Monday, December 26, 2011

EOD Analysis for 26th December 2011 and Outlook for 27th December 2011

Despite a positive start to Nifty's expiry innings, volumes still not showing up; OI in Nifty futures just hovering around the 27 million mark for most of the day. This is marginally high but not enough to sustain upsides. VIX has cooled down a bit compared to the earlier part of the series but no solace here as it just takes 1 bad session to spook off VIX.

In terms of EW perspective, at the sub-sub levels, I am in agreement with Raghuji as far as direction is concerned but more pragmatic on price action.....; it is a corrective of corrective of corrective.....A close above 4840 can open Nifty for another 144 points to the upside and a close below 4690 can open Nifty for another 144 points down. In between, the band will be a plain trading band to suck options premiums IMHO [and it is a good range to trade via futures].

Critical levels remain unchanged and markets are not out of woods. 4509 on a weekly closing basis is still very crucial; I have stopped making expiry predictions as it is not my forte and I have had enough instances of flops as far as expiry levels are concerned; Now, I just take price/volume action and try to hone down critical dates with high weightage.

I have received some requests on high weightage days for the immediate future and I am hence pre-poning listing them out for now; direction is still a big ??? but the high weightage dates in the near future are

6th Jan, 9th Jan, 11th Jan and 12th Jan 2012: extremely high alert dates as lots of stop losses can get triggered on either side in this time frame.

I don't normally encourage too much options trading but as far as Jan series options are concerned, my bets lie with 5000 Jan CE and 4500 Jan PE. One of these 2 will be a big bambookaat making the loss on the other side worth ignoring ;-) As usual my disclaimers

A] Don't put more than 30% of trading capital in options
B] Ideally, keep enough margin to trade as per wave rider's [wwji] formula of building vertical spreads to limit the risks on capital.

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