Tuesday, May 26, 2009

Elections and the Nifty

I have a new post in Practical Technical Analysis on day traders preparation . The post is a little difficult to read, but is probably worth the effort if you read it a couple of times.

A 600 point rally after the elections has changed the support and resistance levels for the Nifty.The threshold has moved up by 600 points. Thus, the lows of 2200 seen in Ocotber should now be considered 2800. A resistance expected in the 3800 - 3900 zone is now seen at 4400 - 4500. Earlier, I was looking at a dip to 3150 support. This probably changes to 3700 - 3800 now. The election is a rare event which raises the threshold of hope in the market.

Is this a bull market? Instead of classifying it in 'bull' or 'bear' terms, I am thinking that this is a market in an uptrend. This makes it easier to identify the direction in which trading opportunities lie -UP.

I also believe that our market remains coupled with international markets. All of talk of a 'Game Changer' is probbaly just talk. If world markets continue to go up, we will join the fun. If they begin a correction, we will probably correct with them.

Agra: I will be in Agra on May 30 for the CNBC Investor Camp.

afraidtotrade.com has an analysis on the intermediate outlook of the Nifty. It says "Thus, the 4,470 level holds key significance to the market in terms of likely overhead resistance that must be cleared". and.... "Let’s keep watching this powerful index to see if we can sustain these higher prices (which now seems likely) and note how far sellers bring the index down on any sort of expected pullback." The moving average pattern on the weekly - "The moving average structure - which always lags price - is still in the most bearish orientation possible (20 under the 50 which is under the 200) though we’re seeing the 20 EMA race up to break above the 50 EMA soon, provided that price holds above the 50 EMA over the next few weeks."

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Sigamani said...

Hi Mr.Sudharshan

I would like to know your comment regarding trading in nifty..

I read somewhere, that a person has to have a mechanical trading system (something like a visual graph with some moving averages)and it should give calls automatically...irrespective of situations just go with the calls everytime and your probability of winning will get you profits..

what do you say on a system above like this?


Vicky said...

Hello sir,

Alan Farley has published an article about the crossovers of 200Ma and 50Ma as GOLDEN CROSS(50 crossing 200 from above)and DEATH CROSS(50 crossing 200 from below).
In that view a GOLDEN CROSS is about to occur(or occured) in NIFTY. Can we take that as a positive signal?


solo said...

Sudarshan ji,
There is an important observation that i've made and i expect your comments on it very soon(for if i am right or wrong)--

Importance of 50wma and 100wma for sensex:--

Today i was looking at the sensex weekly charts(nifty charts not available)with 50wma and 100wma crossover and i saw that these moving averages have proved themselves as very important ones as they have acted as strong supports and resistance in trending markets.

In our previous bear market whenever index touched 100wma it faced strong resistance and retraced hard and even came below 50wma(broke previous lows when it touched it for the first time).After two futile attempts it finally crossed it decisevely and closed for 7weeks above it but again revert back below 50wma.

In this bear market index has touched this 100wma only once and has failed to take a closing above this level.

So as far as i've understood--the bear phase might be over but a strong correction may be in the offing(may be upto 10000-11000)because of strong resistances ahead.