14th December 2009 Good Morning, Market Synopsis: 14th December 2009. Market Direction: Market direction is Neutral - Down. Keep a lookout for the level of 5185.00 on Nifty on the upper end and 5038 – 5056 on the lower end of the trading spectrum. These levels will be the point of reference that will guide you through the day. If 5070 is taken out on the lower end on closing basis, expect the markets to achieve a target of 4960 – 4990 in the lower range. Similarly on the higher side if 5185 is taken out, expect the markets to touch a level of 5250 – 5300. Anything is possible as there are contradictory signals. Also the cycle turning date falls between the 14th and 16th of December 2009. It is during the time of Cycle change that one has to be on the right side of the market as the movement in either direction would be fast and furious. Players Strength: Technical studies suggest that bears are in charge for the day but the put call ratio points towards the bulls being in charge but this can change, as majority of the calls are written in the range of 5300 - 5350. As the market is looking for a direction the market players are in a state of equilibrium as of now. Today could be the day that decides who will come out trumps in the short term. Action: Be long in the market for the day after the Nifty touches the level of 5038 – 5056 on the lower end or on a breakout above 5185. Or take positions only if you have dependable information. It won't be long before a clear trend would be visible. For today if Nifty trades below 5070 use shorts to play the market. Short Term Opinion: Trading would be in a range between 5038 – 5185. There is still a move left which will take the markets up, before this up move terminates. But this will be discussed when the time is appropriate. In case 5038 is taken out expect Markets to move down to the levels of 4960 – 4990. Stocks: No stocks have been given to trade as the studies have thrown up inconclusive results. It is better to watch until a clear trend develops as we are trading in a very narrow band. It is prudent to be on the right side of this trading range. Score Card: 11th December 2009, Today Nifty performed within the limits that were mentioned in the Chart Construction. The Nifty performed according to the Chart Construction. As Nifty crossed the level of 5137 – 5144, which was the Bullish Above level, higher targets were achieved. Nifty made a high of 5182.55 against the level of 5181 - 5185, which was forecasted as a Probable Top in the Chart Construction. This level was spot on to confirm the accuracy of the Chart Construction for the day. Nifty opened at 5136.05 and moved up to make a high of 5182.55 before closing at 5117.30. If you observed the Nifty play for the day dated 11 December 2009, you must have noticed that the Nifty respected all the levels on the Chart Construction by moving up or down from them. On the whole Nifty lost 17.35 points over yesterday's closing of 5134.65. Today Nifty did not move below the level of 5073 – 5078, which was the Max Low level on the Chart Construction. Thereby giving credibility to Neutral sentiments that prevailed through the rather dull day. The market breadth was in the range favoring the sellers. The advancing stocks and the declining stocks were not in equilibrium. 381 stocks advanced and 839 stocks declined while 24 stocks remained unchanged. Today the Markets were looking for a direction which was up, as is evident from the miserly loss of only 17.35 points on the Nifty and a ratio of 1: 0.45 in favor of declining stocks. It sure was a difficult day to trade. Trading Scorecard: 11th December 2009: Cairn Ind: Target Achieved. Essel Propack: Strategy not activated. Ind Swift Labs: Neutral. Jaiprakash Assoc: Strategy not activated. KLG Systel: Target Achieved. Patni Computers: Target Achieved. Considering the market condition on the given day and the strategies recommended, not all the stocks performed to the given potential. Two strategies did not get activated. But the strategies that got activated did OK. As most of the Target levels coincided with the probable top of 5181 – 5185 on the Chart Construction. The strike rate today was 100 %, discounting the strategies that were not activated and were neutral. From the feedback we got the clients were in money today but not by much. What stands out is that in a market like today they did not lose monetarily. Market Summary: Nifty closed at 5117.30 for the day dated 11th December 2009 with a loss of 17.35 points on Contracting Volumes. Giving a sense, the bulls and the bears were in a state of equilibrium in the market today, even if the markets closed with a small loss. Nifty was in a very dull environment for the day as the Intraday movement on the chart suggested. A close of 5137.00 was needed today to give the Bulls a good chance on 14th December 2009. This did not happen today. Directional uncertainty prevailed in the markets today, as for a few days prior to today. The same can not be said for the Nifty Futures as the Nifty Futures too were flat but on Higher Volumes. What is evident from the volumes is that cash markets witnessed some Selling on lower volumes and the futures market there was buying on higher volumes. The Market is always right and we have to go by this maxim and only take positions opposite to the trend, only when the markets tell us to. Today the markets have told us to be silent until the next signal to a trend emerges. Today the stocks surrendered some of the gains towards the end of the trading session. All in all the Nifty closed in a negative position. The downward move today was supported by all the major indices in the Nifty, Market Analysis: Nifty closed at 5117.30 for the day dated 11th December 2009 with a loss of 17.35 points over the previous close of 5134.65 on Contracting Volumes. The ratio of advancing stocks to declining stock was in favor of Declines. 839 stocks declined and 381 stocks advanced while 24 stocks remained unchanged. The following is an analysis for the market on 14th December 2009 in short, without mentioning all the details. Price action: Prices are expected to move in a Neutral - Down direction with a bias towards the Down side. The analysis of Nifty has given an uncomfortable position on probability analysis. The probability analysis has come at 49 % for the markets moving up and 51 % for the markets moving down. There is a directional conflict as is evident from the analysis of daily charts. But if one observes the weekly charts there seems to be profit taking in the market. So it can be said with confidence that the markets are poised to move down if the level of 5070 is taken out on closing basis. The price action on Nifty is looking for a direction at the moment. The daily charts are showing a trend change; where as the Weekly Nifty Charts are still in a sideways mode. But the weekly charts are showing that they are nearing the end of the side ways movement that signifies that a trending market is soon to follow. Volumes: Contracting Volumes with a small loss in price, suggesting a short term down move on daily charts. The point movement of Nifty on weekly charts suggests a Side ways move on contracting volumes. Nifty is in a trading range. If a trend develops from here you can expect a healthy move in the markets in the coming days but one will have to wait for the markets to give the sign of this upcoming move. Trend: Market has got into a trading range, this suggests that the market would be neutral or move lower in the near term, as we are near the strong support zones. The market has to give a close above 5137.00 to confirm an up move. A close above 5154.00 will augur well for the bullish sentiments. A close below 5050.00 will ensure that Nifty has some more ground to lose before it can commence its up move and would be in charge of the bears. Money Flow: Money flow is decreasing in the market as is evident by the rising status of price fall in the markets on the daily charts. On the weekly charts also the money has flowed out of the market on a minuette degree. In a situation like this there is an down move pending. Volatility: Volatility would be neutral to mild today. Sentiments: Nonaligned status is the order of the day with some short term players going long. HNI's and Institutional players are still not in profit booking mode, on the contrary they are in a buy mode. This is evident from the movement in the market and the fund based buying that has taken place. Suggesting that an up move is still pending. Market Patterns: Neutral to down move in Nifty is suggested by the Pattern analysis, Candlesticks analysis, Indicator and Oscillator analysis, Fibonacci analysis, Gann analysis and Elliott Wave analysis over a short term time scale. Cycles: The next cycle turning date falls between the 14 and 16 of December 2009. So expect the market to be neutral or lower as there is ample time to nurture this up move in the short term. There is a good chance that the Nifty could move lower today. A trend reversal can take place around these dates between the 14th and the 16th of December 2009. S.W.O.T Analysis: Strength: Based on the evidence that is thrown up by the Market Analysis it is projected that the Market would be neutral - down today. Most of the parameters point in this direction. The evidence of the analysis tells of the Bulls and Bears in the short term are in symmetry. Though the studies show a neutral to up move, it is prudent for the market to guide us. The prognosis is based on the probability analysis which suggests a 51 % probability of the markets being neutral or moving lower. Any percentage above 80 is good in guiding us for the trend for the day. Weakness: There is very little strength in the market as shown by the studies; except for what the Global markets would do today. This would have a strong influence on Nifty and the direction it trades today. Nifty has to trade above 5185.00 to move upwards in the immediate future and if nifty gives a close below 5070.00, the bears will gain an upper hand. Opportunity: Opportunity the market presents is to be neutral - down unless the Global Markets dictate otherwise. If the Nifty begins to trade above 5185.00, then it would not be prudent to be short in the market. And if the Nifty begins to trade below 5070.00 it would not be prudent to be long in the market. Use the Chart Construction to guide you in this respect. The opportunity lies in trading the markets on the short side today. Take informed decisions before trading. Threat: There are no threats to the Bulls as yet. The Market has to be traded on the short side today. The Bulls would feel threatened only and only if Nifty begins to trade below 5050.00 in the short term. Secondly the cues from the Global Markets would be the guiding force behind our markets. Today is one day that we would heed the global cues as these will help our markets move higher on positive sentiments. Market Insight and Prognosis: Taking into consideration the Market Summary and Market Analysis, It can be said with a certain degree of confidence that the Markets are poised to move down or at the most be neutral on 14th December 2009. A close above the level of 5185.00 will open the doors for an upside, in time and price. Nifty has to trade above 5185.00 to be in a short term bullish mode. If it fails to do so, expect a fall in the market in time to come. If the Nifty moves above 5185.00 on closing basis, a target of 5250 – 5300 can not be ruled out. But today being a possible down to a neutral day, the bullish sentiments may be overlooked. But then markets do have a tendency to surprise you when you least expect it. It is always better to follow the markets than predict the turn around. Use the Daily Chart Construction to guide you through the day. In the markets any thing can happen. If the levels on the Daily Chart Construction are superseded revert to the Weekly Chart Construction. Strictly adhere to the suggested Stop Loss as this will ensure the safety of you capital. Never trade without a Stop loss. Thirdly observe what the Markets are doing near or at the target levels of the stocks given to trade. Relate this to the Chart Construction before you take your decision to exit or enter a trade. If this becomes a discipline with you, then trading would be a cake walk for you. Strategic Action: Nifty has been trading in a narrow for the past few days. Market is searching for direction and if 5187 is taken out on closing basis a target between 5250 - 5300 is expected. This forecasted up move would be rapid. On the lower side the target of 5038 - 5056 is possible on intraday basis. If a close takes place below this, we will see the nifty testing for 4960 - 4990 before moving up again. Most of the volatility instruments are showing that there would be an increase in volatility in the near future. Close up above the breakout level of 5180 - 5187 will augur a short term buy positions for carry forward trades. As is evident the market is moving in a sideways pattern. If the market moves below 5070 on closing basis at target of 4960 - 4990 is visible. There is a possibility of sluggish markets today unless 5180 - 5187 is taken out on the upper side or 5065 - 5067 is taken out on the lower side. There is a strong possibility that a trending market will develop this week. The markets are moving in a band between 5183 on the topside and 5070 on the lower end. If one has to trade this market, be certain that you are nimble footed and are able to take action at the drop of a hat. Today it would be prudent to stay out of the market. One can trade this market on the short side if reliable information is available. As a trader one must wait for the trend to develop before one can take action. All in all we can recommend shorting as a strategic action today. Wishing you a great trading day. With Regards, Ranjit. | 
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