NIFTY FIFTY

[AMITBE]

The low at 2815 off so far has been filled yet which is as good as 2814.
Quite a volatile numbers grind it has been all day.
At this point we've been trading in a tight band between 2838 and 2833 which is getting tighter and there is every possibility of a breakout of sorts.
At 2835 now.

The narrow trading band and the breakout mentioned above did happen...to the down. To be honest, I had expected it to be to the up.

So in the end the market did opt for booking profits.
The blind spots mentioned in the first post this morning got a pretty decent dressing down in a sharply volatile session today.
As can be seen in the attached chart, the bulk of the action is centered in the 2833-2838 band, the exact area that went starkly untroden during the second half of the session yesterday. If interested do go back to chart uploaded at close yesterday.
Another interesting aspect is the area at 2810-2823 wich too remains fairly virginal in both the charts.
More on this tomorrow.

 

[srisara]

fairly virginal in both the charts.
More on this tomorrow.

the above word should have caused lot of excitement to many. nice terms from you Amit.. :d

anyhow, nice analysis, from where you are getting the intra-day data for S&P NIFTY?

Satya

 

[AMITBE]

The moves yesterday were most satisfactory.
While the Nifty shed some points in a rather up-down session, the menacing attribute that can often be associated with volatility was absent.
This is not to say there was no volatility. There was, but remained in a confined band at 2833-2838. Very briefly lower levels below 2823 were tested.

The sensible signal is, abandon the senseless rush for higher levels. They can be won in quietly probing moves, but center on establishing strength at lower levels as then theyll eventually accept and bear the weight of the bigger levels.
Then the bullish undertone would remain intact.

Taking this thought forward, it was written yesterday that the Nifty would be compelled to fill out the several important blind spots it had left behind.
It was also written in a couple of preceding posts that the band at 2823-2832 may see some intense activity.
All that was all but done yesterday.
However the band at 2810 to 2823 still contains some levels that didnt get worked enough. If they are important enough, they may receive their due attention today.
Then past that the Nifty should be in position to attend to matters at higher levels.

Though the a/d ratio was pretty dismal right up to the close yesterday, the core strength of the Nifty can be seen at the buying support it received all day. Its not that the bears were really in control of the proceedings, its that the bulls were not pushing for a fight but regrouping for the task ahead.
This phase is going to be short lived, it appears. The charge is imminent.

The levels to the up and down are known of course:
2804-2810-2813-2818-2822-2824 are immediate supports.
2832 is important to take and hold. Above lies 2836-2840-2843-2848-2853-2862.

 

[AMITBE]

Though the a/d ratio was pretty dismal right up to the close yesterday, the core strength of the Nifty can be seen at the buying support it received all day. It’s not that the bears were really in control of the proceedings, it’s that the bulls were not pushing for a fight but regrouping for the task ahead.
This phase is going to be short lived, it appears. The charge is imminent.

The levels to the up and down are known of course:
2804-2810-2813-2818-2822-2824 are immediate supports.
2832 is important to take and hold. Above lies 2836-2840-2843-2848-2853-2862.

Ok the charge, though rather hasty.
No wonder then the higher levels are proving to be cumbersome to hold.
However, the resistance that 2846 is giving is not figuring on the long term readings and it's more likely an intraday issue.
The support at 2843 is certainly present in those longer term readings.
Though difficult, there is a good chance that 2846 would not stand in the way too long.

 

[AMITBE]

However the band at 2810 to 2823 still contains some levels that didnt get worked enough. If they are important enough, they may receive their due attention today.
Then past that the Nifty should be in position to attend to matters at higher levels.

Ok the charge, though rather hasty.
No wonder then the higher levels are proving to be cumbersome to hold.
However, the resistance that 2846 is giving is not figuring on the long term readings and it's more likely an intraday issue.
The support at 2843 is certainly present in those longer term readings.
Though difficult, there is a good chance that 2846 would not stand in the way too long.

Well...the market can sure be a pretty bizarre, kinky and uncouth place.
The second quote above went off into thin air, at the hands of weak hands, who seeing that the Nifty was meeting a severe challange at 2846-2848 abandoned the fight and ran hard. The highest they got was 2847.30. 2848 should have been the resistance but 2846 came out of nowhere.

From the first quote above, and also written yesterday, 2810 to 2823 still lay virginal (sending Satya into raptures of course! ).
We are back there now to pay our respects and to clear the way forward.
2799, the ever vigilant sentinal has yet again stood solid.
The Nifty has bounced off it again for now.

 

[AMITBE]

What was a surprise is that there was no buying support at 2846 for a fairly long period of time, from about 10.30 to 1.15. The big players obviously stayed away from the action, and in later session sold most likely.

Finally the weak hands gave way and sold hard along the big boys in a sharp fall.

2799 brough back the waning confidence and there is a sharp pullback there, but not before the band at 2810-2823 got its due recognition. With that an important task is out of the way.

The levels being written are shown on the attached intraday chart.

 

[srisara]

Amit,

thanks for the analysis.... I was just thinking abt this Centrifugal forces and Action - Reaction. like when there is a sudden jump ( we call it action), what will be the reaction.

I may not be able to put it in words, its like going up hastily, may make it to visit those levels.

Some sort of spring action?

Satya

 

[srisara]

Amit,
I am attaching the Daily Chart of NIFTY. I could identify the TRIX Bearish Divergence.

What do you feel about it?

Satya

 

[AMITBE]

Amit,
I am attaching the Daily Chart of NIFTY. I could identify the TRIX Bearish Divergence.

What do you feel about it?

Satya

Hi Satya, this Trix divergence in the Nifty has been present since the Dec 14.
It was also present around Dec 7 or 8 when Karthik had first posted it and then it abruptly turned positive.
At best it's indicative of a temporary slowdown, and I'm saying slowdown rather than weakness, and not even remotely considering the use of 'reversal'.
Since the time Karthik pointed to it then, the Nifty has come up a fair distance, and even now is set to go up further.
I have found indicators like RSI and Trix and a few other popular ones to be rather fuzzy when it comes to indexes mainly, and often enough when it comes to stocks too.

The Nifty is a basket of fifty stocks, and more often than not there will always be a counterpoint present at any given time. Today it's the Reliance pack draging it down and next it's the capital goods majors pulling it up. Now the a/d ratio has gone way negative, and then it the international Oil prices dipping. Now it's the domestic funds buying in heavily in the banks and next the FIIs are booking profits in the FMCG counters. Some are building major short positions now and running to cover them next. Now there is this German fund coming in with huge masses of money, now it the Japanese. All of this any much much more is acting upon the movement of the index. So the indicators become rather nebulous quite often as illustrators of reversals, often in the short run too.

If you looked at the long term charts of the Nifty, whether daily or weekly or monthly, the trend is most positively to the up.

In the midst of a strong bull run, or even a bear trend, there will be periods of reflex contrary moves, corrections, consolidations etc., and pouncing on any particular indicator showing divergent signals is going to mislead. A strong trend in either direction is always considered as intact till conclusively broken.
While price action is the major ingredient for most indicators, it's often more reliable to keep eyes peeled for certain formations like H&S or Double Top/Bottoms along with their chief associate, volume. You are less likely to go wrong here.

If your concern is in the short term, yes the Nifty has had two volatile and flat to bearish sessions and the Trix is showing this.
However all this can change abruptly at any time without warning.
This is as much as I can say for now.

 

[AMITBE]

Two things are evident from the movement the last two sessions.
There is a lack of buying support at higher levels even though there is firm resolve amongst a section of the players.
A prolonged struggle at 2840 plus levels was seen on both days. That the Nifty got that far and stayed up for long cannot be ignored.
This makes one believe there is more to come in this leg of the rally into the 2800s.

The other aspect to note is the presence of support at lower levels. On both days the Nifty staged a smart recovery from sharp falls.
However the main concern from yesterday fall is the sharp rise in volume. Thats not a happy sign at all.

There is a certain degree of compression taking place nevertheless, even if we had two lower low days. Compression is used in the sense that there were prolonged range-bound moves on both days where a breakout to the up could easily have taken place and failing which, supports were not easily abandoned. This clearly indicates that in the last two sessions the Nifty has been looking for direction to the up while holding strong to certain important supports. There was no directionless meandering by any stretch of imagination.

So where to now?
A difficult call indeed, but Ill venture out to say today would likely be groundwork day, like a preparation day for another significant move coming on soon.
If that move is going to be to the up, one may expect further consolidation in the higher levels to build a launching pad.
If contrary be the case, wed of course struggle at lower levels.
But am I straddling both worlds like the experts on business channels?
To clarify my stand, I retain the view that we would go higher and soon.
I dont believe we are done with this leg yet.

On to abstraction.
The blind spots as we are aware are all but tended to.
There are no more virgin grounds left to the down.
2799 continues to radiate strong energy.
Centrifugal forces have done their bit.
Actions and reactions have evened out.

The levels: To the up the Nifty needs to regain 2835 firmly and the levels along the way are 2826-2829-2833.
If 2835 is held, 2847 would be the level to seek. The levels to there are 2838-2841-2844.
If we get that far, will post more.
On the down the levels are well known by now.