Markets for 21 aug 09

POSITIVE OVERNIGHT DOW COUPLED WITH STRONG ASIAN MARKETS INDUCED A GAP UP BULLISH OPENING FOR INDIAN MARKETS. NIFTY OPENED GAP UP HIGH ABOVE 4460 LEVELS AND REMAINED IN THE BAND OF 4485 TO 4455 FOR MOST OF THE TIME . A SPURT TOWARDS LATER HALF TO REACH TUESDAYS HIGHS OF 4494 INVITED HEAVY PROFIT BOOKING AND FINALLY NIFTY FELL TO 4444 LEVELS TO CLOSE AROUND THE LOWEST TRADING POINT OF THE DAY THAT EASILY SIGNIFY ANOTHER RISE ON FRIDAY AT LEAST AT THE START. AFTER THE GAP UP OPEN THERE WERE HARDLY ANY TRADING OPPORTUNITY IN STOCKS TOO. FUTURES & OPTIONS REMAINED SUBDUED AFTER THE GAP UP OPEN AND ONLY CARRIED OVER POSITIONS COULD BOOK ANY PROFIT.

SINCE LAST 4 TRADING DAYS NIFTY HAS SUCCESSFULLY MANAGED TO CLOSE ABOVE THE CRITICAL 50 DMA WHICH IS A BULLISH SIGN THAT WILL BE CONFIRMED ON A DECISIVE CLOSE ABOVE THE 20 DMA AROUND 4545 LEVELS. THE RISE ON THURSDAY HAS GENERATED THE HOPES OF FURTHER REVIVAL IN THE MARKETS AS THE INDICATORS IN THE DAILY EOD CHARTS HAVE JUST STARTED TO LOOK UP AND ANOTHER UP MOVE ON FRIDAY CAN GENERATE THE HOPE OF A BULLISH COMING WEEK.

LAST WEEK ENDING 14TH AUGUST, NIFTY HAD A WEEKLY CLOSING AROUND 4580 LEVELS. SO, THERE IS EVERY POSSIBILITY OF A BOUNCE ON FRIDAY TO AT LEAST MOVE NEARER TO PREVIOUS WEEKS CLOSING LEVELS ALTHOUGH 4515 MAY BE A STRONG CLOSING RESISTANCE. IN THE INTRADAY CHART ABOVE, NIFTY FACES IMMEDIATE RESISTANCE AROUND 4494 LEVELS AND A DECISIVE CROSS OVER OF THIS CRITICAL LEVEL CAN CATAPULT IT TOWARDS 4525 TO 4535 LEVELS WHERE IT MEETS ANOTHER RESISTANCE LINE. IT HAS A STRONG SUPPORT AROUND 4444 TO 4440 LEVELS, A DECISIVE BREACH OF WHICH CAN SURELY WEAKEN NIFTY FOR ANOTHER INTRADAY PLUNGE. INTRADAY INDICATOR SLOW STOCHASTIC ALTHOUGH DROOPING DOWNWARDS BELOW THE 80% ZONE DUE TO THE LAST HOUR FALL IN NIFTY, HOWEVER WITH ANOTHER SHARP UP MOVE AT THE START IT MAY TAKE UPWARD TURN TO GIVE BULLISH INDICATION.

THE CHART PATTERN FORMED DURING LAST 5 TRADING DAYS HAS CERTAIN DISTINCT FEATURES. FIRSTLY IT HAS BEEN ABLE TO SUCCESSFULLY PROTECT THE CRITICAL SUPPORT AROUND 4350 LEVELS THUS MAKING IT A STRONG BOTTOM FOR REMAINING DAYS OF AUGUST. SECONDLY BETWEEN 18TH AND 20 AUGUST IT HAS MADE A SOME SORT OF W FORMATION WITH BREAK OUT LINE AROUND 4494 TO 4500 LEVELS. SO, A DECISIVE BREAK OUT WITH VOLUME ABOVE THE RESISTANCE LINE AT 4500 CAN EASILY TAKE NIFTY TOWARDS 4600+ LEVELS EVEN SURPASSING THE RESISTANCE LINE AT 4530. MOST LIKELY RELIANCE INDUSTRIES WHICH HAS BEEN TAKEN DOWN IN A WELL PLANNED & COORDINATED MANNER TO THREATEN ITS CRITICAL SUPPORT AT 1870, MAY BOUNCE UP WITH VIGOR & RENEWED VITALITY TO PROVIDE THAT REQUIRED IMPETUS TO NIFTY TO BREAK OUT OF 4500 LEVELS IF NOT THIS WEEK, CERTAINLY IT MAY COME TOWARDS LATER DAYS OF AUGUST MONTH MAY BE AFTER THE EXPIRY, THE DAYS TILL EXPIRY BEING RANGE BOUND TO HARASS THE OPTION BUYERS AND REWARD THE OPTION WRITERS.

FOR FRIDAYS TRADING, A DECISIVE DOWN SIDE BREACH OF 4440 MAY PLEASE THE BEARS TO SEE THE OPENING GAP OF THURSDAY GETTING FILLED TILL 4400 LEVELS AND A DECISIVE UPSIDE BREACH OF 4500 MAY PLEASE THE BULLS WHO CAN HOPE TO SEE 4535 TO 4550 LEVELS. A RANGE BOUND MOVE BETWEEN 444O TO 4500 MAY PLEASE THE OPTION WRITERS WHO DESPERATELY NEED MORE RANGE BOUND & FLAT MARKET TILL EXPIRY TO POCKET THE WRITTEN OPTION PREMIUM.