Monday, September 7, 2009

Update for 07 Sep 09…

image When I talked about the resilience of the markets in my last post I had frankly not expected the kind of upswing from the markets that it really showed. That was a fabulous turnaround that took the markets to the close it did. now like we have had multiple tests of the highs earlier – we have tested the lows also. The range is small and the breakout will happen whenever it has to. The high is at 4735 and low at 4576. There should ideally be another attempt at breaking the high once again and I am quite certain that the high will be broken – how much conviction that breakout has will remain to be seen. Look at the FII and DII data – this selling by FIIs will remain a concern whether we like it or not.

daily 04 Sep 09 The global cues were good and that should start the week on a good note. The Asia had ended the week with the Nikkei down in red 0.27%, Hang Seng up 2.82% and Strait Times up 0.94%. Europe performed better than Asia and it started in green and ended in green higher than the opening point – never visiting the red area. FTSE ended up 1.15%, DAX up 1.57% and CAC up 1.27%. US on the other hand started the day flat but went on to comfortable green by mid session and remained there only for the rest of the time – ending – Dow up 1.03%, Nasdaq up 1.79% and S&P up 1.31%. Nikkei has started the day today almost a percent up. Mind you today being Labour day the US markets will remain closed and that part of the cues will be missing so incorporate this factor in your assessment of the markets.

On the charts the markets bounced once again from the middle of the Bollinger bands not really bothering to violate the middle of the bands to test the lower band. It also coincided with the support as you would be seeing on the chart on the left. Now to this end we are very close to test the upper Bollinger Band at 4779. The range too has become so constrictive that a breakout is just a matter of time and I would still not bet on the direction of the breakout. Notice two things on the charts – the green ticks do not have relatively more volumes than the red candles. The red candles are with a little bit more volumes than green candles. Now that is the reason I say that it is difficult to say who is running out of steam. Not only that it may be prudent to point out the FII and DII data once again.The TRIX is flat with perhaps a little positive bias. imageAs far as the MACD goes the lines are overlapping each other with hardly any divergence. RSI is at 57.76 and the RSI simple moving average for 15 days is also above 50 at 54.6 – this has two things – the moving average is above the 50 point and the RSI is trailing above the SMA. As always my concern is the ADX – it is at 11 – It will surely move shortly above the 20 marker and that mind you will definitely give out the trend the markets will take in near future. put call 04 Sep 09So what I am saying is that do not read into the 100 odd points upswing – it is most likely to be temporary – one of those days run up. As far as the Slow Stochastic are concerned they have turned bullish by a cat’s whisker – so I will read it neutral. MACD is still bearish. So here we are – with nothing to read really in the tea cup of technicals.

As far as the options data is concerned the PCR is at 1.23 – resisting the markets from going into a free fall. Options pain says that 4600 is the level and till that moves the markets are signalling a hovering around this point. The greatest open interest is at 4600 Put now with 45.93 lac, 4500 put with 44.41 lac open interest, 4800 call with open interest at 36.19 lac (next bus stop around 4800 levels?) 4300 put at 33.78 lac and 4000 put with 33.14 lac open interest. So that does give us some sense as to where we are heading for.

I will summarise this in the following manner, Global cues are good. Our Charts are mixed with volumes and the ADX not playing up still. The Options data point out towards to some more upswing before we stop. All in all the ideal strategy would be to remain long. The stoploss for longs would be closing below the 4579 level and if holding shorts then keep stoploss of close above 4665 for the day. For today go long above 4644 and short below it. I wish all of you luck for today’s trading.



H S Cheema said...

I tend to agree with your assessment about Nifty making new highs. Hoping for the best.