MARKET OUT LOOK 18-8-08

OM NAMO BHAGAVATHE SREE RAMAKRISHNAYA
Good morning. Nifty ended on 14th August 2008 at 4430.70, there by loosing 98.80 points over previous week close.In my last week write up I mentioned that “This indicates that there is some more steam left in Nifty, with probable upside. The likely target may be 4698.48. When Nifty reaches this area, it is advisable to adopt wait and watch approach.”.

During the week under review the Nifty posted a high of 4649.89 short of 48.59 points than the envisaged target. Let us try to examine the likely behavior of Nifty for the next week with the help of few technical aspects. Let us examine the spot nifty daily chart.

The spot nifty went down on the last two trading days and met the short term moving average. For the first time during since 21/7/08 the short term moving average started drooping. The positive aspect is, it is still above the long term moving average and the long term moving average is trending up. Now the important point is, will this level of short term moving average act as support and hold?. If this level is breached next probable support area is likely to be the long term moving average which is placed as of now at 4274.11.

The inertia is rising and about to cross the zero line. Chande momentum oscillator just neared the over bought area of 50 and started trending down.
As we would see the bolinger bands started shrinking. This indicates a trend reversal. The Nifty was moving up. And one more interesting aspect is spot nifty started it’s downward journey from the upper band. Move started at one band will terminate at other band. The move now being started at the upper band is most likely to reach the middle band. For the immediate term it will reach the middle band.

Hence it may be presumed that Nifty after reaching 4394 levels which is the middle band value, most likely to bounce back see some upside, before resuming the downward journey.

Regards
Subrahmanyam

OM NAMO BHAGAVATHE SREE RAMAKRISHNAYA
Good morning. Starting this week I wish to post my views on Nifty on weekly basis and selected stocks on daily basis, of course based on Technical Analysis. If you find any mistakes in the opinions expressed here, the sole responsibility is my ignorance, and if you find them to be interesting the total credit goes to the masters who invented these techniques and made them public for the use of investing fraternity.

The Nifty posted gains for the week ended 8th August 2008 closing at 4529.50 gaining 134.15 points over previous week close. The last two trading days of the week witnessed a downward swing posting lower highs and lower lows. Having considered the situation let us try to analyze what is in store.

The important long term moving average of Nifty is at 29 days, the simple moving average, is placed at 4198.23, and the important short term moving average of 15 days is placed at 4378.19. The short term moving average is above the long term moving average; both the moving averages are trending up. The price is turning down and heading towards the moving averages. On the last two trading days of the week, the volumes are also reduced.

The Chande Momentum Oscilator which is an excellent over bought over sold indicator is yet to enter over bought area, and inertia which depicts long term trend is moving up and yet to cross zero line. This indicates that there is some more steam left in Nifty, with probable upside. The likely target may be 4698.48. When Nifty reaches this area, it is advisable to adopt wait and watch approach.