Nifty for 23 Jul 08

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.


Take a close look at the chart. First of all, point 1 and 2 are at a lesser steeper angle when compared to the earlier trend. Next, take a look at point 4, which is supporting a rising trendline. Point 3 has violated the down sloping trend line. Point 5 is higher than point 4.

This can mean one of two things. Either the market is preparing to be bullish. Or this is a relief rally for the fall of the last six and a half months. If the market corrects downwards from here, and takes support around the 3950~4050 levels, then we are preparing to have a new bull move.

If however, the market does not pause here, then it would mean that this is just a relief rally, and bulls may get trapped at higher levels.

Let us analyse the other aspects one by one.

This chart is used to measure time cycles based on the moon phases. It has been noticed that a count of 12 usually brings about a change in trend, as can be seen from the chart. Can this time also bring about a change? The probability is high.


Now, a measure of price. The Price has been bouncing about various Fibonacci levels, and possibly this could be the end of this bear move. The 100% level of around 14570 on the BSE of the previous bottoms is a crucial test. This could be easily surpassed, given the mood of the moment.


In any case, the bottom recorded in mid July is a very important level, and long trades could be initiated using that as a stop. Please keep in mind, that there would be concerted selling at higher levels, suggesting bulls may be trapped, therefore, extreme caution is suggested at higher levels.

Trade happy after planning your trade.

I am attaching the various charts of the tradable indices which should allow a trader to judge what levels to decide for (him)herself depending on their comfort levels.

The Bank Nifty seems to be ready to assume the mantle of leadership for the Index once again. This large move up can be discounted as a relief rally to the bear phase. For such an extended move, it is prudent to expect a correction.

The chart shows the Future pushing through the recent resistances. It also can be seen that they have been offering support too.

The increase in volumes also suggests conviction in this up move.

Therefore, dips may be utilised to buy, retaining the stop at ~4700 levels.

The Nifty Future also is pushing through the resistances, while receiving support after pushing through.

The same strategy could be used. Buying on dips may be profitable.

And finally, the Nifty itself.

After a long time, we see a convincing more back into positive territory. The volumes are slightly higher than average. We see quite a few positive volume bars in this last week up move.

This encourages us to take long positions on dips.

Further, the chart also shows us that the last bottom is not accompanied by stronger negative sentiment. Another plus point for the bullish case.

Nifty for 26 Jun 08

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.

I am posting the charts for yesterday and today.

In my last post, it was suggested that we may see a short term downside target of 4185. The Nifty did achieve a brief bottom at 4093.

As of now, given that we have a derivative expiration, the event based short covering has provided a relief rally to the upside.

Yesterday’s chart shows the touch points of the short term and the obstacles which the Nifty bull would need to face in the recovery of the Index.

Looking one day into the future, we will also notice, that if the Nifty closes above 4325, then a bullish hammer will form on the weekly chart. This is a very powerful reversal signal.

Thus we may see some substantial recovery. However, as a guideline, we may use the first chart to anticipate the points of resistance.

There has been an increase in volumes but the volumes are not entirely bullish. Therefore, even though the Index is rising, the sentiment is still not totally bullish. I expect some short term resistance between 4370 and 4390. The Index may fall slightly. But to keep the fragile bullish sentiment intact, the Index must stay above the last bottom of 4093.

Trade happy after planning your trade.

Nifty for 20 Jun 08

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.

It has been quite some time since I posted last. I have had some engagements which prevented me to do an in-depth analysis. It is very apparent from the chart that the trends on all time frames are down. The market does not have enough strength to be able to pierce the previous swing top.

The first question which comes to my mind is … where would it stop? First we take the short term perspective. Taking the Fibonacci calculations into account, we have a probable downside target of 4185. This is based on the last downside leg starting from the swing high of ~5299. Will this be the last of the downside? We cannot be sure of that at the present point in time. Only time will tell whether 4185 would be the bottom or not.

Further, within the months of June and July, we are having cycles in time falling on 21 June, 2 July, 6 July and 21 July. That suggests that this may be a volatile trading period. As the market is deep in oversold zone, I expect a lot of upside retracements, which would attract the attention of profit booking as well as new bears.

The last leg on this journey may attract a lot of shorting, which would trap the bears. Then only would we find the market in a position to resume its long term journey upward. So far we do not see any evidence of fear in bears, and shorting is resulting in sizable profits.

Where does the reader, the ordinary stock market investor enter? It is simple, wait for a base to be made. Let the negative sentiment be weaned out and then make your move.

Now, I present the long term charts of both the Indices.

The last time I posted this simple chart, the Nifty was poised at a very interesting juncture. As of now, the Nifty too has given up any semblance of being able to stand against the bear onslaught.

This weekend, I also present another chart, which I normally use to judge the market condition. This is a simple trend following chart, which I rely on to get the feel of the market.

The trick to successful trading is to determine the trend, and once the trend is in place, to take trades in the direction of the trend. This is the time tested safe strategy to the market.

Unfortunately, 99% of the small traders do not follow this principle. Rather, they try to hunt for the bottoms and sell at the tops. That is where they fail. And who makes money? The sharks.

This brings us back to the short term chart. Has the short term down trend terminated. Not yet. The short term bullish pattern which we normally look for has still not formed.

I find that my observations of the end of last month need not be changed.

We may still have upward corrections for the drop of this month. These upward corrections will attract profit booking as well as bears. Therefore, it is suggested to be nimble footed at this stage. If you do not monitor the market on a daily basis, it is better to stay away.

It is an old saying that “any fool can buy at anytime, he must find a bigger fool to buy later for profit.” Profit in the market is all about timing when to buy. Stay tuned.