Sunday, September 26, 2010

Weekend Analysis

1. The 5d Volume Profile shows support at 5960 level. Trading below it will signal weakness.

2. The Option Analysis shows a build up of apprx. 86 lac O.I. in 6000 strike puts , indicating a strong support at 6000 level . It will be difficult to break this level  till expiry & Nifty may expire above 6000 levels . Calls have max. buildup at 6100 level which will be immediate resistance level .Put writers have entered into 6100 strike aggresively in last trading session. Further buidup here will give  indication of price level to unfold.

3. The probable EW count shows the completion of the 4th wave and trading in the 5th and final wave of this upmove since 5350 level. The 5th wave may be in its third subwave. The approx. target of the 5th wave , equating with the 1st wave of 165 points , is near 6100 levels. Though it may extend well beyond it. ( next target may be 6200 level if extends by 1.618 ).  Booking out of longs near 6100 levels will be prudent ,and trading light thereafter . 

The probable EW count of this upmove is as shown -


alphabet1 said...

OI is a curious study this time.

1. Option pain at low 5500.
2. Just 8 lakh OI at the highest strike. only one strike 5500 Pe has 1 cr OI. All in Pe , either open or hedged.

3. Even 6000 Ce shed OI this fri. Why ? are people not confident of rise.

4. Even RIL, Tata Motors, Unitech OI not suggesting a surge.


Some count current run up as 3 and others as 5. The entire approach to market becomes dramatically different if this run up is 3 instead of 5.

AAR VEE said...

alpha 1

Hi ,thanks for the comment .let me try and answer with my perspective

1. option o.i. is not an indicator on its own ,it should be used in corelation with other datas as by o.i. alone u may not be able to guess the positions ,whether long /short in totality.

2. 5400 (and not 5500 pe )has excess of one cr. o.i.Hope u remember this figure being reached the first day of this series.from there on the base has systematically shifted above ,first half of the last week was 5900 and now 6000 ,before that was 5800 etc. This shows profit booking at each rise and eating premium at new levels.That is a smart move by smart money getting max profit.

3.shedding of calls show that writers are not confident and covering up the positions ,so shedding o.i. at 6000 ce shows bullishness and lack of confidence of bears and not bulls.

4.For indiviual scripts ,story is indiviual .market has risen inspite of RIL non participation.Banks and IT may be u are tracking wrong scripts to check the upmove.

5.Option pain at 5500 may be due to hedging by smart money on break of this level by going long in futures and hedging here.

6. EW count is subjective to the analyst. we can have some price levels as invalidation of the count and get the feel of the mkt. structure. the idea is to get the broader trend and be with it.It may be in 3 or in 5th wave but surely it's up :)).we can always relabel seeing the price action

Pl. remember to have probabilities in market aligning with the trend but trade the price action keeping some price levels where those probabilities gets invalidated.
price is supreme rest all are dynamic indicators subject to change with price in realtime.