Technical view by Nooresh

Budget … the reason…Cash is also a trading position

Sensex falls by 800-900 points - --

My speculation was tilting on positive side :) oops... But was not convinced enough ... So what does one do...
Simple - When confused -- Do Nothing !!! --- When in doubt stay out...
So last 1 week or so its been more relaxed with not much of updates and all chat etc answers are wait... Nothing forces us to trade every move but the lowest risk and confident move. Maybe would prefer to watch a little more :)
Now lets get back to technicals as i am not an economist to talk on the budget.
Sensex Technical View :
Sensex has broken below the short term trendline of 14550 which was a stoploss level for all short term speculative longs. Now the index might be in a possible Head and Shoulders pattern but would still wait for a few sessions below the neckline of 14200 to confirm.
We may also see a re-test of the neckline and a possible move about it also before confirming the pattern as the current drop is a knee jerk reaction so next few sessions would clear up the noise on charts.
13900-14200 is a band which if broken will lead to a more deeper correction to 13500/12700 or lower . Would pull a detailed view after 2-3 sessions till then strategy is to wait and watch.
Cash is also a trading position !!!
This is an important line which many traders love to forget and end up over trading/lose discipline. All our readers/clients had a great time from 9.5k to 15.5k with super trades and took a rightful position to increase cash at 15.5k.
Got in a lil at 14k-14.2k did get a decent bounce and back to square one. If still holding on stops would be 13.9k for fresh entries.
Sometimes doing Nothing is also good. We would be back in full force after a few sessions be it on either side up or down.
Stocks to watchout for :
Tata Steel 380-415 , DLF 305 -345 and many such ranges were discussed before. Now after a sharp move of 10-15% from our support levels many stocks are back to similar levels or just below it. So all we had was a full circle !! and back to nothing. Many HNS , trendline breakouts seen. So after 2-3 sessions of clarity or confirmatory selling days would give good trading opportunities on either side.
Discussed below are stocks with their supports and recent lows. The lows are equivalent to 14k Sensex and 4100 Nifty levels.
Major stocks and sustaining below these levels for 2-3 sessions would confirm trend change or selling pressure. Holding them could see a small bounce to the extent of 5-8 %. Decide ur trade accordingly.Rounded levels for guidance.
Bank Of India 14k/recent lows -- 309 cmp 327 todays low 315
Bank of Baroda 400 407 398
BHEL 2008 2100 2062
DLF 309 303 305
HDFC Bank 1350 1427 1400
HDFC 2215 2350 2307
ICICI Bank 675 678 665
Larsen and Toubro 1408 1467 1448
Reliance 1900 1893 1865
Reliance Infra 1098 1131 1108
So of the major stocks a large section of stocks are very close to 14k levels which gives a possibility of a small bounce even if they have to crack deeper. Stoplosses are difficult to place on short side unless there is more selling pressure built up and momentum fall.
Trading a bounce should be with a 3-4% stop below 14k lows. Shorts should be below 5% of lows or on rise of 8-10%. Just a rough technical indication rest traders can trust their instincts :)
Personal view is to wait on sidelines and yet again start researching on mid cap stocks. Look for pyramiding strategy but slow and little early this time !!

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Article by Nooresh Merani

Nooresh has written 2532 articles.

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