Weekly technical Analysis for week ended 16^nd  June 2012.

During the week nifty did nothing but just moving in a close band of 70 points only and this is frustrating for the markets. It clearly shows that market does not know where to go and was not able to move in any direction and it was waiting for the news to make a move. One day the news was good so moved up and the second day not so good news and it moved down again. Market was moving only to both international and national news.  This clearly shows that market is undecided and the further movement would depend entirely on news. The movement appears to be slightly in favor of bulls .I have observed in my short stint as a investor and trader that whenever market moves only on news the moves are not sustainable. It may be on upside or down side. The present market from the lows of 4800 appears to have moved entirely on news and not on its own. So my view is that the up move would not sustain as we cannot expect positive news continuously. It may be noted that the raise during the last 10 days was on low volumes which is clearly indicating the market participation is not so great. The volumes should be high during the rise this is the cardinal rule. But as I say price is the king and we should believe in it and what even may be our study when price is saying one thing just believe in it. So as of now the price is saying market wants to move up and it is the thing we should do. As of now market is trying to move above the major EMAs which is a positive news for the market. Market has moved above the 50 day and 200 day EMA which is a good sign. Its now just above the 200 day EMA which happens to be around 5070 and till market is above it bulls would try to dominate the market. This would be keenly observed by the market participants as any move below it would sound death knell for the bulls. 100 day EMA 5200 levels so market might find some resistance at those levels and it is taken out then we can see a good and healthy movement for the market as bulls would get confidence. It may be noted that on a weekly chart the nifty has formed a hammer which gives an indication the bulls are strong and they intend to take the market up. It may also be noted that 100 week EMA is at around 5400 levels and we can expect the market to find resistance at that level. In the previous upmove from lows of December we have found the resistance at that level only. Market moved above it and then collapsed to sub-5000 levels. so even in case of extreme positiveness in the market we might find huge resistance at 100 Week EMA. I have been observing that over the last five to six months market is oscillating between the 200 week EMA and 100 week EMA. It is finding support at the 200 week EMA and finding resistance at the 100 week EMA. In December it moved below the 200 day EMA/SMA and then move up and again found resistance at 100 week EMA/SMA. We have to see whether the same happens now also. So these are the areas which are to be observed closely. One of the important things which are to be observed is that market has been making consistently making lower lows till now from November 2010 onwards and this is the first time it has not made a lower low(means did not move below the low of December 2011 low) and if it moved above the high of 5630 its high then we can say that we are in the firm grip of bulls and till that is done we can only assume that we are still in a bear market. So we have to see whether the market would go up and make a new high for 2012 to would fail to do so and confirm that we are still in a bear market and would go on to make a new low for 2012. Even the Elliott wave is becoming more complicated and I am not able to give it as I myself am not in a position to confidently tell what it is.  I would try to work out on the same this week and give up the Elliott wave update in the coming weeks.

Positive for the market:

·         20 week EMA has moved above the 50 week EMA

·         Nifty has moved above the 50 week EMA

·         Market has moved above the 200 day EMA – big positive for the market.

·          Daily MACD is in buy mode and is moving up above 0 which is really a positive sign.

·          

Negatives

·         Weekly and daily MACD are in sell mode.

·         ADX +D and –D all the three are moving down which is indicating that market might not be trending.

·         Stochostic oscillator is in extremely over bought zone.

M. Sri Mahidar

Trend is Friend

Celebrate Life

Sunday, June 17^th 20.50 IST

Weekly technical Analysis for week ended 2^nd  June 2012.Nifty ended the week on a weak note and it has closed below all the EMA which is a weak indication. Market continues to be weak and also its pointing towards further down sides in the market. During the current week nifty moved up and failed to moved above the 20 day EMA, it found resistance at that level and then fell which indicates weakness in the market. One of the positive things is that MACD has still not give a sell signal which gives an indication that when ever the market tends to move down buying might emerge but we have to see how the market actually behaves.one of the points to be noted is that from November 2010 onwards when even market has moved up and then moved down invariably it broke the previous low and we have to see whether this time also the trend is followed. If it has to be followed then we have to see a low below the dec 2011 lows which happens to be around 4544 will it go there. We have to wait and watch. When ever this phenomenon is violated that we can assume that bulls have gained strength and we can expect a healthy up move in the market. Till this happens we can expect the market consistently moving down and trend is continuing. One of the points to be noted is that nifty is again at the 200 week EMA and we have to see whether it again offers support or not.  In December nifty moved below the 200 week EMA and then reversed with vengeance and we have to not see whether that again offers support or not. 200 week EMA appear to be around 4800 levels. So we can expect the bulls to defend their territory which they have defended successful over three years. Bears are trying all their means to break through the support level but not successful. So considering this the 200 week EMA appear to be laxmanrekha for the bears, till they take the market below this rekha they cannot take the market down. So the coming weeks is going to be interesting week as we can see a keen tussle between bulls and bears and we can also expect the market volatility to increase. So till the 200 week EMA is taken out its not advisable to short at these levels. Wait patiently for this barrier to be taken out. It taken out I can assure that bull would run for cover. And historically seeing when ever 200 week EMA was taken out, market has tanked heavily. So have patience and wait for the lakshman rekha to be taken out and then bears can have field day.

On thing to be noted is that over the last three week nifty has made three weekly candles in which the low of each week is above the low of previous week which is a good indication for bulls especially when the market is near the 200 week EMA and it clearly indicates that bulls are preparing an ammunition to foil any attempt by the bears. So be carefull as the market might  be very volatile and we can expect unexpected movement in the market.

It can be seen from the below chart that nifty has been failing to go through the resistance line drawn from the January 2012 highs, at-least during the last three months It failed to move above and every time it moved near it selling pressure came and the market fell. The trend line appears to be around 5000-5050 levels so any up move might find resistance at this levels and we have to be watch out at these levels.

Still my soft ware problem is not rectified so I am unable to give my Elliott wave updates. This weekend also I am not available so may not be in a position to post the technical update. I would try to do it if the time permits and internet is available.

M. Sri Mahidar

Trend is Friend

Celebrate Life

Sunday, June 4^th 20.24 IST