Wednesday, December 21, 2011

EOD Analysis for 21st December 2011 and Outlook for 22nd December 2011/Food For Thought

At the very outset, I would like to pay tribute to Sir W.D. Gann for giving this simple sootra of 4 critical dates across the year; 21st March [Spring Equinox], 21st June [Summer Solastice], 22nd September [Fall Equinox] and 21st December [Winter Solastice]; My first year in the market and missed out the Spring Equinox aspect and burnt my fingers royally with the counter-trend rally; after that, courtesy some guidance of my seniors and some efforts on time analysis, touchwood got 3 swings right in 2011.

3 Additional Credits: harshalji and jacsji of mmb for always encouraging me to read materials on Fibo and Gann. Sarmaji [garipatiji of mmb] for steering me towards his classic analystical phrase 'MA - Manipulative Analysis'

Are markets out of the woods??? An emphatic NO NO NO!; significant gap-up and a relentless short-covering rally through out the day aided by positive global cues. IMHO, this is still an exhaustion gap and not a break-away gap since the OI in Nifty futures was hovering marginally above 25 million in the morning and then another 2 million added in the last hour. Compared to last 5 trading sessions, this is a positive sign as today after a long time supply has come through with the rise. As we move towards expiry, these volumes will come in and there will be roll-overs on either sides and Im looking for 30-35 million coming in regardless of which direction we move from here. Please note that today's gap-up will almost certainly be filled [need to analyze further whether this happens before or after expiry].

Was looking for a close above 8k levels on BNF and then a march towards 8200 but BNF pulled up the bourses very well and some profit booking may come through before the next upward march if any. Upto 4800 on Nifty spot and 8280 on Banknifty spot is a mere technical pullback aided by short covering IMHO.

Friday 23rd December marks an important Fibo cycle completion with the 8th Jan '08 top of 6357 [987 trading sessions from that day and hence we can expect good opportunities on Friday [direction will be determined after EOD Thursday as my learning is very shallow in this regard and also need to consult harshal bhai for this aspect]

Will be closely monitoring 4509 for this week's Nifty closing; closing above this gives in more hope for some more upside [albeit relief rally] on Indian bourses for ultra-short term and close below this is a technical signal for more pain in the system with levels far lower than the anticipated 4450!!!

Santa Rally is very much on the cards with following targets in all likelihood for global markets

FTSE - 5550-5600
DAX - 6100-6200
Dow - 12200-12400

Wishing you more trading success in days to come

As our commander in chief, waverider says 'Effort + Discipline = Success' [We are working on the 2 variables on the left hand side and still waiting for that fruit on the right hand side]


naganand said...
This comment has been removed by the author.
naganand said...

hi sir sorry to butt in, pleaseeeeeee recheck eod charts of nifty, because there is no exhaustion gap on charts, ydays high of real body and todays low of real body are almost ditto :)

reachnagraj / theknight16 said...

@naganand: you have a valid point:D

my concern was more towards a bar taking out yesterday's low and I stand corrected in this regard. Thanks for the feedback

sometimesbullsometimesbear said...

Excellent and practical write up. Thanx. Some astro analysis predicted this upmove quite well for late Tue and today. Friday Moon Rahu conjunction might pull markets down it seems - Also corresponds with ur Friday comment of keeping fingers crossed.

SMR said...

Hi Nags,

Great learning on 4 critical dates across the year!

Does these days repeat every year on the same dates?


reachnagraj / theknight16 said...

@SMRji: Yes sir - all these 4 dates produce good tradeable swings - based on my limited study so far, these dates tend to provide a swing in the opposite direction of the prevailing ultra-short trend.

In 2011, we saw this on 3 occassions; March 21st up from lows, June 21st up from lows, 22nd September down from highs, and 21st Dec just has turned marginally green from the lows....let us see how these shape up