NIFTY Resistance at 3700!?!

NIFTY showing resistance around 3700. Chaiking Money Flow (CMF) also suggest distribution(sell) as the histrograph is in postive but in negative divergence.

ADX give away intersting indicator. ADX come down to around 34 suggesting slowing down of the speed. Further today -DI line has crossed over +DI suggesting bears in charge. Perhaps it is time to short if tomorrow remain the bears day!

Reliance Industry (RIL) Technicals : Showing the direction?!?

Reliance Industry (RIL) is considered as torch bearer for Indian Stock Market, and it is, without much doubt. After the recent crash RIL recovered on 9th April onwards, earlier than the market, and NIFTY followed it. On 17th April RIL showed high of 2714, but closed in red at 2640.

Thereafter, RIL remained strongly between 2600-2700, even during the continuous fall in NIFTY for six consecutive trading session from 2nd May to 9th May, and eventually RIL slipped below 2600 on 9th May.

Thereafter it tried to recover with the market, but gradually it has been slipping beyond 2500 and on 30th May it went to the low of 2390 and closed at 2403, showing weakness in the trend.

Last two falls were with greater volume, almost double, than average trading days. Increase in volume suggests that people inclined towards the current trend. So in a down day more volume shows that there was large sell of than average and it is also negative indicator. People who have been holding the script since some time sees no upside in near future thus start selling off.

Such attitude is clearly reflected in Chaikin Money Flow (CMF) indicator . On 30th May RIL generated largest negative bar on CMF in its recent history, which shows people are distributing (selling) the script.

Accumlation/distribution line is very clear. A/D line is sliding since 21st May and eventually has gone in negative territory , after more than six weeks it has gone in negative territory, lastly it was in negative on during third week of March’08.

Interstingly , MACD lines have been sliding down since 9th May, earlier than all other indicators, and with negative histogram. MACD 20 line is now in negative territory.

NIFTY Technicals : Bear’s Delight

As everyday passes NIFTY shows more and more bearish indicators.

A. First bearish reversal , Three Black Crows, was generated during 1st week of May .

B. Again Three Black Crows Second indicator appeared of during on 22-23-26 May

C. Today (29-05-2008) candle showed bearish engulfing pattern, and the mood is confirmed by the amount of (E) volume which is higher than average. (However, the reason for such high volume can be assigned to the settlement day)

D. Today 20 Day EMA (Red line) has crossed under 50 day EMA (Blue line), which indicates downturn.

F. MACD has been in negative with negative divergence.

G. Accumulation/Distribution indicator clearly reveals continuous intense distribution.

NIFTY : Climax reached

Today NIFTY reached to the climax after the ongoing tussle between bulls and bears and ended the suspense of last four weeks. This time also the chart has generated Three Black Crows indicator as previously did between 1-3 May. But this time the force is greater bears appears in complete command of the situation. All other indicators are clear as crystal going negative .

Midterm chart also appear bearish as CMF (Chaikin Money Flow) shows distribution all the way and RSI (Relative Strength Index) has failed to reach anywhere near 70, let alone above it.

NIFTY or roller coster?

Roller coaster is what NIFTY has been in last one month and I have been enjoying the ride. I am not trader at heart and do not participate in the daily/short term activities. But being a Gemini the volatile and chaotic situations gives me thrills and excitement

The NIFTY chart is pleasant to eye, at least for short term. On 2nd May it touched to psychological height of 5299 and closed in red. Infact, the bearish trend was indicated a day ago on April 30, but there was no other indicators so that red closing was not significant. On side note, Candle Chart showed red bar on 2nd May , however OHLC showed green , perhaps therefore candle chart showed more clearly about the trend reversal.

That after 2nd May , for five consecutive days were bears delight. However, it noteworthy that during these six red days the fall was gradual and not sharp as expected. So, either bears were weaker than expected or bulls did not give up easily and fought back without giving much ground.

12th May was D-day, and bulls were pushed to the level 4914, it was bottle neck situation , but bulls reiterated strongly and recovered some of the ground lost on previous day. On next day, bears put more force but positively the lower level was 4944, higher than previous 4914. On 14th the bulls started from 4958, where it was left on the previous closing and marched and closed at 5012, just above the previous days opening of 5009, as if challenging the bears.What happened thereafter in two days on 15th and 16th showed clear strength of bulls.

Ofcourse, now as the level of 5200 is approaching, bears are ready to sho(r)t back. Now level of 5300 is crucial and required to be conquered, but bears will not give up easily. All indicators are turning into positive, except the Chaikin Money Flow (CMF) which is disheartening. CMF is still in distribution mode, of course histogram is decreasing with positive divergent.

NIFTY : End of tug of war?

After the crash which started from 10-01-2008, market showed recovery from Mid-March and went up. In 1st week of April’08 showed uptrend on the chart but with some doubts.

But there after it started rallying down within first three trading session of May’08 chart showed bearish reversal with Three Black Crows. As the reliability of this indicator considered high, I was expecting some solid sell off with loss of 100-150 in one day. However, the marked slided lazily , mimicking the uptrend and confusing the experts and analysists .

Now, all indicators confirm the bearish mood (well, indicators were saying loudly, but I kept fingers crossed . EMA 20 (red line) is downword, volume are at daily average (ideally it should be decreased during phase). MACD line crossover , with negative divergent (and in negative too ) in histogram. William R% indicated nose dive from overbought to oversold.

One can expect a technical re-bounce , but more down side will be there. Check this example.

Bharat Bijlee (BBL) : Consolidating

Bharat Bijlee (BBL) has been consolidating for last 3 weeks between narrow range of 2100 to 2200. Last three sessions were showing some  uptrend with slight rise in price.  It is making very interesting chart pattern for break out. However, it is not necessary that consolidation is always cause breakout towards upside. The direction of the break out is decided by the the quality of future news/result or circumstances.

BBL also shows two spikes in the chart where volume have jumped much greater than average daily trading with  , which perhaps can be assigned to inside trading, as the results date is approaching near.  MACD and RSI indicators also show clear and consistent upward trend, one can expect a good break up in the price with  good jump in the price.

Tata Tele (TTML) waiting to jump

On 15-04-2008 TTML started making strides from 28-00 and went upto 37-00 (about 33%) in 6 trading sessions with good amount of volume. Thereafter it has been resting ,because of profit booking, between 37 to 35.60 nicely. Perhaps , it will make another stride from here to somewhere above 40.

Whether Indian stock market is showing bullish signs?

Everyone is toying with the question. The market seems to have arrived at cross road and most experts are hopelessly divided about the direction where the market will head, and I am not expert at any technical analysis but I too have my opinion

I recall reading somewhere (do not recall the source, please share if some knows) that historically is is seen that once market corrects it takes 91 days to begin recovery phase.

Around 10-04-2008 Nifty showed first fall and continued, with 2-3 bounce back. Intermediate bounce backs lasted for 2-3 trading days but the trend was downwards. Around 09-04-2008 recovery started which continued for 7 session, then two insignificant days of profit booking and then the trend continued upward. Perhaps, this can be sign of beginning of recovery phase and the market has swing up after showing the bottom. The market was not fettered by any negative news during while making continuous uptrend which is good sign.

If one compares the chart of previous fall of 11-05-2006, which also showed recovery around 09-08-2006 (approximate 91 days) and then the trend was continued.

RSI (Relative Strength Index) of both the charts are strikingly similar going towards 70 , and should remain around that level (in the recovery of August 2006, RSI constantly remained around 70 till first week of December’06).

MACD (Moving Average Convergence/Divergence (MACD) in both the charts are moving above 0 (turning positive) with the positive histogram. After August-2006 correction MACD line remained consistently near 65 till 08-12-06.

Only CMF (Chaikin Money Flow) indicator shows some worrying sign. During May-August’06 recovery, CMF showed consistent accumulation during previous two months (July-Aug’06) of the recovery phase. However presently CMF is not conclusive at all and indicator is withered showing confusion among the market players.

Technical analysis , however, does not consider any external factors and merely base the analysis on the chart patterns. Thus the chart pattern shows bullish sign, but one has to wait for confirmation of bull market.

However, in US according Dow theory, the market has confirmed bullish signal as both the index (Dow Jones and Transportation) have arrived at confirming the bull signals around 18-04-2008 (Read following articles for Dow bullish signal).

http://www.internetnews.com/bus-news/article.php/3741971
http://www.fool.com/investing/general/2008/04/21/thanks-a-lot-dow-theory.aspx
http://www.forbes.com/personalfinance/2008/05/01/allocation-diversification-…

Reliance Power Bonus : Wow ?!?

Reliance Power has remained in controversies at every stage, even before it was conceived and even after the public issue. Certainly enough, the public issue was not a reason to the recent damp in the market, but unfortunately Reliance Power became scapegoat for the crash.

Many guesses were made about the listing price , and one of guess was that if Anil Ambani could keep the price of Reliance Power above 900-00 , he would be richest person. Thus before the IPO premium was nearly 400-00+ but soon after the market crash all the premium and high hopes for listing above 900-00 were vanished.

After the listing Reliance Power has been available below the issue price of 450-00 and the investors are cursing the management for it, as if the company could really tackle the pricing in the market.

Now, the management has come up with a novel and generous idea of issuing bonus shares, only to public, and not to the promoters, to cover the short term losses of the investors .

This generous gesture of the company has made me say , wow!! Reliance Power has been really amazing company in every respect. The company collects 44 times more premium on its face value, which has no business, no assets at the moment going to public, earliest project will commence after nealry 4 years, still IPO is oversubscribed 70 times or more, finds its place in Future and Option segament from the first day , traded below issue price, and then bonus issue from nowhere.

To me, the move of issuing bonus share is perhaps simply to encourage price hikes. More particularly, as the management is issuing bonus to only to public which is wise move, other wise a bonus issue to all the shareholders, increase share capital and dilute earnings.

So, one can expect good price move in Reliance Power in short term. Which will give opprtunity to exit from the scrip.

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