Nifty opened on a strong note moved up in the initial part of the week made a high of 5138 and from there after it tanked and fell heavily on Thursday and Friday and recovered in the last half of Friday there by closing the week on a weak note. The fall on the last two days is on heavy volumes suggesting that the trend may continue in near future. It can be seen that nifty has failed to close above 5150 this time also, this is the second attempt of nifty at 5150 in last one month or so. Thus giving a clear indication that 5150 would be the difficult to cross in near time. The time gap of one and half months between two attempts to conquer 5150 is very significant, generally when ever such time gaps are there between two attempts, these levels are difficult to go past either in uptrend or down trend. So if history is to be seen than it would not be easy for nifty to go past 5150. So till 5150 is taken our successful we have all the chances of indices moving further down sides. I have been clearly indicating for the last few weeks that the days in which markets close on positive note the volumes are very low and the days in which market falls or closes negatively volumes are very high indicating that distribution is going and markets might drift lower. It can be seen from the chart below that volumes are very high in the last two days when the market has fallen violently indicating that down trend might has started and we might be seen further down sides on coming weeks. Nifty during the week has moved below all the EMA 5 day, 15 day, and 50 day MA in just two days indicating weakness. It also moved below the 50 day EMA and in later part of Friday recovered and moved above the 50 day EMA. 15 day EMA is placed at 5002 so as along as nifty is below it we should take every rise as an opportunity to short. If nifty moves above it then it is better to reverse positions with stop loss at those levels.
Positive for nifty:
• It is still above 50 day and 100 day EMA
Negatives for nifty:
• It is below the 15 day EMA
• Volumes are increasing with the every fall
• Weekly MACD and TRIX have given sell signal.
• DMI has given a sell signal – but DMI has to move above 20 to confirm the trend.
• Daily MACD and TRIX are in sell mode.
Elliotte wave analysis:
During last few weeks it has been indicated that, 5195 and 5520 are the targets which has to be broken, I have also indicated that if nifty fails to move above 5195 and then we have chances of nifty moving towards the low of November. As nifty has once again failed to move above 5195 we have all chances of seen 4500 in near future.
Directional Momentum Index:
DMI is indicating directionless for the market. This week –D1 has moved above +D1 indicating strength of bears. Also the movement was very swift and straight indicating that bears are coming into very fast. But the DMI is still moving down and is placed at 16 but appears to have just started to move up it has to move above 20 to confirm trend. So keep a close watch on DMI to know the strength of the trend.
Pivot Point Trading Strategy:
Last week nifty has moved exactly according to pivot strategy. For the coming week the pivot is placed at 4962. If nifty moves above 4962(preferably close) then we have chances of moving towards 5117 if nifty fails to move above 4962 or if moves above 4962 and fails to move past 5117 then we can easily see nifty moving towards 4785 and 4630.It may also be noted that monthly previous pivot is placed at 4860 and yearly previous pivot is placed at 4856 so if these are broken then we can see 4500 easily.
Turtle Trading:
20 day phenomenon
Current trend - neutral
Go long above 5138( add to positions)
Square off – NA
Go short below: 4539.
ATR – 94
M.Sri Mahidar
Monday 29th November 2009 Time 19.55 IST
Trend is Friend.
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