Technical view by Nooresh

Sensex 18800 and Nifty 5650 – Trend Deciders for Short Term.

Sensex Technical View:

It has been one of the most confusing and volatile markets we have seen in the last few years. The index has corrected a good 10% from the top and is testing the previous breakout levels.

Although we have still not received a confirmation of a breakdown or reversal from re-test levels but its generally a very confusing period in re-test.

The long term trend for Sensex changes below 17800 and all the optimistic scenarios go out of the picture once thats taken of. Similarly weekly closing below 18800 cuts down the short term momentum and makes it a sideways market.

We need to wait and watch before concluding major long term decisions. For now we have advised clients to re-deploy cash at 19000-19400 levels and quite a bit of it was removed on sharp pullback of 5-10% in our stocks entered . Below 18800 is our stoploss.

Certain Technical Points : 
- > 200 dema is placed at 18800 and 5640.

- > Re-Test of Channel is placed at 18800-19000 / 5650-5700.

- > Recent Bottom on 26 Nov was at 18950 and 5690

- > Previous breakout took placed at 18500 and 5550.

- > Long Term Parallel channel is closer to 18000 levels

- > Previous Major Bottom at 17800.

-> Midcap and Broader market has not corrected heavily in this drop.


In short there are lot of supports but when there is a breakdown there is no logic in looking for supports but wait for reversal signs. Right now our bet is that 18800 should hold and ideally 18950 should not be broken but if does one needs to be ready to get on to high cash quickly.This doesnt imply that the long term projections are dented but one needs to survive corrections to participate in the next rally. In adversity lies the real opportunity.


Investors can look to start being selective and make a list of stocks to add in coming days. So research and research.

Stocks to watchout for :
Real Estate stocks like DLF and HDIL seem can give a sharp bounce. Also there are certain signs of bottoming out and after a couple of months these stocks can be in focus.

Short Term Pick – Buy REI Agro above 28.5 for a target of 32.

Dr Reddys can be a short below 1600.

HDFC and HDFC Bank look good provided they can hold 650 and 2100.



Ahmedabad January 22-23

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Article by Nooresh Merani

Nooresh has written 2532 articles.

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{ 10 comments… add one }
  • shivaji January 14, 2011, 23:01

    i believe 5640 is 200dema and 18800 on sensex and it shd hold today we are closed at 5654 and 18860… flag break out is being tested and i have never seen sensex going back into the flag patterns once it breaks out.. whats your take on …

    • nooresh January 16, 2011, 22:33

      Hi Shivaji,

      Thats the very reason that Breakout Re-testing can be very difficult. If we see on 10-20 year charts the long term flag pattern for Sensex came to around 8400 but it made 7700 and 8000 levels. So its a tricky situation in re-test. Same goes with Hang Seng Recently.

      So we will be able to confirm the patterns over next 2 weeks.

  • mitesh January 15, 2011, 00:14

    hi, 2day close at 5654. so it has chance of forming 3rd wave (ediot wave ). soo…
    wil we see 5250 as complete of 5th wave? what you think nooresh ???

    • nooresh January 16, 2011, 22:31

      Hi Mitesh,

      As i have said in my previous comment the longer term Wave B is to be first confirmed to be over. Shorterm wave counts could differ. So lets wait for another week or two before we take a cal. Till then time to keep high cash and not much open trades.

  • shivaji January 15, 2011, 23:43

    November low of 18955 has been taken out in faster time and is it the sign of trend change for long term????? if yes then let us know the impact .. if not then how do you read this faster time retracement of last leg from 18955 to 20665… as per elliot wave are we going to enter into wave C which is downwards and start retracing in bigger way… if so then we might enter into corrective phase for 12 months atleast as per time analysis… please let us know …:) :)

    • nooresh January 16, 2011, 22:30

      Hi Shivaji,

      Yes the major concern in the current drop is the time for the fall has been very less giving a faster retracement on downside. That is one of the major reasons for me looking towards keeping high cash. As per Elliot Wave we may need to wait and watch before we can confirm that the B is over or not as in the last few months we have seen many failure patterns on Elliot subwaves.

      I would keep a watch on 17800/18500 break over next few weeks/months to confirm a long term trend change. In near term if we dont reverse in next 1-2 weeks it could be a serious concern.

  • Nirmal Bhattacharya January 16, 2011, 12:38

    Hi Nooresh,

    As per my policy, I made an exit on Lokesh Machines, Ballarpur Inds, Tinplate as it stopped out. I would like to enter in M Term/ L Term on the following Stock…Please suggest the level.
    1. Lokesh Machine – MT
    2. IDFC – LT
    3. Ballarpur Inds – MT
    4. Elecon Engg – MT
    5. IDBI Bank – LT
    6. Autoline – MT
    7. GEI Inds – MT
    8. TCS – LT
    9. L & T – LT
    10. Subex – MT


    Nirmal B

    • nooresh January 16, 2011, 22:25

      Hi Nirmal,

      I would suggest you to wait out for next two weeks before more clarity comes in.

  • shivaji January 16, 2011, 23:05

    Hi Nooresh,
    one more thing to observe is the midcap and small caps index they are still above november low and not yet made lower low …. does it give you any information ??? dont you think that this fall could be false below 5690 to fool the nervous bulls and want to create a panic so that bulls can exit and make them to buy later at higher levels….

    • nooresh January 17, 2011, 10:27

      Hi Shivaji,

      One cannot bet on a false move. So let us wait for a few weeks before taking a plunge. One thing is now sure this market may not runaway


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