EOD Analysis for 12th July 2011 and Outlook for 13th July 2011

5608 after holding firm for 8 days, which was already longer than expected was expected to break down today; especially with all the bad global cues and Banknifty, CNXIT dropping, and none of the other heavy weights also supporting, the fall was imminent.


Now the 4 crucial points on the downside are 5408, 5440, 5480 and 5532; as mentioned yesterday, on EOD basis, 5408 may hold strong for the July series on EOD basis and should that happen, we may have some consolidation again in the 5408-5532 zone; some flat sessions in between are inevitable, courtesy manipulation to suck options premium on both sides; outlook until 15th July is flat to bearish; the more number of instances we close above 5408 and 5532, the better it is for Nifty for the last pending rally for 2011


Any major upside beyond 5608-5655 on EOD basis will probably come towards the end of the series. Infosys bad results are just an excuse as the charts had shown weakness well before the news was expected; to the extent 5408 holds good on EOD basis, there should be ideally no panic in the market; 


There are various opinions about what would happen below 5408; this is a very crucial level and a strong support level and I find it strange that a lot of people do not realize the significance of this level; one should take cues from the daily records and see how many times this level has provided support - I would go on to say that this is a God-Father Support level and whilst we have had instances of this being breached, this level has been taken out pretty quickly even after falling; on the other hand one must note that in case we have an assault on 5408 yet again, this will be a death cross for that level i.e. this is the 2nd last time this level can support Nifty for 2011; upside can come yet again if we close below 5408 and subsequently retrace back; However, one more assault on 5408 post-retracement and it will be chaos and panic on the markets and 5177-5225 can be revisited -> Probability = 1% for July series


In the current situation, a wait and watch approach is advisable; some of the beaten down heavy weights might stage a come back but if the global cues remain negative, then some more downfall may come in; to the extent 5408 holds on EOD basis, one should use dips to buy; as of now expiry target still remains 5600-5690


For those following this blog and using it as one of the guidelines, there have been ample profitable trades already; over-trading is not good and now I would encourage people to wait and watch how things pan out; once we get the bottom ascertained for July series (hopefully by 18th July) appropriate positions can be taken; From 18th, one should trade in next series options and futures as rollovers will start and whilst gains may be limited, it will save the cost of roll over on futures and prevent the time decay on current series options