Battle continues… Update for 29 Apr 09

So today had turned out to be another day when the bears could pull the markets lower than the 200 EMA. It (200 EMA) always holds a lot of relevance for the markets but to fight it around this as a pivot is indeed interesting. Infact I will go a a bit further and say that perhaps the high achieved on 15th Apr of 3498 too has become a resistance to beat. Now whether 200 EMA is playing the spoil sport or 3498 – the fact remains that we may have topped out for the short term and this should become our levels to watch out for – for all those who intend to play the range. We closed at 3362 that is 62 points above the present middle of Bollinger bands.

As far as the Global cues are concerned we did not have too good a cues from there too and that may be a reason among others to make us close red. Asia was all red but not as bad as us. Nikkei ended 2.67% in red, Hang Seng 1.92% in red and Strait Times 0.56% in red. Europe too traded red for most of the time finally ending – not at the lowest levels – but still well in red. FTSE was down 1.69%, DAX down 1.85% and CAC down 1.66%. US opened red and almost immediately climbed to the safety of neutral line. The problem is that it continues to play dangerously close to the flat line and is not showing the conviction to remain green. We are still short of mid session so there is still time before we see where the markets finally end there.

The candle was dark and that comes after a Doji (not a perfect one though) Only thing is that it lends support to the fact that we were perhaps near the top for the present run up and any further run up will have to necessary see bulls support at the present or lower levels. We are below the 200 EMA and the 20 EMA trails at 3279 – well within the reach of the bears if they do desire.  We are already below the 5 EMA and if 20 EMA is violated then the bears will scream victory. The volumes are once again on a decline – so that is one point for the bulls that bears do not have enough volumes to crack the markets. The bears on the other hand say that these volumes were enough to crack nifty 100 odd points and the thrust will be when it will be. ADX is bullish but with each passing day the bulls show signs of tiredness. MACD turns bearish after today’s black candle. Slow Stochastics say bear by a point. Means that the %D line has crossed over %K line by a point. RSI though bullish is looking down. The good thing – there is no indicator in the overbought territory – the bad sign – there is no indicator in the oversold zone too. So expect the down run to continue till the indicators turn oversold and bulls get some better support. 

Seeing the options data – the moment the markets show a chance going down there is a spate of put build up. To my mind this is one of the reasons that there is such a resistance to fall lower. All the puts this month are likely to go down the drain. Hopefully there will be a lesson there and the carry forward of positions will be more intelligent. Apart from the Options, the uncertainty of election results and weak global cues are countering the build up of positions on the down side. So though there seems to be a strong possibility of us going lower – there is a bright chance that we settle down in a range at these levels – if we do not go down. The chances of us going to higher levels – though can never be ruled out – seems painfully difficult at the moment.

Hey before I go any further – remember the Options strategy no 2? Well congratulations for 8.9% return this month precisely. No more no less. I am a day early – but I am sure the markets are not running up to eat your positions tomorrow.

The options pain that I had mentioned in the last post giving indications of ending the month around 3200 levels now give the nadir at 3300 levels so that should be the nearest to the closing tomorrow. please do look at the options pain and the call put ratio charts.

I will move on to the Pivot data now: -

R3 3591 
R2 3514
R1 3438
Pivot 3394
S1 3318
S2 3274 
S3 3198 
Projected High Range 3416 to 3476
Projected Low Range 3465 to 3405
Fib Projected High 3503
Fib Projected Low 3318

I wish you all the luck for tomorrow…