As has been with nifty for the last few weeks it is struggling to go past 4700. Last week close was strong at 4730 and from Monday onwards nifty opened up but started to fall moved below 4700 and moved just below 4600 and then bounced back to close at 4680 so again near 4700. Now we have to see how nifty behaves at 4700 whether it reverses of just blasts off from the current levels. The odds are in favor of the bears now. Unless and other wise nifty closes above 4730 strongly that too with heavy volumes the up trend is weak and will not last. Nifty has taken support exactly at 15 day EMA and then bounced back to the hands of bulls. So as the nifty is above 15 day EMA the strategy is to go long at every fall. And if it moves below 15 day EMA the strategy is to reverse the same. But my view is the 15 day EMA low is at 4555 so wait for the market to close below this level then only see for shorting opportunity as in last six months nifty has once gone below the 15 day EMA low that too after budget. So now our critical feature is that we should closely watch the 15 day EMA low and look for shoring opportunity only and only on close or breach of the same. The directional momentum index is just moving down and is at level of 11 indicating that the market or the trend lacks strength. Keep a close watch on DMI as the up ward movement whenever it happens will signal the strength of the trend. I will be posting it, when ever the sudden change in the same happens. As the market is not trending it is better to book profit when ever a rise or fall of 100 to 200 points occurs. Another point which may be noted and which has been pictorially shown by charts last weeks is the there is –ve divergence between the oscillators like RSI, TRIX and MACD indicating clearly that the under tone appears to be weak.
One of the huge power full indicators is Money Flow Index (MFI) which clearly shows whether money is coming into the market/stock or going out of the market/stock. For the last few months on weekly charts the MFI is continually moving down where as nifty is making a new high (can be clearly shown in the chart below). This divergence clearly shows that the money is going out of the market at every raise which is a very weak signal and good new for the bear’s years. Unless and other wise the MFI moves up we have all the chances of market tanking in a big way. Every body in TV channels papers etc are taking about huge liquidity and also that money is flowing into the market by it the MFI is showing the reverse. It is clearly telling that money is going out of the market rather that coming in. the Divergence between the two is very huge signifying that we might see some healthy correction in near future.
One of the powerful indicators which shows the strength of the bulls is the Elder bull ray which shows whether the bulls are gaining strength with every raise of loosing strength. There is –ve divergence between that and nifty in the weekly charts which is also showing that the market is weak and might break at any time.
We have to wait breaking of the six months trend line which appears to be at 4550 once it is broken then we can be assured that down ward movement has begun before that we should just watch and see. So keep a close watch at 4500 as any break of the same will signal an end of the up move.
Directional Momentum Index:
DMI is has moved from 13.62 to 11.08 has just given a buy signal i.e. -D has moved above +D. The downward movement of DMI is a clear indication of lack of direction. Wait for the DMI to move above at-least 15 and above 20 will give confirmation of trending indication. Wait for DMI to move by four ticks/points and see in which direction the break out has happened and open positions in that direction.So keep a close watch on DMI as it is expected to give a clear indication of direction in coming weeks. On weekly chart the DMI is in buy mode and is moving down indicating the bulls are loosing ground. Even though +D line is above –D line the distance between the same is narrowing indicating that bulls are losing ground.
Pivot Point Trading Strategy:
For the coming week the pivot is at 4664 any break of the same will pave way for 4592 and 4505. So for the coming week the nifty range should be any where between 4505 and 4751. The monthly Pivot is at 4586 any breach of the same will clearly indicate weakness and will pave way for 4430.
Turtle Trading:
Turtle Trading - 20 day Phenomenon
Current trend – buy (but my view is to go neutral)
Go long above - 4744
Square off - 4353
Go short below: 4353
ATR at 123
M.Sri Mahidar
Sunday 6th September 2009 Time 8:39:31 PM IST.
Trend is friend.
No comments:
Post a Comment