Friday, October 28, 2011

EOD Analysis for 28th October and Outlook for 31st October 2011

A very positive start for Nifty, following positive global cues and a very healthy OI of 31.2 mill in Nifty futures throughout the day. Banknifty finally did manage to see some supply beyond the 9800 zone but still early to comment whether it was an extension in short-covering or fresh longs initiated; outlook remains unchanged - 2 consecutive closes above 9750 opens BNF for retest of 10k levels. As indicated earlier, a close above 5150 on Nifty had potential to deliver upto 144 points in the upward direction and fill up the pending gap to 5325 levels. That has been achieved now and we are left with 2 major gaps 4750-4880 and today's gap-up; expect today's gap-up to be filled with a downward price action next week but the other gap still needs a close below 4880 to fill it up. Weakness in BNF can only be confirmed with a close below 9500 that opens BNF for retest of 9000-9250 levels.

5032-5092 levels have survived and will continue to do so in all likelihood until Monday EOD. If bulls manage to keep 5032 intact until Tuesday EOD, that will limit the downside to 4980-5020 for another week of trading. Still maintain that there is nothing much exciting about this upside right now and markets are not out of the woods. A simple clue of what is happening lies in the EUR-USD exchange rate relationship; first major fall took place from 1.51 to 1.41 and subsequently a 61.8% retracement was seen; next major fall was from 1.44 to 1.32 and a subsequent retracement of 61.8% to 1.425 [in progress]; the same is being witnessed in the DAX/FTSE/Dow etc and the news from Europe only accelerated the time factor of the rise; the next major leg of fall will be seen around 16th Nov to 22nd Nov; the mechanics of the current financial engineering and pitfalls will be given in global market updates tomorrow.

5032-5092-5132-5177 are current support levels
5348-5378-5408-5440 are current resistance levels

Trade accordingly, with hedges and for futures, 25 point stop loss on either side and trail the winning leg - that is the strategy to be employed; for options, as mentioned earlier, I am not very optimistic about the options side as there are a lot of holidays in between and the frequent gap-ups or gap-downs may not help. Those with low margins should probably take 1 strike lower on both sides, apply a 10 point stop loss on both sides and trail the winning leg


jhanutaran said...

hi nagsirji

happy diwali

where have all guru's been .... i have not seen the on the mmb thread. pls advise me where i can meet you all on which thread / site

redgs mon

Meavin said...

Nagraj ji, what is so special about Nov 16 - Nov 22 period? I know you have been mentioning you for some time about the importance of this period.. So just wanted to check from you.. If its an important Turning Point, can it coincide with Major top and actually markets raly till this time zone before starting slide again?

Meavin said...

Nagraj ji, please let us know the significance of Nov 16 - 22 period.. If its a major turning point then can it coincide with a Top and thereafter the fall will resume?