EOD Analysis for 6th January 2012 and Outlook for 7th January 2012

Price volatility and trading opportunities on expected lines but volumes still missing on the bourses. OI in Nifty futures still pretty much unchanged at 23.5 to 23.8 million despite the steep cuts and sudden spike up! VIX below 27 still on the back of thin volumes and seemingly flat session on EOD basis. Broader markets under selling pressure.

Critical levels and outlook remain unchanged.

Personally, not attaching importance to tomorrow's session as it is just a testing session and no updates will be made tomorrow. Next update on Monday EOD

Hope the first week of 2012 trading brought in cheer to your trading margins; we hope that you get more and more trading success as we move through 2012.

EOD Analysis for 5th January 2012 and Outlook for 6th January 2012

Still no trace of volumes and OI in Nifty futures pretty much the same as yesterday i.e. about 23.5 million
Whilst BNF and CNXIT are marginally up and Nifty seems to be relatively flat, broader markets are clearly indicating a lot of selling pressure.

Critical levels and outlook remain the same and just to recap

Supports: 4640-4690-4720

Resistances: 4751-4780-4808-4840

A close above 4840 may yield another 144 points UP whilst a close below 4690 may yield another 144 DOWN

As per the time analysis, we are entering the high volatility and action period 6th Jan to 12th Jan
Frankly, at this point of time I am clueless of the direction but it will be at least 150 points from today's EOD value and days with lot of good trading opportunities and I am slightly biased to the downside

Justification:
1] There is a gap-up we had earlier this week that needs to be filled
2] Yesterday's EOD candle showed traits of a Bearish Tweezer

Standard Disclaimer: Please do not take uni-directional positions unless trend gets clear. Trade with the edge of hedge till we get clarity in direction

EOD Analysis for 4th January 2012 and Outlook for 5th January 2012

A flat start to begin the day and no significant change to OI in Nifty futures [was hovering around 23 mill through out the day. Although Nifty traded in a relatively tight band, quite a few whipsaws were generated.

Critical levels and outlook remain unchanged from yesterday.

For a sustained upside, fresh longs and volumes are needed; for the downside, current volumes are not sufficient to accelerate the falls but if volumes stay thin like this and upside is not sustained, prices will move down in a grinding fashion.

Other Updates
From a global market perspective, we had indicated that some peripheral Euro-zone countries deserve to enter the bond markets again. Less than 2 weeks from that post and we have Portugal auctioning bonds after a lull period of a year or so. It just vindicates our stance that in general, market makers tend to look forward and if appropriate measures are incorporated by a corporation or a sovereign, eventually things start turning around.

Does that mean that the Euro-Contagion is slowly getting out of the way? Por supuesto no - the debt burden is excessively leveraged [by the bankers and not the sovereign IMHO] and the current measures are compounding the challenges in reality. Even now bond markets will lap up the bonds but also create excessively leveraged swaps/swaptions and that is going to increase the impact of the explosion that will take place in future.

EOD Analysis for 3rd January 2012 and Outlook for 4th January 2012

A very positive open in price at the back of positive global cues and pretty good price action from all major counters. Still not very convinving because of the lack of volumes [OI not exceeding 22.5-23 million despite such a positive session] and would prefer to classify today's gap as an exhaustion gap which IMHO will be filled prior to Jan expiry or worst case scenario in the middle of Feb series. VIX cooled down a bit.

The first congestion area of 4690-4720 was crossed over well but the second congestion area 4728-4751 proved a bit difficult to conquer but as of now marginally up. Need more volumes to sustain this

Critical Supports: 4590-4640-4690-4720

Critical Resistances: 4751-4780-4808-4840

A close above 4840 with volume and momentum can yield another 144 points up in the same direction
Full weakness and panic on the bourses can be expected once prices breach 4509 on the downside, more so if it happens on a weekly closing basis.

As per forecast given prior to Christmas, Santa Rally was expected with the following targets for major indices

DAX: 6100-6200
FTSE: 5550-5600
DOW: 12200-12400

Alas, Santa didn't give it but the new year seems to have managed to pull for most of the targets given above
So if the volumes to enter the system for Nifty, maybe just maybe we also will have some more upside before sliding down [4840 holds the key as Raghuji also mentioned in his blog yesterday]

EOD Analysis for 2nd January 2012 and Outlook for 3rd January 2012

A muted start to the day with OI in Nifty futures around 21 million; then with the first leg of falls, another 1 million added to the OI. This kind of volume can't take the index significantly up and sustain nor cause a severe fall as such. It was good to see a good short covering session in the 2nd half of the day.

With FIIs still on holiday, the action may be a bit muted; again would like to repeat that 6th, 9th, 10th and 12th Jan are heavy weightage days as far as price action is concerned [as of now can't say which days are up and which days are down but the moves will be strong with at least 150 odd points on either side from EOD 5th Jan Nifty value]

Critical levels remain the same as I gave last year!!! [please see the post on 30th Dec '11]

BOY - All The Best To All Traders

I would like to wish all traders a very prosperous BOY [Beginning of Year] Trade and of course a prosperous 2012 trading year once again.

As all traders say - we are neither bulls not bears - we just switch sails as per headwinds and tailwinds....Good Luck