Monday, February 16, 2009

Market sees a break down

After a four day consolidaion the Market finally moved out of the consolidaion, taking the interim budget as a trigger. A trigger is just a reason for the market to do what it intended to do anyway.

Always go with the trend.

So far, the short term trend was up. Now, with the Nifty moving below 2835, this trend has changed to sideways. Long positions should be closed since the Index has violated a significant support level.

Has the downtrend resumed ?

Not realy. The Nifty was inside a trading range 2700 to 2875 and this trading range probably continues wih different boundaries - 2950 to 2760.

Looking at a Scenario

The Market is moving inside a range, although the range is probably wider than the one we are tracking. The real range may well be 2500 to 3200. Maybe, the Index will move inside this larger range for months altogether, before deciding on a trending move. The next move could be down to 1800 or up to 3800. All of this is just to build possible moves for the Index.

If this is a trading range, how should I trade ?

The nice thing about a range is the fact that there are opportunities on both, the long side as well as the short side. In a few days time, most stocks will reach support areas. This will be a time to buy for small up moves. Traders may consider going short on rallies. Going short will no longer be easy enough. I suspect that the best part of the bear market is behind us. Every rally now will raise the question: is this the real 'bull' move ? Thus, short selling may remain rather difficult, from now on.

The Nifty

While the Nifty remains inside a trading range (2760 - 2950), the range is difficult to trade since we have alrady seen two failed moves out of it. First, the Nifty fell below 2700 to 2635 but rallied back inside the range without reaching its downside target. Now, the Index broke out above 2875, went to 2950 and has retreated back ino the range. Therefore, it seems that using oscilators to identify extreme conditions may be the more profitable. This means using tm Stoch, or RSI, CCI, Stochastics or some such method.

Have Fun!

7 comments:

chandu said...

Thank you very much for taking time and for the detailed analysis,and giving the clear picture about the market.

Good Night.

vijay singh said...

hello sir
ntpc finaly break 175 now can i short. if yesh then what should be my stoploss

Ravi Sahu said...

Mr. Sukhani I have always been a fan of your analysis, personally practicing TA so your views act as a support to my dicesion making....Thnx a lot....keep up the good work SIR

stockchart said...

hello sir,stochastics is the one most underused oscilators, as in general its believed that it can best be used in a range bound market ,so in very strongly trnded markets when on a particular period chart ,if its an upmove than stochastics tends to remain in overbought areas and still price continues its upward journey,but i have found a way to use stochastics even in such strongly trended markets..hope someone helps me in building a programmed trading system out of this understanding.bjnaik@hotmail.com

john said...

HI SUKHANI JI!!
Is nifty a short now or long at these levels. A small upmove of 15-20 points in nifty tomorrow should be used as fresh sell opportunity?

Plz provide support and resistence levels for nifty.

Bikramjeet Singh said...

"Warrent buffet has the luxury of being wrong, the rest of us do not."

Please read this interesting write up.

http://www.cnbc.com/id/29246565

Sunil Malhotra said...

The Job & lay-off in US market are really in bad position. Last week I was travelling to Las Vegas,US & when I was going, then the person sitting besides me was telling he is working in German bank in US, so his job is safe, but people in US banks & other places have been laid off and even some people above the age of 55 years have been sent out on compulsory retirement. And when I was coming back in flight from Las Vegas to Chicago, I had spoken to two persons, one person was from Detroit and he was also saying that the there are lot of people with no-jobs in Detroit. I had also spoken with another person, who was from Jordan and he was that "I am done with America". He said he was working US for last eleven years and last he was working in a computer company with 100 people and they had laid of 35 people out of 100 people and he was one of the persons laid off. He said he joined the Casino, since he was educated he got promoted in Casino to senior post, but due to slum in Casino Business, Casino decided to cut the jobs and cut the jobs of senior/higher salaried people. Since he was promoted and was getting higher salary, so he again got fired from Job. So that man said i am done with America and going back home in Jordon. In short i just want say that position in US is far worst than everyone is expecting. Americans are counting Jobless claims of people of US Citizens, but the people who go there on Visa or illegally they are also jobless and US has no data of these people. If situation goes on like this, i feel market in US may fall further and India may follow it.

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