Sunday, November 14, 2010

Weekend Analysis

We are poised at an important juncture for positional trades. Had booked longs near 6225 and above.

Now the last week’s action has created a crossroad ,so positions have to be taken cautiously.

1. Indicators:
The Weekly indicators have started coming off the OverBought zone after a long time ,The medium term Daily indicators are already nearing midway from OverBought zone downwards and the short term Daily are nearing OverSold areas.The Hourly Indicators have reached Oversold zone already.

There is a good probability of a bounce from here any time soon ,but be cautious to enter new longs ,either book old longs or wait on side lines.The quality of this bounce will decide the future course.

Since the higher TF indicators have started trending down ,there is a scope for a bigger correction before next upmove.

2. Volume Profile:
 There is clear indication of Positional selling near the recent top and till it is not taken out ,any bounce will remain a suspect.

Positional longs should be formed only on closing above 6290 level. 6120 level may be immediate resistance for any bounce. One can trade long above it and short below it.(This may give one or two whipsaws but trading it will be fruitful in the end and will cut all the noise)

3. Option Analysis:
 The maximum Call side buildup is at 6300 strike and that of Puts is at 6000 strike ( in which the call side is exceeding the put side ,showing Resistance and downward bias.)
 Aggressive built up at 6100 & 6200 calls after breaking 6200 levels shows bias for more downside.The 6000 puts stand firm in last week’s correction with no unwinding, shows immediate support level.

 First half of the week may see the 6000 level holding.The trading range may be 6000-6300 with downward bias.

4. FII Activity:
Frankly I was not anticipating this sell off seeing the PreDiwali buying of 5475 Cr. !!! on a single day (4/11/10) and 6120 being the 10d highest volume level from where this breakout gathered steam,(was expecting this level to hold on Friday) But FII’s have turned sellers in last three trading sessions which also cautions us as this selling for three consecutive sessions comes after a long time.

5. EW count:
 As per the last EW update ,the probability of the start of the 5th wave since 4786 level was taken into account. As mentioned this count is valid till 5935 holds. Pl. check

 Now if 5935 holds this correction may be only the 2nd of the 5th and upward journey will resume (Ending Diagonal Scenario???). But if this level gives way ,the Alternate count suggests that this may be the 'c' wave of the 4th which can target 5800 levels or below.

Trade with caution.

Keep in mind the 5935 level. Down move below it will be fast.

Positional longs only on closing above 6290 level.

6120 can be the SAR level for this week’s trading.


manu said...

thnx pa ji..

posts make me feel relaxed:)

ilango sir told me 2 cvr 25 % portfolio but didnt got time to cvr it..
will like 5935 to hold and target the "5"th..
ur alternate count is scary..

AAR VEE said...


as per the alternate count we may get new highs or atleast recent top in the 5th wave.

alphabet1 said...

I do believe :

On ichi eod, KS is strong support. CS cross of price and price of TS is weak. Cloud underneath is thick.

This fall has smoothed the divergence which was building in RSI. (As you too have observed Hourly has now taken full turn and is now in OS situation)

If Nifty doesnt breach 6000 this week, see the entire pullback to a new high.

Sriganeshh said...

some of the reasons for selling is
1. Failure of US & Seoul free trade accord
2. Failure of G20 to agree cap on imbalances in trade deficits
3. China rate hike and its sudden move to monitor big ticket lending by its banks..
4. possible X-mas preemptive profit booking. Last year also same thing happened.
5. Results are as not as good as expected. Topline growth is good but bottomline is not up to the mark.
6. Inflation is cause for concern but RBI indicated there will be no action on rate front to control inflation which is worrisome.
7. Liquidity is drying up in a busy season. Though banks are given leeway to dip in to its SLR portfolio...practically it will be difficult for the banks to repo them to generate money as my guess is the securities must be in loss position as increase in yields would have resulted in price reduction.
8. on the option front, iv is matching at 6000 and 6100 levels, therefore if short term oversold conditions gives a bounce, market may witness selling again at 6120 levels as you rightly pointed out.
9. I tend to take a view that the present correction may be the 4th wave with 3rd ending at 6338. Probably there is a possibility to go below 6000 say 5935 around and then bounce and close above 6000 for expiry. If you consider this as 4th wave, what could be the time ichi charts indicate short term trend change from Nov 22.


AAR VEE said...

Thanks alpha1 for ur inputs.

AAR VEE said...

Hi Sri,

Ya u have given a good compilation of the bearish fundamental factors.
even the nifty p/e around 24-25 needs some cooling off.but somehow i feel that the euphoria accompained with a top was not there at recent top.There may be a new top higher than this after this current correction.( modestly 6600+ to 7000levels!!!)
I am considering 3rd ended near 6225 level at start of oct. and since then the correction going on in the per alternation guidelines the 2nd wave was flat so this 4th is zigzag and in last leg as per alternate view.
Yet to study the time analysis part thoroughly so not commenting on it.
lets keep probabilities in mind and play as the price unfolds.

alphabet1 said...

manu said...

hi sri..amazing analysis(lic type:))

Rv bro..check comment to mok and u n FII and update unitech if time allows..

my sl hit cvrd half positions at par..results out..dont understand from cnbc that its bad or good..

hope sri can look over it..10 % down n three days..

is result bad or raja (uninor) thing taking nerves..

35 % of fii holding in unitech in shareholding..

i find it a plus point others find
negative..will they add..??????

sri help

mo k said...

I have added Alpha, Manu, and Sri views to posts above, since the contribution from it are very solid, and will help many.

I feel unless the FII pull the plugs,
market would see new highs,
may be if we assume deepavali trade a onetime matter, we will make a touch earlier high, and break through.
This dip may prove to be a good consolidation phase, to dip to 5350 to 6340, a dip to 61.8%, 50% or even 38.2% to gain back the momentum,

on the negative side are the December vacation time, usual Feb dip, and the lack of momentum on the deepavali day.

piyush sharda said...

hi rv,
very good and detailed analysis.
was missing ur analysis last few days. rv i feel that the count that it id 4c is more probable. it is because suppose 5(i) is done. 5(i) is divided into 5 waves, ist wave of 5(i) shud be 6132 by looking at charts. now the 5(ii) shud correct maximum till ist wave of next lower degree ie 6132. it has already gone below it . so it is looking more probable 4th only.

good analysis sri,
integrating news ta, ew, really amazing for one person to do so much.added completely new dimension to the count, never thought of it .

mo k said...

This post merits the best, RV, with the addon from Sri, :) thanks a lot.
Its depth is fantastic,
the trendline with the retracements makes a solid base for a rebound. Lets see what the mkt [& FII] does.
Have a great weekend! and fabulous trades!!

AAR VEE said...

Hi piyush,

nice to know ur EW views.If its the 5th wave then the 1st of this ended at 6338 top in five subwaves and if this is the 2nd ongoing, it should not go below 5935, the start of the 1st.This is a hard EW rule as per which i am taking 5935 as point of invalidation.
I couldnt get clearly the subwaves calculation u are describing,i prefer to concentrate on broader picture though keep the minuette and subminuette in mind.
since EW allows flexibility in keeping valid alternative count:),i will just like to keep this level and trade the probability unfolding without any bias.

AAR VEE said...

ya the trendline (or break of it as the 4th normally does to decieve) along with 38% retrace holds the key in the event of a larger correction from here.

Sriganeshh said...


my suggestion is stay away from unitech for sometime as news is not so encouraging for hold.
1. internal fight between jv partners on telecom front with raja thing getting worse
2. sector is getting into the negative list of financing institutions for sometime
3. asset price bubble is being closing monitored by authorities so there will be more measures to control
unitech may not find going smooth...this is purely fundamental view and for technical view,85 is crucial and can see lower levels...

manu said...

thnx sri..its already 82