— > Gap support at 11635-11430 was not broken yesterday with a low of 11621 /11625 in the last two sessions. Similarly now we have highs of 12256/12272 clearly defining the bands.
— > Since the bottom at 8k the momentum trendline has been supporting all dips. We have noticed around 4-5 instances where it has kissed the line and bounced back sharply.
— > The bounce back has generally crossed the recent highs and made a move of the range size. 10715-11300/500 saw a move to 12272 which is almost 600-800 points range.
— > Current range is around 11625-12272 which if broken points to another 600 points move in case 12300 is taken of. This level also coincides with 12900 which is the 38.2% fibo level. So upside could be 12900 + – 150 points.
— > A move below 11600 and the trendline would have severe negative implications as then we may retrace back almost 50% of the entire upmove from 8k-12.3k.
— > If we see the charts closely every such move has been followed by a gap-up above the previous highs. So in case that happens the gap levels would become the stoploss.
— > We have seen almost 4-5 instances of support from the momentum line any more attempts to stick to the line may turn to be fatal and disastrous also so be extremely cautious if indices go below the line.
In simple terms 11600 and 12300 are support and resistance zones which if crossed convincingly would decide the next 500-800 point move but the technical setup also suggests it would yet again be difficult to trade it. The trend is still up so the probabilities of 12900 seem to be higher ( maybe market knows the result).
Option traders can look for some strategies like strangle,straddles.
Stocks to watchout for :
Many stocks are showing false breakouts which are not holding up through the day. This could be due to indecision among market participants or a distribution pattern. So its very confusing technically as no fresh signals on the index.
Time to trade only for high risk traders who are very quick.
GMR Infra and GNFC possible election impact stocks look set for some moves.
Possible breakout stocks though i am indecisive with the choppy index conditions.
Mundra Port , MTNL , Central Bank which can move up sharply
The stock tried to give a breakout today but could not stay above 252-255 levels. The stock is nearing towards lower support zones of 222-225 which if broken may lead to a sharp fall. Very volatile stock so take your own call.
Market Observations and Thoughts :
The TV channels seem to have lots of Exit Poll scenarios and jazzy graphics to put their view though all seem to have totally divergent conclusions.So rather then taking a guess on Election it would be better to watch IPL it seems!!
I am no where close to political analyst so would avoid any interpretations about the government formation. Technically 11600 and 12300 is what i am looking at. Although taking a call on which side is the next 500-800 point move is very difficult. The uptrend is intact but lot many divergences on indicator side ( they keep giving it always ).
The selling and buying ticks continue to be quick in the day with equally good volumes indicates that the indecision remains high. So the next move should be by a gap move for which the higher probability is on the up side as the trend is still not broken.
Although even if one is to take a call whether NDA , Congress is making the next government there is no way to gauge the impact on market and a gamut of stocks ( ADAG relies on SP ,PSUs like disinvestment and so on ) . SO its like a guess where in u make or u break.
Are you taking a bet on it ???? Better find a bookie then take huge market positions 🙂 unless u have a good risk apetitie
A small column posted in the latest edition of – Money Today magazine.
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