Link to original: http://livestock.cloudaccess.net/market-analysis/109-nifty-post-june-expiry.html
 
#10
Spectacular rally! Nifty extended the bounceback from the important technical support of 5-year strong trend line. June 28 close, being a weekly, monthly and quarterly close was very important and Nifty did not let us down. Propelled by the news of Gas price hike, Nifty gapped up above 5700, continued to go higher throughout the day and ultimately settled 150+ points higher, just short of the 200-SMA at 5840. Overall cash volume in the market at 14,700 crores was quite high, especially considering that this was on the first day in a new FNO series. After 13 consecutive sessions of selling, FIIs turned around in cash market and bought equity worth 1100 crores. FIIs also initiated 61,000 longs in index futures with 1700 crores of net buy. The last reasonable FII buy was on May 30! INR too shared the cheer and recovered 1.3% to close at 59.39.

It is likely that several market participants will characterize current rally as short covering, but then only time will tell. We need to ride the trend as far as possible. Nifty hourly charts are now showing solid strength, infact slightly overbought on MFI. A breakout on the upside is now confirmed by the close above 5780, the upper end of the channel. 5760 - 5780 zone should now provide support to Nifty for the coming days. Nifty faced its first hurdle at 5850 and the last hourly candle was sold with high volumes. A small correction looks possible and it should be bought with SL of 5760 if it does occur. There is a 60 point gap between 5760 and 5700, so expect a sharp movement to 5700 if 5760 is broken. Above 5850, the next resistance will come between 5970 to 6000 region.



Nifty daily charts are showing improvement with RSI and MACD deeply oversold and turning upwards. Nifty has taken support from bottom of the channel and bounced back. Top of the channel with the current arrangement is above 6300. Intermediate resistance will be provided by 200-SMA and a breakout above this level at 5840 will put Nifty in confirmed medium-term uptrend. Those already long on Nifty can now increase SL to 5760 and increase exposure above 5850.



Nifty weekly charts show an ascending triangle with 5-year strong trendline providing support. Breakout target from this pattern will be 10,000 on Nifty. However unlikely it may look right now, we need to patiently wait and see if the pattern is validated or broken. A decisive break below trendline on weekly closing basis will indicate breakdown and open downside in Nifty till atleast 4500. A breakout above 6300, will indicate upside till 10,000. Nifty closed the week in style with an extremely bullish candle with high volumes. Strategy for positional traders should be buy on dips with SL of 5690 and addition above 5850.



I said earlier that 'Banknifty will likely gain momentum above 11500', and it did. Next major resistance for Banknifty is at 12100, so expect a very swift and volatile movement between 11500 and 12100 over the next few days.

S&P 500

Despite heavy selling during the last 30 minutes on Friday, S&P managed to close the week and the month at 1606, above the important pschological mark of 1600. Since there is a strong resistance from 200-SMA at 5850, Nifty can possibly gap down on Monday, consolidate in the 5760 to 5840 region before deciding on the next big move.

Original link: http://livestock.cloudaccess.net/market-analysis/111-nifty-july1.html
 

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