Testing the strength of BULLS...

F&O snapshot of NIFTY.

As on 12th December 2008 NIFTY Dec Future closed at 2921.70 (Rs. 0.35 PREMIUM) with a turnover of Rs. 12414.25 Crores, Adds 369100 shares(0.97%) in open interest pushing the open interest to 38578976 shares. This shows that some steam is left with the bulls and bears will have to show more strength to win the battle.

In this week Nifty has moved up 7.62%, a very good move indeed.
But since last two days not able to move further up nor did closed at lower levels.

A deep cut is expected in US market due to Senate denying the auto bail out package. We may feel the ripple effect. Though today despite of this news our market was resilient and staged smart recovery from day lows. With longs, it is the time to be very cautious. Our market absorbed the negative IP data today. Same thing happened previously and then after couple of sessions heavy selling was witnessed. It is not easy to predict about this time.

Looking at technical indicators of which I m fond of pondering with--
Stochastics fast and slow - telling to exit longs and initiate shorts.
ADX - converging back, telling to exit longs and initiate shorts.
RSI - Flattening out, a caution.
Ultimate Oscillator - losing steam.
CCI - Flattening out in overbought zone.
ROC - Drooping down, telling to exit longs.
Money Flow Index - Started a down tick, smart profit booking already started.
DPO - Flattened out - gaddi mein puncture ho gaya lagta hei.

( I am taking a break, I am not sure when I will be able to update this blog, till then have a good week end )

Golden Barricade

Today again we witnessed importance of Fibonacci numbers. Though it is not the eternal support but depending on the strength of the trend, it does lend support initially. If attacked consistently within short period it will give the way out. It will not sustain. But it will certainly give support or pose resistance if approached after a reasonable time period.

Today nifty took the support around 2863, and saw a smart pull back, though not smart enough to bring the nifty in the green. While talking to some of the market men, they told me that there can be second stimulus package coming next week so nifty bounced back. What ever it may be, bulls defended 2863.

Now where we go from here?

Today many midcaps (one of my friend calls it madcap - you never know how they will behave) staged surprising moves. IT pack was weak. It was one of the culprit hindering the up move of the nifty. Tomorrow if there is some bounce in IT stocks and follow up buying continues, then we will certainly head towards 3080, where I feel there can be some resistance. Beside this nifty is sitting above clusters of weak supports which are 2810, 2748, 2715. Also heavy put writing and call unwinding was witnessed earlier at 2600 levels. Since 3^rd December Money flow index is improving on nifty chart reaching 82.25, which can give signals of profit booking soon. I expect in this series nifty will close above this levels. But you never can be perfect; because the ultimate truth is that we are in a bear market.

Market men will be eagerly waiting for the IP data tomorrow, which may give a knee jerk. Every dip can be considered as buying opportunity for the time being. But never forget the stop losses please...

Follow up buying needed to sustain this upmove.

Today we witnessed a good upsurge. Surpassing the golden resistance number 2863, closing at 2928 with good volumes.

There is a concern with Commodity Channel Index (CCI ) reaching 94.71. As long as no divergence is seen in CCI bulls can be comfortable. Otherwise some other indicators too display bullishness.

One has to be cautious because one never knows when a whipsaw can occur. Keep appropriate stop loss with the longs. Now a major resistance is at 3241. If nifty has to move further up it will have to consolidate at current level without succumbing to the bearish pressure. As long as bulls defend 2863.00, for few sessions, nifty can go further up. Other wise we may see a good fall.

Pivot Point Resistance and Supports

Support - 2730, 2829. Pivot - 2885. Resistance - 2983, 3039.

Is it time to panic?

If any body buying Puts or Calls of Nifty after 20^th November 08, and holding it must be suffering from time wise decay in the value. At this time writing out of money calls or puts can be beneficial but it requires higher margins. Nifty has been trading in the range 20^th nov. low 2503 and 8^th dec. high 2862. Since 20^th Nov in 12 trading session no significant increase or decrease in volume witnessed. A positional trader will have to wait for a decisive break out.

If we assume no break out soon, then the followings will be important levels for nifty to watch out.

2503, 2588, 2640, 2682, 2725, 2777, 2862.

Break out above 2862 can lead up to 3080 and break out below 2503 can crash up to 2280. For near future I do not hope for higher high above 3241.

For 10^th December 2008, we may see some initial panic and then a smart pull back. I expect the opening in red at around 2777 levels and panicking up to 2682 levels. If nifty manages to close above 2725, it will be a concern for the bears and a comfort for the bulls.

Pivot point support and resistance.

Support – 2712, 2640. Pivot – 2787. Resistance – 2859, 2934.

Will the party continue???

Today we witnessed a classic example of Fibonacci retracement. Today nifty made high of 2862.00, while the golden number was 2863 - 61.8% Fib ret. Of the range 2253 – 3241.