Thursday, November 17, 2011

EOD Analysis for 17th November 2011 and Outlook for 18th November 2011

What a day! BNF saw a short-covering rally and then melted far more than it gained due to the weak global cues for financial sectors [in fact, the low levels we saw today on BNF were due yesterday itself with such steep falls in Euro-Dollar and high bond yields on PIIGS debt] The volumes supported the fall today and there is still a lot of short-covering pending. A corrective bounce is due in Euro-Dollar as well towards the 1.35-1.36 mark IMHO that will provide some relief. FTSE is moving towards the expected target but is on tenterhook support zone of 5400-5440-5480 whilst DAX is still having critical support at 5800-5860-5900 and lots of short-covering pending there as well [eventually the destinations for Euro-Dollar are 1.28-1.32 levels, FTSE T1 @ 5300 T2 at 4800; DAX T1 @ 5600 and T2 sub-5k levels with pauses and relief rallies in between]

Initially, we expected that these levels [5300 on FTSE, 5600 on DAX] may be achieved this week itself but with so much short-covering pending and a potential bond buy back from ECB, it may take slightly longer. Today, I would like to take the opportunity to thank the entire team for contributing to the time analysis - this is the 3rd time we have alerted readers about large swing opportunities and as my lovely spiderman says - trade little - trade healthy! [21st June whilst all were bearish, we said markets will go up on mmb; when things were hunky dory in September, we stuck our neck out and said steep falls expected closer to 22nd September; 16th Nov to 22nd Nov will witness a lot of weakness and volatility that turned out true once again and has reinforced the team's confidence with time analysis. We still have a long way to go and also have to concede that a lot of interim level forecasts have not been up to the mark and we are trying our best to improvise on that and in due course of time, improve accuracy for shorter term objectives as well]

Now - why some upside can come now [albeit relief]; SnP 500 chart has thrown up an interesting CT [and price was above 1230] and Dow has managed to stay afloat yesterday at 11900 levels- the CT as per EW or Wedge / Pennet as per classic TA on SnP indicates that it could be a break-down or break-out in the next few sessions. ECB bond buyback program, potential stimulus from Fed can give a breakout on US bourses [SnP still has room to make a poke towards 1270-1290 levels despite all the negativity and Dow still has potential to make 1 more poke towards 12200 levels] On closing basis if SnP breaks 1230 levels today and Dow breaks 11800, then safe to assume that more trouble awaits the markets.

Coming back to Nifty, 5092-5032 zone is gone; 4911-4944-4994 was a good bounce back zone. 3 times 4994 supported yesterday and today and 4911 still held firm. If the cheer comes through in Europe and US tonight, then Nifty has potential to try for 5032-5092 zone once again. Bulls desperately need 2 consecutive closes above the 5092-5125 zone to keep their hopes alive. Although other markets have lots of falls pending, Nifty may be close to bottom; as highlighted last weekend, the current falls are very dangerous as the broader markets are getting beaten down to the core and are not showing any signs of recovery.

So the critical levels remain unchanged and bears [incl me] need to be on alerts as 1 more leg up is still very much a possibility. Infy managed to hold 2750 on closing basis today, HUL is still holding the 390 mark on closing basis and pharma is also showing some defensive prowess. From time to time we keep mentioning that there is no perpetual rise or fall. At least until the end of this expiry, 'bullish tsunami' waves on Nifty can sleep in peace; In all likelihood, Nifty will find its bottom in the 4450-4550 zone and then move upwards

Hope you enjoyed the profits - we certainly did [happy to be able to say that after 3 weeks where hedges ended up saving us rather than the core positions!]


reachnagraj / theknight16 said...

Just to clarify for all reading this, want to make it clear that 4450-4550 is not an expiry target proposed and do not encourage going for OTM Puts with these words.

4450-4550 is the potential bottom for Nifty and I am still clueless as to when this target will be achieved - so please refrain from blindly loading Puts 'assuming' that I said 4450-4550 for November expiry; we may or may not see this in 2011 and maybe have to wait until FY11-12 results in March/April 2012 to see these levels.

vineeta said...

I want to thank all the contributors of this blog-mr nagraj,mr harshal and mr raghu for their fantastic analyis .
thanks alot

DUSIANT said...

Hi Nagraj

I try to make sure i go through your blog daily, ur's raghuji's and even Harshals, now a days though harshal is unable to update his blog, since he has gone outstation.

You have predicted long back i feel around 1 month back reg this 16 to 22nd Nov. So complete credit.

But as u have mentioned that sometimes ur forecast or analysis were not correct.This is just to tell u so that u cna improve though u have mentioned the same in todays blog.


Bishoyi b said...

Dear nagraj ji and team,
Kudos to your fine effort. There may be room for improvement, you are doing better. Is bottom for nifty @4500 zone or more cuts can expected. Should we start buying for 3 years period @4500 level?

Suraj said...

Dear Nagraj ji and team,

Thanks to you. Keep it up.

Can I start buying OMC's for 3 years perspective.