Technical view by Nooresh

Triangle Breakdown ??? Again wait for confirmatory moves.

Sensex Technical View :
Sensex has made a low below 9162 and closed around 9110 which is not a good indication for short term. Also the volumes were very high on the Satyam initiated fall day.

On the near term it seems a breakdown below the triangle line but as before we would be waiting for a confirmatory signal in the next few sessions then to jump the gun rightaway but yes the bias has turned towards negative in the short term.

Another thing to note is in the last 3 days Sensex has lost almost 1000-1300 points which is a big move in short term so there is a decent possibility of a small dead bounce before a clear cut direction emerges. The triangle size is of 2k points odd so the ideal targets on confirmation could be 8300/7700/7200 with a stop placed on the upper triangle line.

The strategy should be to avoid longs and continue to hold the cash because if the triangle pattern is broken then the correction could give gr8 opportunities to invest finally and the time period of Feb-March would soon be over ( the uncertain and time wise correction period lasts till March ) .

Stocks to watchout for :

Its possibly breaking down the channel and some close below 1300-1320 could lead to a target of 1150. Only a move beyond 1450 + would negate the bearish possibility

Hindustan Unilever
This is the only stock which is holding up in current markets but would face resistance around 270 sustaining which it could go well up to 295 where one could look to short.

Larsen n Toubro
Larsen has had made 3 lows in the range of 660-680 in last 3 months. Oct 680 , dec 670 , Jan 660. So technically sustaining below 650 would be a very weak signal. Any upmove would face resistance at 750-770.

Reliance Inds

The stock continues the downward bias below 1150 and the last support is around 1020 zone below which it could be disastrous for the stock. Need to watch that level closely. Technically it has broken the recent trendline and may try to test it around 1160-1180.

Recent imp lows 620 ( close on Oct ) , 615 in nov , 635 and 627 in Dec. So technically the range of 615-630 remains a good support and with cmp at 652 could try to hold the zone and might give a bounce to 700 .

RCAP and RCOM have give breakdowns and short term charts and best would be to avoid them.

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Article by Nooresh Merani

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