India futures color change to Sell

Nifty color changed to sell mode at today's open and the Bank Nifty also changed to daily sell mode.


The weekly color is still buy for Nifty and Bank Nifty but the reversal trendline is very close at 5700 and 11200 for Bank Nifty.

Nifty Two trendlines will define the move

Nifty index has been trading in a range for quite some time.

The index tested the trendline resistance from Nov and Dec highs but failed to cross it. The second test within a week again failed to move above it.
While on the downside the 200 SMA has been strong support for some time.

The daily charts also show another support zone at 5700 levels where the volume profile shows good buying action in the past.

The worrisome part is that the rise from 5700 levels has getting smaller and smaller and in April we had the third bounce which was half of last time and did not last for even 3 days.  This does paint a bearish picture.

Worth noting is the near stagnation at 200 SMA levels without taking out the peak of first test after the breakout from 200 SMA.

Any direction breakout from the above two trendlines will set the direction for future.

Attached is the chart.

Well its not all bearish for Nifty, there is a bullishness also in form of invested Head and Shoulder.  This particular pattern is in formation so have a watch on this.

The bullishness will come only on break above the neckline at 5950 levels.

The volumes which has been lower as per the textbook pattern. Need to watch the volumes on upside breakout here.

Trend stalling: Perfect range play

Nifty's upmove looks to be stalled at 5900 levels.
The two consecutive doji with now index below their lows shows that the trend is still of range.

With first test of 200 sma already done the index flattered in 4 days which is not a too bullish sign.

The index has also come inside the flag formation. This itself is not bearish bearish if the index takes support at 5800 and resumes upmove.

Worth noticing is the rsi play for nifty futures. The indicator has been between 70 and 30 levels for last 7 trading days.

India Sectoral Trend Weekly 21 Apr

Indian sectoral indices while remaining mostly in buy mode are showing signs of sideways move.

The indices average move last week was just 0.4% and prior week was -0.5% while the Nifty move 1.1% last week and -0.5% prior week.
The average move of last 2 weeks for broader market indices like BSE 500 is at 0.3%, Small cap at 0.6% and Nifty Mid cap was flat.

This shows that while that there was some traction in Nifty there is no clear sectoral leadership as of now which can take markets to new highs.

The weekly color is as follows:

The IT is still maintaining the Neutral color after the Infy's results shows broader strength is still present in the index.

The Auto and FMCG indices are clear winners and this could be a good monsoon macro trade.

India Futures color trend: Indices at color change levels

Nifty futures has been in complete range for most of April within the 6000 and 5700 levels.
But on weekly basis the index has maintained the support.

There is a bullish flag formation on the index which and the index is still trading above the breakout levels which is the bullish sign. See Post here.

The color as we start the week:

                         Weekly          Daily
Nifty                 Buy                Neutral   Buy color on index close above 5900 levels.
Bank Nifty        Buy                Buy         Lev Buy color on close above 12000 levels.

Dow Theory update: New high in Dow Industrials

The US index Dow Jones Industrial made a new 2011 high after the Transport index made a new high on 31st March.

This validates the bullish stand. The dip in mid March did triggered a sell signal when the 50 SMA was broken.
But the recent swing low above 50 SMA was a buy signal. The above average volumes on breakout is a good sign.

The Transport index in remains in bullish trend.

The daily macd is though in sell mode but it has started turning to bullish mode.

Nifty Point Figure update

Nifty is at crucial resistance of 5950 levels. The index though gave signs of breakout from Bullish flag formation with gap up and good volumes as posted y'day.

The index on Point and Figure charts is also an interesting study at this juncture. The index is showing bullishness with a failed bearish breakdown and is now at triple top resistance.

If it breaks out from this levels then the target comes at 6100 which is also the target of bullish flag breakout.
But the final call will be only on touch of 5950 for spot when the breakout gets confirmed. 

 

There are multiple lines of resistances between 5900 and 6000 levels so the move can be quite erratic and frustrating. The ideal case would be good volumes at these levels 

Nifty Is this a bullish flag formation?

Nifty hourly chart shows a bullish flag formation.

The index maintained bullishness by staying above the 50% retracement levels.
Volumes also picked up in last 2 hours today near the upper end of channel.

Any sustained breakout from the channel is a straight buy as the weekly color is still a Buy.

Nifty multi time frame Bollinger - Coinciding levels

The Nifty Multiple time frame Bollinger tells same story. The Weekly, Daily and Hourly all are near to mid band i.e. 20 SMA. What a coincidence.

Worth noting are the contracting or flat bands. This when there was a Bollinger Band breakout on daily charts.

I consider the  20 MA levels generally as the mean reversion where the market is near to neutral levels. And Markets do not like to stay such for long times.

Since the index has come to mid band (20 MA) from the upper band shows that undercurrents is still bullish though we may be in range for some time.

India Futures: See saw at 200 DMA of 5700

Nifty after crossing the 200 DMA is now again at those levels. It has till now stayed for 14 days above the moving average.

There is a great lot of sentiment attached to the 200 SMA. It can be defined as the line between bulls and bears and the same can be seen today as the index is making every effort to stay above 200 SMA levels.

When index is near such levels there can be sometimes multiple testing of such levels as the struggle unfolds between the bulls and bear.So expect more range and reversals at these levels.

Infosys results : A lesson again forgotten

Today Infosys was down 10% after announcing the results. Being an index heavy weight it contributed 50 points decline to Nifty which was down about 86 points.

Looking at the charts its all scary with big down candle and one of the biggest ever volumes in stock's history.

But one historical pattern stood well. Infosys reverses direction after the results. If the stock is rising then it declines and rises if it has been declining for last 1 month.
This particular pattern has been in play for last 3-4 quarters and was evident today also.

The stock for sure has strong supports at 2900 but this kind of strong candle can for sure has follow on effects for song time.
Also it has set a big resistance at 3300 levels which is the top of today's candle for quite long time.

Pls read Disclaimer.

Nifty Fibonacci chart

Let me post Nifty chart with Fibonacci retracement. The upmove started at 38.2% levels and in process has given a 5 day high closing value that also with above average volumes.

The move has come when everyone was so bearish in the morning. Hearing others view I wanted to change my own view to bearish but then I looked at the color system and saw that the Daily color is still in Buy mode though it reduced from Lev Buy but still in Buy and the weekly was also in buy mode.

This move coming at the trendline resistance from Nov and Dec highs gains importance now as the shorts has been squeezed now.

More details later on the implication of such move.

Trend Example: The 4 hour trend supports the market

In the previous post I mentioned that the 4 hour time frame is in bullish mode with 5750 as trend changer.

Well today the Nifty is still above the 5750 levels and has closed the down gap in first hour of trading itself.

Coming to color of Nifty

Daily --> Buy mode from Lev Buy and Weekly --> Buy mode with 5700 as crucial trendline system level.

Today's volume signature needs to analyzed closely as it can provide the future stock movers.

Trend indicator with multi time frame

For quite some time I was working on a trend indicator. The trend is derived from high and lows with stop loss based on ATR. This is quite common and I just combined these two techniques.

Using highs and lows price as trend is reduces lag and the stop loss gets adjusted as per the volatility. The ATR is the one of the best indicator for gauging the volatility.

Now the major change I did was to use multi time frame indicator with base time frame. For example with 1 hour trend I use the 4 hour vales and then look for confirmation. When confirmation then its one side otherwise trade less.

A simple screenshot. The Blue line is 4 Hour indicator while the green and red is of 1 hour.

Trading based on multiple time frames is a good technique and can be quite useful in choppy markets.
The best use is to detect what is larger trend is and then position the trades based on that. The smaller timeframe then gives the entry point.

In the above chart the the profit booking sign came at 5850 and has been in sell mode based on 1 Hour time frame. The 4 Hour time frame indicator is still bullish with stop at 5750.

The strategy for traders would be to go short 50% at 5850 and then book profits at 5750. That is for short time frame traders and for institutional traders would be to go short on break of 5750 levels.

The same kind of strategy can be applied for any indicator. More on this particular indicator later.

Related Post:  Nifty Trend Indicator with multi timeframe update

Nifty IV and HV: Present Analysis

Nifty's HV of 10 days went below 10 and then rebounded. The HV (10 days) has been a good indicator for reversal from the top.

As can be seen the index reversed from the Jan top when HV (10) made a low below 10.
The HV (10) made 52 week low in July but the index did not fell sharply instead stayed in range abd broke out later.

This time the HV (10) moves below 10 with index also at trendline resistance. Nifty has surely seen given up 3% from the top as of now.
Analysing the HV of 30 days for Nifty though tells a different picture.

The chart shows HV(30) and IV's in a uprising channel which we discussed earlier also. Nifty IV moving higher. The difference of HV (30) and IV is less than 1 indicating mean values for them as IV seems to be optimally priced in.

The Nifty IV from last 2 weeks are consistently below 20 levels which on break of 20 can lead to one more burst higher.

As of now the options and IV's indicate more of range trading. For any breakout trades based on HV and IV one could watch the HV (10) cross of 15 and IV's move above 22 can be bearish for markets.

Related Posts.

Nifty IV's what are they foretelling

Copper: At Breakout levels

Copper is at major trendline resistance after bouncing from below 50 DMA.

The setup is very similar to Gold a few days ago which broke out from the triangle formation.

Copper being regarded as barometer of economy will be worth watching. The effect of Europe rate rise will surely reflect on this commodity as it is highly sensitive to economy growth.

Action worth watching:

Nifty Why so much confusion?

The markets are best place to get confused and its even better when everyone also is in same boat.

Well going by the Color system lets see what is the picture.

                Weekly --> Buy mode    |       Daily --> Lev Buy
          Start Value -->   5760          |       Start --> 5550

     Trendline System          Stop  -->      5800       ( Its not the normal trendline.Details)

If some can guide me on how to put these values on a different page on this website then I am glad to put the color, start and stop system for daily basis.

Nifty the same old pattern playing again

In the earlier posts there was indication that we can see a Sep 2010 kind of steep rally.  Post 1 and Post 2.

Well that came true and Nifty came to striking distance of 6000 levels and has a 10% upmove and we captured about 7-8% of that move.

What from here? That's a good question and many are questioning the move and many more are searching for direction.

First lets see a chart comparing the Sep 2010 and the present move.

Both rallies had same starting point at 5350 and the same exhaustion  at 6000 levels.

Analyzing further the number of bullish days are 11 and 10. The consolidation days at 5950 were 8 for Sep rally. This time the rally had 3 days as of now.

The index though has one bearish setup of bearish divergence and that also at trendline resistance from last 2 tops at Oct and Dec. But seeing Hing Kong index breaking out from such a similar setup the bullish options are open. HSI chart:

The recent volume action in Midcap and small cap index with better A/D across broader market weighs higher for bullish options.

Nifty and SPX in X O view

The Emerging market ETF EEM has broken out of the consolidation. Read the post here.
The etf is relatively bullish than SPX which is a major turn in the assets allocation globally.

Lets see how Nifty is performing relatively.
First Nifty vs EEM in a relative chart:

The ratio has been in range for quite some time and has is at the resistance trendline.
The 50 SMA is getting flat which is a good sign.

This shows that India is still underperformer in emerging markets.

Now hows the Nifty vs SPX. Well that's showing bullishness.

There is first breakout from the double top of X's which is highlighted. Though it is still below the bearish trendline but the ratio has rising bottoms.

So overall Nifty is for sure signs of bullishness but the months of under performance still lingers and that itself can be good trigger for buying by funds.

Socioeconomics: The Cup that counts

India winning the ICC world cup is a moment that will be cherished and remembered for a long time to come.

This event will leave a big impact on the Indians and for sure can change the dynamics of sports in India and subcontinent. The Bhupathi Paes winning the finals and becoming top seeded in doubles was all lost in the news.



The hope that was materialized will provide new confidence to Indians and this for sure will reflect in the equity markets in times to come. As of now it would be difficult to quantify the impact.

The frenzy will continue to IPL and for sure the Media sector will all be flaring up.

The equity market did cheered with close above 5900 levels. Was it the Cup effect? It seems so.
The FII ownership at 18% (as of Dec 2010) is quite low and we Indians cheered to the news.

India Sectoral Trend Weekly 1 Apr

Recovery across the sector with just only 5 in Sell mode and 12 in Buy mode. Nifty has also come to Buy mode.

This reinforces the view that stating in earlier posts that market is gonna rally after the Nifty Bullish divergence and VIX rise in tandem with Nifty.

The rise in beta indices like Realty and Infra has been with good volumes shows appetite for Indian stocks at low levels.

The broader market index BSE 500 has also come to Buy mode while the small cap index is still in Sell mode.

The IT index though is still in Neutral mode which shows that rally in more in the beaten up sectors.

The weekly color:

The breadth has improved a lot and that was evident in last weeks State of Market post.

EEM: Emerging Markets new high of 2011

Emerging markets etf EEM has made a new high of 2011 and has broken out of band of 48 and 44 levels.

The breakout has come with bullish gaps and above average volumes which is a bullish sign. The range gives a target price of 52 levels.

Worth noting is the recent uptick in the relative performance with SPX index.

Chart:

Earlier post on EEM
Charting the Emerging Markets path

Nifty: Why 2011 is not 2008? Pattern repetition not happening

The 2011 first quarter looks quite similar to 2008 first quarter in some respects.

The market makes a top and then sharply falls. Then after being sideways for 4-6 weeks a rally comes. The rally soon falters and rest is history.

But the study shows that the pattern will not repeat itself. The initial analysis suggests that the signature of the move is different but the complete answer can be know in next 2 weeks i.e. by mid April.

First the charts showing the two periods.

The pattern though looks quite similar as mentioned but the key differences are:
1. The rise after the fall has been much stronger this time.
2. The volumes are better on rise for this rally.

Analyzing the 2008 pattern the index was above the 50 week SMA for 2 weeks and then in 3rd week the index closes below the 3 weeks low. The high of that week then becomes the resistance with ~20% fall coming on break of the crucial point of breakout from 50 week SMA.


The above are quite famous pattern for any down leg and is called A-B-C pattern. More details later.

Now coming to present, the Index has come out of the 50 SMA and will close above the 50 SMA for 2nd week in a row. If we consider this week as breakout point then the weeks low at 5660 is the crucial low to be maintained. For any fall to come then the next 2 weeks will be pointer.

So the 5650 (~ lows of 5660) will be the decider for the pattern.Keep watch on those levels.