Sensex Technical View :
Yet again a new low made but not much below the recent one. Then again a recovery from lows seems to be the standar pattern. Technically one can confirm a bottom only after it stays in place for quite some sessions and then a follow up consolidation . For Sensex the major levels remain 8800-9700 on the downside. The recent top at 11870 could be the decider for extreme short term and sustaining above 3400 on Nifty and 11200 for some sessions will give some power to a bounce. So next 3-5 sessions could see some clarity come in.
In previous times its seen whenever RSI has given a positive divergence to previous lows we do see a bounce which is yet again the case. But the bounce has fizzled after 10 % or more bounce. So ideally going by this study we should see a bounce to 11200 levels and on crossing 11900 it could get highly positive for 12900-12300. ( Disclosure : Have advised buying 3500 call option at 68 )
Stocks to watchout for :
Bharti Tele moves below 700 gives a trading down tick till 660s but not a close below 700 so still not a breakdown and can again remain in the range.( Disclosure : short call at 690 covered half at 660 then stop of 685 hit )
BHEL hasnt closed so wait and watch ( stop of 10-15 rs hit ) . LIC housing bounces back from the lower zone and above 275 could be positive.
NALCO cracks and gives a good downmove and can continue till 240 or lower also .( Disclosure : short at 310 tgt of 285 half booked )
Some of the stocks have bounced back sharply after breaking recent lows and given a good closing which is a good sign and nice candle patterns in certain cases.
So if one is a short term trader then a quick trade can be done if the stocks cross recent bounce back highs ( 11900 Sensex ) for 10 -15 % + bounces and a stop of 3-4 % on crossover.
Some of the possible trades which can be looked at with similar tech logic.
Aban lloyd .... above 1300 can touch 1450-1550
Balrampur Chini .... above 60 can touch 66-69
HDIL ... above 140 can do 155-165
IDFC ... above 65 can touch 72-75 ...
Renuka .. above 73 can touch 80-85
There could be many such trades possible.... Keep a watch and its a trading bounce play so keep stops and book at 10 % moves.
Market Observations and Thoughts :
As we have been seeing 61 % is the level for Sensex and Nifty which are nothing but averages for the 30 and 50 stocks. So i was just having a brief look on some heavies to how much they have corrected. The main weightage ones are Reliance,SBI,LnT, ICICI,Infosys .
Reliance 1300 , SBI 1050,Lnt 850, ICICI ( below 61 % ) , Infosys 1100. All of these have made lows close to 61 % or are very near to it. At the same time many constituents are below 61 % and may go to till 73-75 % retracement too. So if we consider it to be a long term bull trend then lot many stocks have come back to attractive levels and much of the price correction is done although there could be scope for more but staggered buying over a period of time would be preferred as time to recover phase is still left.
" Many investments become LONG TERM coz PRICES have dropped, BUT SUPERLATIVE Gaining Long term investments are created by buying when SENTIMENTS have DROPPED "
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