WEEKLY OUTLOOK 28 JULY TO 01 AUGUST

(Click on chart to enlarge)

Please note that the outlook and levels given below are to be used on closing basis and best suited for swing trading and short term investing. Very short term traders can also use this to draw their own strategy. We suggest some home work with pen and paper and stick to that strategy. Use your own discretion to trade. We hope that our previous outlook was helpful as markets also behaved accordingly.

BSE SENSEX(14275)

is poised at a crucial juncture. Although, the indicators are pointing towards an up trend in near term yet, a breach down of 14000 would negate this view. This would be confirmed if 13500 is also not held. But the consensus is on a positive outlook for the week initially. This would have targets of 15130 and then 15800, the optimistic one. A close above 15800 would open doors for 18000 levels but…this is only a technical view point and seems wishful at this stage. Let’s see!

NIFTY(4312)

It is also in positive mood for the moment. As given in the charts, targets of 4560 and 4760 are achievable if the support 4256 is respected. Otherwise, a breach of 4085 also would confirm a downtrend in the direction of 3800. A reversal from anywhere below 4800 would be a cue for sideways trend in near term.

DJIA

Our markets would be taking cue from the world markets’ trend. Dow Jones is predicted to be headed lower towards 11000. One of the analysts I trust, envisions that the support 11150 is to be held in order to keep it in buoyant mood. Otherwise it would remain iffy and sideways between 10700 and 12000 for few more weeks.

EVENTS

Besides earnings season, the most important events are the Interest rate decisions by the RBI on the 29th and FED meet on the 31st July .The inflation figures and Fed rate decision would have an impact here on Friday. These events could give a decisive direction for the medium term. Watch out!

There are no signs of fireworks on Crude Oil charts. And if, the inflation figure stabilizes or cools down even a bit, it would induce substantial positive charge on markets.

CONCLUSION

Comparing Nifty and Sensex charts, the range is apparent for near term. Therefore, for a few more weeks, it could remain in a range between 15800 (Nifty 4800) on upper side and 12500 (Nifty 3800) on lower side. Breakout from this range would determine the medium term trend, obviously! But overall, the mood is positive for the week though, the RBI and FOMC decisions this Thursday would have an impact as well!

Wishing you a happy trading week!

SATURDAY 26/07/2008

BSE SENSEX 2 YEAR CHART
(Please click on chart to enlarge)

Detailed outlook would be published tomorrow evening. Watch out!

WEEKLY OUTLOOK 20/07/2008

Updated Monday 21/07/2008 at 10:30 a.m.

(Please click on the charts to enlarge)

Charts courtesy:iCharts

TECHNICAL

There are a little signs of positive divergence in indicators and oscillators on the charts. But the zone between14075 to 14250 poses a strong resistance on way up. Then would come another boundary at 14677 which needs to be broken to confirm that an intermediate term bottom at 12500 has been formed. Until then we might remain in a range between these two blue lines. But on a breach of 12500 levels, we might be heading lower towards 12000 to 11000 levels in medium term.

The big Q: which way the impending knee jerk reaction of 22nd July will break out the blue boundaries on the chart given above? Or will it really break out of this range! It is that million dollar question! There are lots of ifs and buts. Let us be some dramatic:-

Negative Scenario: If negative reaction comes near lower boundary, say 13000, then breaching of 12500 is most likely and markets may turn negative once again. But if it manages to stay around or above present levels before 22nd and then negative impact could be cushioned well above 12500.

Positive Scenario: If positive reaction comes at present levels or around 14000 levels then expect a sharp move towards 14677 though, this could prove to be a formidable resistance. A positive reaction from lower levels obviously, is any body’s guess. This will keep the lower boundary fragile and upper one firmly intact.

The above scenario would be reviewed after 22nd, if required.

All eyes have turned away from crude chart for the moment. But crude oil is likely to remain weak for the time being. Its primary support is $100 and intermediate $120. This will surely help the markets in near term but…only after 22nd.
Wish you a happy trading week!

We have also published fresh data for our other blogs. Please visit through the links on top right of this page. Please also keep a watch on updates daily.

SATURDAY 19 JULY 2008

BSE SENSEX WEEKLY CHART. (Please click on the chart to enlarge)
Detailed outlook tomorrow, latest by 9p.m. Please watchout!!!

NIFTY OPTIONS FOR PROFITS

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IMPORTANT

Now updates would be available on VIEW UPDATES. All our relevant blogs have links given on right hand side of every page.

OUTLOOK FOR THE WEEK 20080713

(Please read carefully each and every word before arriving at some conclusion. The levels given here are to be treated as on closing basis and one should square-off positions before waiting for a precise hit of the given targets. Also please note that the given levels are for the "near term" which may or may not be achieved in two weeks either. Intra day trading is not recommended as per this)


Domestic political developments, Crude Oil prices, Inflation and the US financial health would be the main drivers of the markets in near term. The earnings season doesn’t seem to infuse any jubilation, is apparent from the reaction to Infosys results. S&P, the rating agency is adding to our woes by warning of a downgrade probability if there is slowing of growth due to inflation.

DOMESTIC POLITICS
Domestic politics would be the main cause of volatility. The news channels, with the help of opposition, would make or break the government many times until 22nd July. This could cause long streaks up and down on daily charts. The parliament floor test on 22nd would be a turning point for the direction of the markets. Leftists may develop cold feet by then perhaps, as the mood of the nation is in favour of the nuke deal. There would be a very sharp move upwards if trust vote is in favour and vice versa.

WORLD MARKETS
The US and the UK markets are pointing towards more downside in near term. That would certainly have an impact on world markets besides ours.

OUR MARKETS
Shorts have almost been covered, implying that there isn’t enough cushion to arrest a down move. Moreover, expecting a rebound from the present levels would be a contrary view. Since the trend is almost downwards, fresh short positions would help bulls in rebounds from support levels intermittently.

TECHNICAL (please note down the given levels for ready reference): Coming to the charts, there aren’t enough positive signs in weekly or daily charts. However, if SENSEX holds the level of 13300(currently at 13470) and reverses from here then expect an up move towards 14100 or 14500. Keep in mind that it is a bear market where an uptrend has its limitations.
But a close below 13290 (NIFTY 3988) would take it down towards 12400 (NIFTY 3700) in near term. Sensex may take support "for some time" at 12800(NIFTY 3850) level on its way down.
(It may not yet; but a close below 12300 would open a target of 11000 levels for medium term).
Wishing you a happy trading!!!
(Please also visit our other blogs for more information through the links on top right).
UPDATES (ONLY IF NECESSARY) WOULD APPEAR EITHER AT 0900hrs, 1230hrs, 1430hrs OR 2100hrs. (-5:30hrs GMT)

CLOSING

Sell off despite consescutive growth in Infosys, is a signal for future trend. The signal is that markets are visualising downturn in future growth due to inflation being caused by crude prices, food crisis due to demand and supply mis-match and last but the foremost credit crisis due to financial mis-management.
Indian markets are going to remain subdued until Parliament floor test on 22nd July.

MARKETS AT NOON

Just moving on triggers only though, it would perhaps be the third day of consecutive close above 13800 on sensex. It is a positive sign for the near term. But needs to close above 14680 to turn positive in medium term. Until then just lighten the longs.

WATCH LIST 20080711

Infosys results; Oil and Iran; Impending Parliament floor test; Inflation; Industrial production data today; Bear trend in world markets. All these are to be kept in mind before plunging in blindly. Parliament floor test will give medium term direction. Until then it will be choppy and volatile; guided by earnings and revaluation!

Option traders can initiate long straddles of strike 4100 or 4200. It depends upon where the market is stabilising, e.g. initiate 4200 strike if market is hovering near or at it. Hold until expiry.

WEEKLY OUTLOOK

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POLITICAL UNCERTAINTY

Political uncertainty will keep markets fingers crossed. It would be difficult for weak hearts to trade in very volatile market. It is quite clear that people are in favour of the deal but everything now depends upon the forthcoming floor test. Even if the government falls, the leftists are doomed this time and markets are waiting for that. Markets will just react temporarily until the floor test in parliament, but it is the economic fundamentals that are becoming suspect, especially the inflation and financials around the world. So crude is going to have the last laugh.

CRUDE...has broken support $140 and is now headed towards support $130-131.

CRUDE...WATCH 139

CRUDE should hold $139 support . If not then hurtles towards 130. But if support 139 is held then brace for another rally.

WATCHOUT

WATCHLIST
The following watch list can be helpful in determining your stakes in the markets.

OIL: Still in uptrend
INFLATION: No respite in the near term.
WORLD POLITICS: hovering around Iran and Oil. G18 meet in Japan.
INDIAN POLITICS: A lot of air has been cleared already, but could cause volatility in near term.
INDIA RESULTS: INFOSYS results this Friday on 11th July 2008.
INTEREST RATE: Hanging fire. FED meeting and RBI meeting on 31st July 2008.

DOW JONES (US): Downward targets still wide open. Bear market.
S&P500 (US): Downward pressure still exists. Bear market.
NASDAQ (US): Downward pressure still exists.
NIKKEI (JAPAN): Downward pressure yet, the strongest one comparatively in the whole lot of world markets.
FTSE (LONDON): Sideways with negative bias. Down from here is the Bear Market.
HANGSENG (HONGKONG): Just hinging on support. Down from here is the Bear Market.
SHANGHAI (CHINA): The most battered of the lot, therefore, turning attractive for bulls soon.
BSE (INDIA): With positive bias, waiting for short term trend direction. Bear market confirmed.

The Week Ahead

OUTLOOK
A pennant formation last week on index charts is a pause before onset of a trend. Next Trend in which direction! Buying pressure and trading volumes are indicating an upward move. More likely we might move up “but do not forget that upside is limited” as per the charts. So, we can expect sideways week with a positive bias. At the same time the downside targets are still open but a down move could get arrested above 12300 levels.

HOW TO PLAY
A reversal from (or below) Resistance 13800 can pull markets down once again towards 12300 in the near term. A move above 13800 could take it higher to between 14500 and 14700. A move above 14700 though unlikely, is needed for a positive medium term outlook for the index. Therefore, 13800 would be the pivot to take long or short call. Option traders can initiate a straddle( long CE and PE of strike 4000 or 4100).

STOCK TREND
The frontrunners are in an indecisive mode obviously.
RIL: seems to be stepping downwards slowly in the near term unless it breaches 2425-2430 level. 2000 level is the sacrosanct level.
SBI: is somewhat enthusiastic and could rally towards 1150 to 1250. But SBI also needs to close above 1400 to turn positive. 1000 level is the key to this stock.
INFY: Holding 1700 steadfastly and it needs to keep that level intact so as not to move down in the near term. A rally above 1700 can take to 2000 levels in the near term. It is the best among the lot to trade this week as it announces results on Friday. PIVOT is 1700. Long straddles could be profitable though, I would also recommend long only position with SL-1700 on closing basis.

Note: Study above in combination of “How to Play” and “Stock Trend” can help you in arriving at your own outlook for trading.