Outlook For September 2012

As mentioned in the last post, I'm currently very much tied up in my professional engagements. Nevertheless, here is a recap of Nifty and BankNifty EOD charts

Nifty charts clearly indicating that 5408 is going to be a key hurdle. We already have had 2 consecutive closes above 5408 in the last 3 weeks that keeps the hopes of an upside alive. Should we get 2 consecutive closes above 5408 in Sep '12 series, then the Diwali rally should take us to 5740 odd levels where a top should form. This has been the outlook from the summer quarter and there is no change to that view.

Recap of Support / Resistance Levels on Nifty [EOD levels]
5032-5092-5169-5225-5280-5325-5348-5378-5408-5440-5480-5532-5608-5655-5690-5740

2 consecutive closes above 5408 invites a test of 5532 levels; we have this condition already satisfied but then profit-booking came in. Nifty has bounced back from 5225 on closing basis and this time if we get 2 consecutive closes above 5408, Nifty is near certain to achieve the Diwali '12 target of 5740. Difficult to go above 5740 despite all printing presses being active across the globe for monetary easing.

A close above 5740 will give bulls the chance to retest 5810-5944 zone. 1 close above 5944 is enough for bulls to make new highs but will it happen in 2012???? Very very remote

5169 on the downside remains a crucial make or break level for bulls and bears. A close below 5169 will invite a retest of 5032 [from where a strong bounce back came in Aug '12] and the same should be expected in the next leg of fall as well. If 5032 holds fort, then well and good, failing which 4800 retest is near certain.

Neither rises nor falls are linear [let us not forget that the fall from 6338 to 4531 took a good 13 months]

Critical Dates for Sep '12

22nd Sep '12 marks Fall Equinox and there should be some good swings around this date

As per charts of BankNifty, barring 2 throw-unders, it is pretty much within the wedge pattern that should give us a break-out or break-down around 17th Oct '12.

We have a lot of festivities with the nearest one being Ganesh Chathurthi. Let us hope that the festive cheer keeps us distracted from all the disturbing news vis a vis India scandals.

My next post will be in the last week of Sep '12 and for those obsessed with trading, the Support / Resistance levels given above should suffice. For day trades and jackpot trades, my seniors are taking care of the same. Good Luck to all of you.

EOD Analysis For 31st July 2012 and Outlook For 1st August 2012

OI in Nifty futures little changed from previous session and remarkable drop in VIX

Today was the second consecutive close above 5169 and that implies that this rally can go upto 5348 levels
[with some pauses in between and profit booking; the rise from 5032 to 5200 was very fast and a 61.8% retracement of the same is pegged at 5135-5140 levels and Nifty bounced back smartly from the lows of today]

5250-5280-5325 are strong resistances and Nifty has an intermediate triple top as of now in the 5342-5348 zone. So one could trail longs and see how things pan out after that. The key reversal level continues to be 5169 on closing basis IMHO to switch directions as mentioned in the previous post [and most seniors in the Nifty blogosphere would tend to agree]

Looking at VIX, historical data of Aug '11, one should still be wary and very very alert in this series
[we had mentioned in the beginning of July series that the first half would be biased on the positive side and second half on the negative side. Barring the last 2 days of July, things turned on expected lines]

In Aug '11, we saw almost 5700 levels in the first week and then ended the series at 4728 on 26th Aug '11
VIX was remarkably cool in the first week of Aug '11 only to spike well above 27 by the end of the month

The upside should be enjoyed till it lasts; 1st condition for upside has been satisfied; 2nd condition for rally to pick steam is 2 consecutive closes above 5408 and that needs at least 10% to 15% volumes more

I am personally bearish for the last week of Aug '12 and 1st week of Sep '12; whenever PCR / VIX are at extremes, one should be wary but that does not justify blind shorting and lapping up of Puts. This rally is fuelled by 'hopes' of liquidity injections and can delay but not avert an eventual fall

Critical dates for Aug series are
7th Aug
22nd Aug
[give or take 2 days on either side]

Phew quite a long post but I am very busy for the next couple of months with my professional engagements and hence my posts will be sporadic. My seniors are helping readers with frequent posts and that should be sufficient

Good luck with your trades and enjoy the monsoon season

EOD Analysis For 26th July 2012 and Outlook For 27th July 2012

OI in Nifty futures pretty high today due to expiry and as expected, with 2 closes below 5169, Nifty went into retesting 5032-5092 band. Bulls must ensure that 5032 is retained on closing basis or else Nifty is near certain to take a steep cut of another 144 odd points. Also tomorrow being the weekly close, this level has more significance

Short covering can take Nifty upto 5169 but strength only after it closes above it for 2 consecutive sessions

Illustrative Charts for reference

EOD Analysis For 25th July 2012 and Outlook For 26th July 2012

OI in Nifty futures hovering around the 33 million level and VIX not reflecting price action appropriately

Critical levels and outlook remain unchanged for both Nifty and BankNifty

5032-5092 is a critical support band and going below that on closing basis means more pain for bulls
Short-covering can take Nifty to the congestion band of 5169-5177-5196 and strength to be confirmed only above 5225

EOD Analysis For 24th July 2012 and Outlook For 25th July 2012

OI in Nifty futures hovering around 32 million today and VIX is too low

Critical levels and outlook remain unchanged for both Nifty and BankNifty

EOD Analysis For 23rd July 2012 and Outlook For 24th July 2012

OI in Nifty futures higher as we head into expiry week and it clocked 30 million with the fall today
VIX is certainly not reflecting the reality in prices [and this holds true at the moment across the bourses]

Critical levels remain unchanged for both Nifty and BankNifty; with a close below 5169, Nifty is near certain to test 5032-5092 band; holding 5032 will be crucial on closing basis as going below that would imply steeper cuts. On the upside, 5348 seems to be the upper limit for Nifty in July

EOD Analysis For 20th July 2012 and Outlook 23rd July 2012

OI in Nifty futures hovering around the 27 million mark and VIX is surprisingly cool on major bourses at the moment at sub-18 levels

Critical levels and outlook remain unchanged for both Nifty and BankNifty

Recap: 

Key Support level for Nifty @ 5032-5092 and congestion band of 5169-5177-5196

Key resistances at 5280-5348-5378-5408

Closing above 5408 or below 5032 can yield another 144 points in the same direction IMHO

For BankNifty, the key resistance level now is 10800 and support at 10400 

closing above or below that can yield another 200-250 points in the same direction

Aggressive traders can initiate shorts with a close below 10600 and longs with a close above 10650

[EOD/EOW illustrative charts will be updated over the weekend]