EOD Analysis for 30th December 2011 and Outlook for Opening Session of 2012

As usual, a day after expiry and first day of new series, volumes dropped significantly with OI in Nifty futures hovering around 20-21 million for most part of the day and 1 million added with the falls! So we have ended the year 2011 with a drop of about 24% on the index value and still no signs of the correction being over.
The close below 4640, a very critical support of the near term has been broken.
IMHO, we should be able to see the bottom and a swift reversal within the next 3 to 4 months.

As usual, as far as trading is concerned, need to monitor levels on a day to day basis but as far as investments are concerned, one can start buying in tranches as I had mentioned earlier this month as well. Somewhere between March 21st and June 21st, we will see Nifty moving out of the complex diagonal triangle it is trading in for the last 13 months now. IMHO, we should be able to see at least 5200 by Diwali 2013 and by Diwali 2014 we will be able to finally create the new high on the bourses.

For Monday i.e. the first session of 2012, the critical supports and resistances IMHO will be

Supports: 4550-4590-4620
Resistances: 4690-4728-4750-4800-4840

We should not forget that the close below 4690 yesterday has confirmed a visit to at least 4550 in Jan series if not more. Short-covering can only take Nifty upto 4800-4840 beyond which fresh longs are required.

Hope year 2011 proved good for you in trading. I had the good fortune of meeting a lot of good people along the way and thanks to our mahaguru waverider, learning the art of sharing. Some pests did disturb with a lot of mud slinging but all I have now is an attitude of gratitude because all the irritating mud slinging pushed me to spend more time with TA toys and materials. So aall izz well on that front

With that I thank all of you for supporting the team and taking the time to read out our blogs despite the fact that the accuracy levels are still not as good as we expect them to be. I would like to wish all of you a very prosperous 2012 and regardless of what happens on the bourses, may your trading equity swell on the basis of profits.

Happy New Year 2012 - \-/ \-/ \-/ Cheerz

EOD Analysis for 29th December 2011 and Outlook for 30th December 2011

Finally on expiry day, the volumes cropped up; the morning session opened with OI in Nifty futures hovering around the 26 million mark but then every 30 minutes, slowly increased by about half a million taking OI in Nifty futures to almost 33 million in the last hour. Surprsingly, VIX spooked to 27.3 odd levels initially but despite the sell-off in the last hour, it cooled below 27 levels! [I love my India....]

The close below 4690 has confirmed a technical sell for a target of about 4550 at least [looking for 4450 personally]; again would like to repeat that it may not follow immediately but the stage is set. 4640 provided the interim support so a short-covering rally can take Nifty upto 4840 odd levels even now; but every rise can be taken as an opportunity to short. It is near certain that we will revisit the 4550 [or perhaps even 4450] prior to Jan expiry.

Most heavy weightage dates for Jan series are 6th, 9th - 12th Jan '12 where a lot of volatility can be expected in price action. Total weakness to be confirmed after a weekly close below 4509 that will open much lower levels. On a fundamental level, this cannot be ruled out as valuations for major Nifty stocks on PE basis are still higher especially in FMCG and IT segment; with the results season around the corner, one can expect downward revision in prices and further rationalization of PE multiples.

For tomorrow, 4550-4580-4640 will be expected supports; 4690-4720-4750 will be expected resistances for Nifty.

To the extent 11800 on weekly basis and 12k on daily basis intact.on Dow, one can expect a surprising upside to 12400 odd levels. 2 consecutive closes below 11500 and it is adios to higher levels for a long time.

The sharp correction in Gold is indicating margin calls on hedge funds IMHO; caution advised for those long in Gold and Silver....accumulation band for gold on Comex levels will be USD 1300 to USD 1450 per ounce. Silver only to be accumulated in lower 20s.....per ounce [hope readers will remember that the bearish setup for Gold and Silver was highlighted when Gold was over USD 1750 per ounce and Silver above USD 34 per ounce]

EOD Analysis for 28th November 2011 and Outlook for 29th November 2011

Volumes finally came in today in some proportion; Nifty opened with OI in Nifty futures @ 25 odd million but picked up another 3 million in the last 90 minutes of trade. No change to the levels and outlook.

For now, bulls can breathe easy that 4690 survived on EOD basis but expiry manipulations may give a lot of power to bears. 4840 is the critical level that bulls need to take out and right now struggling to cross over 4800 also! Keeping fingers crossed to see how expiry pans out.

EOD Analysis for 27th December 2011 and Outlook for 28th December 2011

2 days to go for expiry and still no trace of volumes; OI in Nifty futures still hovering around the 25.5 million mark in the morning session and then notching up to 27 million towards the middle session and 28.3 million odd at close [just rolling over of positions I reckon and a good way to suck out options premium]

Critical levels remain unchanged and outlook remains unchanged.

Recap:

A close above 4840 opens for another 144 points UP
A close below 4690 opens for another 144 points DOWN

A Weekly close below 4509 will spell doom on the bourses.

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.