The market seems to be yoyoing with the bears & bulls equally for the past 6 weeks. First the market shows some serious signs of new highs then breaks down like there is no tommorrow. The markets are making higher high and higher lows in the 7500-7800 region. The shallow & short corrections clearly indicate all the corections are bought into. The RSI on the daily charts in moving in the no trade zone of 40%-60%. The market is being driven by the blue chips in the Auto, Consumption,IT etc. where as the Bank, Metal,Finance, Infra stocks as well as the broader market indices are moving out of phase. The broader market has to catch up fast or the rally is likely to fissle out fast. The market is showing second degree negative Divergence, which is a definite sign of concern.
Nifty opened the week at 7619, made a high of 7796, low of 7598 and closed the week at 7791. Thus the Nifty closed the week with a gain of 223 points. Monday saw the market form a Bullish Tri-Star formation, a sign of reversal. Here there are three neutral candlestick formations instead of the doji formation. On the weekly chart a Closing white body Marubuzo has been formed whereas the daily chart has seen a formation of white body candle which is fourth in succession. Thus candlestick formations suggest a bullish bias in the near term. Also Nifty completed a Bullish Island Reversal and thereby generating a Buy signal. The signal will stand negated if Nifty closes below 7540. Since the formation is occurring in a consolidation phase, one cannot attach higher significance to it.
The market is constantly making higher top higher bottom formations and thus continues to remain in an uptrend. In the short term, the trend is likely to reverse if the Nifty closes below 7540. A breach of this support is likely to test the Support zone between 7441-7394 is due to a confluence of the 61.8% correction level with intermittent bottoms at 7441 & 7422. On a higher scale, a very strong Support zone is formed between 7112-7067. This is a result of confluence of 38.2% Retracement of the higher rally (7112), 61.8% Retracement of the immediate rally (7097) and the start of the intermediate Bullish Rising Gap (7067). The long term trend will continue to remain bullish as long as this Support zone is held.
This week, Nifty managed to reclaim the short term average of 20dma (7712) as well as the medium term average of 50dma (7638). It continue to remain well above the long term average of 200dma (6743). Thus the trend in the short term and medium term has once again turned positive while that in the long term continues to remain bullish.
RSI @58 is above the equilibrium line and hence indicates bullish momentum. MACD continues in Sell mode despite being in positive territory. Meanwhile Price ROC has just turned positive and hence has given a Buy signal. Stochastic Oscillator %K @70 continues in Buy mode as it remains above %D. ADX remains at 23, which suggests the strength of uptrend has reduced. The Directional Indicators have given a Buy signal this week as +DI has gone above -DI. OBV has started moving higher but is yet to signal a Buy. Interestingly both RSI and MACD have confirmed negative divergence of the second order. Thus Oscillators are suggesting consolidation in the near term.
Option writing suggests support coming in at 7600 and resistance at 8000. Friday saw strong Call writing at 7900 strike and Put writing at 7700 strike, which indicates immediate resistance at 7900 and immediate support at 7700.
Stock of the Week:
Naukri/Info Edge (I) Ltd
The Stock has given break out of a rounding bottom pattern on the daily charts, with good volumes. The pattern target lies at 950 with the stop loss of 760. The stock can be bought with the target of 832-862 for the stop loss of 975.
Nifty opened the week at 7619, made a high of 7796, low of 7598 and closed the week at 7791. Thus the Nifty closed the week with a gain of 223 points. Monday saw the market form a Bullish Tri-Star formation, a sign of reversal. Here there are three neutral candlestick formations instead of the doji formation. On the weekly chart a Closing white body Marubuzo has been formed whereas the daily chart has seen a formation of white body candle which is fourth in succession. Thus candlestick formations suggest a bullish bias in the near term. Also Nifty completed a Bullish Island Reversal and thereby generating a Buy signal. The signal will stand negated if Nifty closes below 7540. Since the formation is occurring in a consolidation phase, one cannot attach higher significance to it.
The market is constantly making higher top higher bottom formations and thus continues to remain in an uptrend. In the short term, the trend is likely to reverse if the Nifty closes below 7540. A breach of this support is likely to test the Support zone between 7441-7394 is due to a confluence of the 61.8% correction level with intermittent bottoms at 7441 & 7422. On a higher scale, a very strong Support zone is formed between 7112-7067. This is a result of confluence of 38.2% Retracement of the higher rally (7112), 61.8% Retracement of the immediate rally (7097) and the start of the intermediate Bullish Rising Gap (7067). The long term trend will continue to remain bullish as long as this Support zone is held.
This week, Nifty managed to reclaim the short term average of 20dma (7712) as well as the medium term average of 50dma (7638). It continue to remain well above the long term average of 200dma (6743). Thus the trend in the short term and medium term has once again turned positive while that in the long term continues to remain bullish.
RSI @58 is above the equilibrium line and hence indicates bullish momentum. MACD continues in Sell mode despite being in positive territory. Meanwhile Price ROC has just turned positive and hence has given a Buy signal. Stochastic Oscillator %K @70 continues in Buy mode as it remains above %D. ADX remains at 23, which suggests the strength of uptrend has reduced. The Directional Indicators have given a Buy signal this week as +DI has gone above -DI. OBV has started moving higher but is yet to signal a Buy. Interestingly both RSI and MACD have confirmed negative divergence of the second order. Thus Oscillators are suggesting consolidation in the near term.
Option writing suggests support coming in at 7600 and resistance at 8000. Friday saw strong Call writing at 7900 strike and Put writing at 7700 strike, which indicates immediate resistance at 7900 and immediate support at 7700.
Stock of the Week:
Naukri/Info Edge (I) Ltd
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