BSEIndia: All Stock Market News: [sharetrading] Nifty analysis by prime analytics

Thursday, December 03, 2009

[sharetrading] Nifty analysis by prime analytics

4th December 2009

Good Morning,

Score Card:

3rd 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 5127 – 5131, which was the Bullish Above level, higher targets were achieved. Nifty made a high of 5181.00 against the level of 5160 - 5167, which was forecasted as a Breakout confirmation in the Chart Construction. Since Nifty did not close above this level for the second time running, there could be a change in trend. This level was close enough to confirm the accuracy of the Chart Construction for the day. Nifty opened at 5124.53 and moved up to make a high of 5181.00 before closing at 5131.70. If you observed the Nifty play for the day dated 3 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 gained 8.45 points over yesterday's closing of 5123.25. Today Nifty did not move below the level of 5093 – 5100, which was the Strong Support level mentioned on the Chart Construction. Thereby giving credibility to Neutral sentiments that prevailed through the rather volatile day. The market breadth was in the neutral range. The advancing stocks and the declining stocks were in equilibrium. 714 stocks advanced and 526 stocks declined while 31 stocks remained unchanged. Today the Markets were looking for a direction as is evident from the miserly gain of only 8.45 points on the Nifty and a ration of 1.36: 1 in favor of advances. It sure was a difficult day to trade.

Trading Scorecard:

ACC: Stop Loss Triggered,

Bajaj Hindustan: Target achieved, monetary gains made,

Deccan Chronicle: Neutral, monetary gains made,

Graphite (I): Neutral, monetary gains made,

MUSCO: Target achieved,

MRPL: Neutral, monetary gains made,

Union Bank: Target achieved,

The trading results were 85.71 % today. The traders who traded on the calls made today would have been in money. It was a good day for the traders as was evident from the positive feed back we got.

Market Summary:

Nifty closed at 5131.70 for the day dated 3rd December 2009 with a gain of 8.45 points on Contracting Volumes. Giving a sense, the bulls and the bears were in a state of equilibrium in the market today. Nifty was in a very volatile 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 4th December 2009. This did not happen today. Directional uncertainty prevailed in the markets today. The same can be said for the Nifty Futures as the Nifty Futures too were flat higher volumes. There was a divergence in the volumes of Nifty and Nifty Futures. This is suggestive of the uncertainty prevailing in the markets. What is evident from the volumes is that cash markets witnessed some buying on lower volumes and the futures market there was confirmed selling 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 neutral until the next signal to a trend emerges.

Market Analysis:

Nifty closed at 5131.70 for the day dated 3rd December 2009 with a gain of 8.45 points over the previous close of 5123.25 on contracting volumes. The ratio of advancing stocks to declining stock was in favor of being neutral. 714 stocks advanced and 526 stocks declined while 31 stocks remained unchanged. The following is an analysis for the market on 4th December 2009 in short, without mentioning all the details.

Price action: Prices are expected to move in a downward to neutral direction. The analysis of price has not given a comfortable position on probability analysis. The probability analysis has come at 53 % for the markets moving up and 47 % for the markets moving down.

Volumes: Contracting Volumes, suggesting a short term down move.

Trend: Market has got into a trading range, this suggests that the market would be neutral or move lower. The market has to give a close above 5167 to confirm an up move.

Money Flow: Money flow is neutral the market as is evident by the neutral status in the markets.

Volatility: High.

Sentiments: Profit taking is the order of the day with some short term players going short.

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.

Cycles: The market fell on three consecutive days and now has given a rise for three consecutive days. That is three period Fibonacci count on the down days and a three period Fibonacci count on the up days. Considering that today was a down day the next Fibonacci integer is two. So expect the market to be neutral or move lower. There is a chance that the Nifty could move lower today. If it does not move lower today then we will be sellers in the markets between the 6th and the 8th of December 2009, for the sole reason that the cycle change will take place around these dates. If the market moves lower today we will short the market and cover around the 6th or the 8th 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 move down or be neutral today. Most of the parameters point in this direction. The evidence of the analysis tells of the Bulls and the Bears in the short term are going nowhere. Though the studies show a neutral to down move, it is prudent for the market to guide us. The prognosis is based on the probability analysis which suggests a 47 % probability of the markets being neutral or moving lower.

Weakness: There is very little strength or weakness 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 5167 to move upwards in the immediate future and if nifty gives a close below 5090 – 5094, the bears will gain an upper hand.

Opportunity: Opportunity the market presents is to be neutral unless the Global Markets dictate otherwise. If the Nifty begins to trade above 5167, then it would not be prudent to be short in the market. And if the Nifty begins to trade below 5090 – 5094 it would not be prudent to be long in the market. Use the Chart Construction to guide you in this respect.

Threat: There are no threats to the Bulls as yet. The Market has to be traded on the short/long side today. The Bulls would feel threatened only and only if Nifty begins to trade below 5090 - 5094. 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 there are no clues from the charts.

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 be neutral on 4th December 2009. A close above the level of 5137.00 will open the doors for an upside, in time and price. Nifty has to trade above 5167 to be in a short term bullish mode. If it fails to do so, expect a fall in the market today. If the Nifty moves above 5137- 5167 on closing basis, a target of 5250 – 5300 can not be ruled out. But today being a 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.

Wishing you a great trading day.

With Regards,

Ranjit.

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