NIFTY BREAK 12 JAN 2017
Nifty broke a 4 month trend line and has exhibited a double bottom break. As such still portends to a buy on dips with targets above 8445 – 50.
Watch the Clip.
Subscribe to our blog and you tube channel.
S&P 500 : The Bowl Breakout
The S&P 500 Broke out after a 3 month consolidation
Watch The Clip
Emerging market sells offs and have been blamed ( and rightly so ) for the sudden falls of our dear Index. The MSCI EMI has been a great indicator of the general movements in the EMs and the correlation the NIFTY inspite of India weightage at 8.42% has been visible
But is it now possible that for some time , the major weightage EMs in the MCSI EMI now delink ? I think so .
The Table below shows the performance of MSCI EM Vs the Major weightage Country Indices ( Weightage :China 26.37% , South Korea 14 .27% , Taiwan 12.28%, India 8.42%, Brazil 8.35%, Others 30.3%)
India has been a laggard , trailing Korea inspite of being the fastest growing economy in terms of growth rates. The clip below shows the graphs of each. Coupled with the US dollar rally and taking a view that the Dollar rally may be in the last legs , The NIFTY seems to have limited downside over the next 5 to 6 months , before reaching back to a number close to 8450 on the NIFTY.
I would be a Buyer( at least 40% to 50% ) the at current levels , keeping a plan to increase positions at 7600 and below.
Trend Line Resistance : Watch the Clip
Book Your Space Now
NIFTY break Out : Watch the Clip
Book Your Space Now
Most of the times : we justify a position by virtue of news flow , but initiate the position looking at the price action .
Lets clear “The Thought Process”:
- We don’t know what events come up when
- We can bet on data , but lets keep that separate from the buy or sell decision
- The only news flow that hits everyone by surprise is NATURAL DISASTERS , citerus paribus
Its good to know whats happening in the world and that we have an opinion on it , but barring point 3 , lets make decisions based on process actions alone . The only decisions before we initiate a position should be :
- Stop Loss
- Take Profit
The NIFTY is at a crucial juncture : No one Really Knows whether the upmove from 7520 will take us to 7950 & above or the market will kiss 7780 and revert to 7320.
My thoughts below:
But the market may move by a large amount Intraday. To play the move two strategies can be adopted. Intraday :
- Short in the range 7735- 7745 with stops at 7785. Target would chase 7610. Dont forget to reverse at close keeping the lines in mind.
- Long in the 7680 – 7725 zone with Stops at 7675 . Target would chase 7950 .
I will rather go with the second .
For traders and investors in the Indian Equity markets , questions remain:
- Sell Stocks at 7714 , wait for a break of 7950 and reenter
- Stay invested and wait to sell near 7875- 7950 range and then wait for a break
- Short on upticks with stops near 8050 for a retest of the trend line supports.
Broadly : Are we on a one way street to make new highs with intraday corrections or is it a market that will crash with fervor as we have seen in the recent past?
As an investor and trader of futures contracts on own account , I face the dilemma that keeping large stops in material positions defeats the purpose of a stop. The stop needs to be very tight. Especially after the NSE increased the lot sizes.
Analysts and advisors don’t have that problem.Even if all the stops on recos have triggered , they magically still have the cash to continue in the market.No offense meant, but when u deal with real cash , things are a bit different.
I was going thru the charts of the NIFTY and wanted to share some thoughts.
NIFTY weeklies ( dailies are not very different)
- The long term trend line since 2008 has so far held
- The sloping mid 2014 to 2016 trend line break at the 7780 handle can cause to test the Jan highs of 7950, and then possibly go further up towards the 8000 number .
1)If u are not yet long , and made no money on the long side till now . WAIT FOR 7950 to short with stops near 8050.
2) if u’ve made some money , then get to the futures in stocks that have participated to a lesser extent and keep a 3% to 5% stop. UR stop will be lesser and chances are there will be sudden up moves in those.
Below is a further break down of the heavy weights in the NIFTY 50.
INFY : Looks to provide support
- Looks to provide support to the Index , On the verge of a break on dailies and it could lead the IT pack .
ITC : GRAVE RISK
- Led the Rally from the bottom , but the structure does not give any confidence that it will support the Index . At max a range before a possibility of a massive break down .Can lead the fall.
HDFC BANK : looks to provide support
- Only a break above highs will provide the comfort of a new consolidation break out .
- Has the potential to provide limited support
HDFC Main : Supportive
- Long term trend line is in place
- Short term false break , portends a break on the upside.
- Supportive of NIFTY
RIL : THE DARK HORSE: Supportive
- Can potentially lead the NIFTY to a new high if the 2009 to 2016 consolidation range breaks .
SBI : Supportive
- Has a penchant for V shaped rallies
Happy trading and dont worry about the long weekend.
We are where we started . Lets not blame oil, china , global routs . There are always reasons to rationalise any move. I too was caught long and levered. esp since we trade only F&O. but the pain is not because of the yuan , oil , china , profit numbers etc. The charts showed it but the position said that the chart is not right esp since the we compare to the top and not to the bottom…
The mirror does not lie. The positions tell us to ignore it …