EOD Analysis for 23rd February 2012 and Outlook For 24th February 2012

OI in Nifty futures pretty much unchanged from yesterday.

Critical levels and outlook remain unchanged; even in case of severe profit booking, expecting 5177-5196 to hold out on closing basis till 29th Feb '12.

Just some points to highlight once again

Volume: Today being expiry, high volumes are logical and some drop can be anticipated in the next couple of sessions; as long as the OI in Nifty futures is around 27-28 million or so, bulls can manage the upside

Price: 5408 on a weekly closing basis will be critical tomorrow; holding 5408 on closing basis tomorrow means more steam for bulls and a close below 5408 on weekly closing basis tomorrow means more room for correction. 5408-5532 on closing basis is a good consolidation zone based on last year's data as well.

2 consecutive daily closes below 5408 and we are near certain to retest 5200 and expect that to be the floor for the next 5 sessions or so

2 consecutive closes above 5532 and we can see an attempt once again to take out 5608-5655-5690 [here the volumes will be crucial as mentioned above]

Profit-booking and consolidation phases are healthy and good for the market; odds as of now are stacked in favor of bulls

Last but not the least, a word on BankNifty [I don't have my EOD files and charts yet :(]; my gut feeling is that yesterday's candle was an ONR4 [I have addressed the query to my seniors late last night and await an answer; today seems to be an inside bar; this counter may surge again or stage a further correction so caution advised [alert and savvy traders can straddle this opportunity via futures ;-)]- will update later tonight in comments section once I have time and data in place :D

EOD Analysis For 22nd February and Outlook For 23rd February

Volumes in Nifty futures saw a BIIGG surge today with OI hovering around 40 million! Now this kind of volume can help Nifty gain 150-200 points on the upside and equally on the downside also!
Critical levels and outlook remain unchanged from yesterday
After a relentless rally of almost 1100 points and one day prior to expiry, a few sessions of profit booking / consolidation is fairly logical and healthy for the market.

Expecting 5177-5196 to hold out on closing basis till 29th Feb '12 even in case of sharp profit booking sessions;

EOD Analysis For 21st February 2012 and Outlook For 22nd February 2012

Positive start to the day aided by positive global cues; OI in Nifty futures surged to 36 million today [indicating a lot of roll-overs on both long/short side IMHO considering relative intactness in futures premium] These volumes are good to sustain current prices and on the other hand, bring in some retracement of the rise as well.

Despite all major index makers in green/flat territory, VIX surged to 26 [seems like an aberration]

Critical levels and outlook remain unchanged;

For upside, 5608-5655-5690 will be critical resistances on closing basis; the volume concern expressed last week has been resolved today; 2 days to go for expiry and as mentioned on Friday as well, I stand corrected with the term 'bearish'; we may see some profit booking and perhaps some crushing of OTM Calls written
[We have had only 1 meaningful correction session in 2012 so far and Put Writers have been milking out the bears!!]

As far as bears are concerned, 5532 and 5408 are the 2 crucial levels; once 5532 is breached on closing basis to the downside, a retest of 5408 will be on the cards;

5177-5196 band expected to hold out on closing basis until 29th Feb '12.

Wave Count Review - 19th February 2011

Dear Readers
Attached is the slide set with different EW scenarios; frankly, there is nothing much to write home about as most of the points are almost identical to what Raghuji regularly covers in his blog; some jargon here won't even help initiate the next trade!

The comments and notes are self explanatory;

EW Review: Please click EW Review on the left hand side to download the charts and counts......

PS: 2 major points to remember;

EW works best at index level [individual stocks may at times demonstrate valid EW patterns but these may not happen consistently as EW principles are based on mass psychology best demonstrated by the index; so please use EW to identify turning points and which market cycle we are in......

The anticipated moves basis EW patterns must be cross-checked with other indicators as well; [trendlines, volume and momentum as Raghuji keeps insisting all the time in his blog!

EOD Analysis For 17th February 2012 and Outlook For 21st February 2012

Positive global cues and a flush of liquidity from all over helping bulls defy gravity once again. OI in Nifty futures hovering around the 30 million mark and VIX hovering around 24;

Critical levels and outlook remain unchanged

As long as 5177-5196 is intact, bears are in ICU and the bullish tsunami [this is undoubtedly a strong bullish tsunami from the lows of Dec'11] has steam. Breach of 5408 on closing basis can open another 144 points to the downside.
IMHO, 5408 is a very crucial level witnessed last year also; once breached convincingly on the upside on closing basis, does not give up so easily. Given the strength of the rally and the way the 5177-5196 has held firm for 14 sessions in a row now, IMHO this is the max downside on closing basis until 29th Feb '12 [unless some major bad news comes through]

The negative tinge for 20th Feb to 22nd Feb is open but I stand corrected with the word 'bearish'; just some retracement of the meteoric rise via profit booking.

Yet again, the weekly close has been stronger compared to the previous week; As far as possible, I avoid putting in my EW perspective as Raghuji and Wave Rider are pretty good in putting it all together with various scenarios. However, this weekend, I will put in my EW perspective by Sunday evening my time[in consultation with seniors as well] It will be a powerpoint slideshow that can be downloaded.

There is no perfect system and the relentless quest for finding that perfect system will only deter a trader from being consistent and applying the basic rules of trading [identify the trade, open positions with a hedge, and drop the losing leg after a certain threshold] If in doubt, stay out and don't open the trade - simple and easy [There is no rule that says trade everyday!!! That is a weakness a lot of human beings impose on themselves]


A Small Primer:

Some basic levels based on my limited experience of 16 months with Nifty and IMHO all trading in Nifty must make a note of these levels in their trading diaries

[I am ignoring the sub 4600 levels for now]

Set1: 4640-4690-4720-4750-4808-4840-4880
A close above 4880 opens Nifty for 144 points to the upside
A close below 4690 opens Nifty for 144 points to the downside
[The number 144 will be consistent at all critical levels; I just know it is a Fibbo number and for some reason it works; beyond that I have no logic to offer]

Set2:  4911-4944-4944
2 consecutive closes above 4944 opens Nifty for 144 points to the upside again

Set3: 5032-5092-5150 [There is a congestion band at 5169-5177-5196]
1 close above 5150 opens Nifty for another 144 points to the upside subject to volume and momentum [courtesy the congestion band mentioned]

Set4: 5225-5280-5348-5380-5408
5408 is a very very crucial level IMHO and close above/below this brings a lot of changes to Nifty; the importance gains more relevance on weekly/monthly basis

Set5: 5440-5480-5532-5580-5608-5655-5690

5408 to 5532 is a consolidation area on closing basis; once Nifty comes into this area, it tends to spend time gyrating here before assuming a definite direction

Set6: 5740-5780-5810-5850-5880-5944

5944 is the most crucial price level on closing basis for the upside. Once Nifty closes above 5944 on closing basis, it will zoooom and has 3 potential stops 6080-6180-6280. [Here, I need to thank a senior from mmb, MGUSA who very nicely explained and illustrated the importance of 5944 and now I realize the importance of that]

Beyond this is unchartered territory as we only have 2 price points 6338 and 6357. So even if one is not comfortable with all the jargon, just following these levels in sets above can make trading life simple. When spot price is above the mentioned level, the lower levels become support and when spot price is below the specific levels, they become resistances. [with a small tolerance of 20 points]

For those reading my blogs, leaving apart my personal bias and verbose commentary, these are the very levels that I always mention depending on price action - so far they have helped me. Just sharing the same with all of you as well.

What I have observed with myself and many people is that we don't take proper hedges - and we have an underlying psychological barrier that prompts us to think that our main position should end up as the winner; took me some time as well to come out of this mindset and was a costly learning experience in summer 2011! The thumb rule is simple - the losing leg should be dropped and the winning leg should be retained [even if it means that the losing leg was the original position and the winning leg was just the hedge - what matters for the trade is which leg is swelling trading margin and which leg is depleting it; the leg that depletes should be knocked out - period] Also, not every trade can result in success; even with all the notes, there are days filled with whipsaws when stop losses are triggered on either side! We have to humbly accept that and move on. Last but not the least, the stop loss needs to be modified once a trade is going in your favor so that you lock in some of the gains.

EOD Analysis For 16th February 2012 and Outlook For 17th February 2012

Whilst the global cues were not positive, the price action can at best be described as routine profit booking IMHO as far as Nifty is concerned; considering the meteoric rise Nifty has had in the last 2 months. OI in Nifty futures pretty much the same as yesterday; VIX still below 24 - so no signs of danger yet.

Critical levels and outlook remain unchanged.

5408-5532 has been a consolidation area for umpteen sessions in 2011 also; it takes some time for Nifty to convincingly take out 5532 on closing basis with volume and momentum; should that happen now, then the next assault by bulls can at 5655-5690 with minor resistance at 5608

Breach of 5408 on downside on 2 consecutive daily closes or one weekly close will encourage more shorts - until then the scale is tilted in favor of bulls.

As far as the critical dates are concerned, yes I did mention that 16th Feb to 22nd Feb do have a negative tinge with highest weightage around 20th Feb to 22nd Feb; however, the severeity of this negative tinge is questionable now [tomorrow's close should provide some clue]

Today was the 13th session above the critical band of 5177-5196 zone; if it holds out tomorrow as well [very likely that it will] then in all likelihood, this will stay as the bottom on closing basis for another 8 sessions [following 2-3-5-8-13-21 sequence] i.e. until end of Feb'12 calendar month.

Review of Time Forecasts of Recent Past for good tradeable swings

Period                           Forecast                  Verdict
22nd Sep '11                 Bearish                      Success
16th-22nd Nov '11        Bearish                     Success
21st Dec '11                  Bullish                       Success
17th Jan '11                   Bearish                     Flop

The sample size is too small and unless the track record improves, I would myself take it with a pinch of salt [hedging is very critical regardless of personal bias always]

Highly Sensitive Dates For the next few weeks [direction to be determined basis price action]

20th Feb to 22nd Feb 2012 [personally bearish]
21st Mar to 6th Apr 2012
17th Apr to 20th Apr 2012

EOD Analysis For 15th February 2012 and Outlook For 16th February 2012

Very positive start aided by positive global cues and good news on liquidity front from all over. OI in Nifty futures were same as yesterday at open [1.5 million added after Europe session opened] and VIX below 23!

Broader markets also in sync with the upside; momentum in bell weather stocks like metals, infra is simply amazing thanks to liquidity flowing from all over the place. Banknifty is on a roll as usual leading from front

Critical levels and outlook remain unchanged; 5532 assaulted as well today! To sustain this upside further, volumes need to increase by at least 5% more [can come through shorts entering the system as well]