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.