Nifty Analysis: Outlook and Trend for13th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 10900)

Blood Bath Continues: After taking a breather yesterday Nifty once again tanked down. It closed with a massive loss of almost 900 points at 9500 levels.

Only positive point today was that markets somehow managed to save itself form a trading freeze. There is no point mentioning any support or resistance levels as markets are behaving irrationally for the short term (though its not making sense now, in some time it should start making total sense).

In last couple of post we had mentioned that this correction is definitely not a normal correction and if its a rare correction (seen once in 2-3 years) then it should complete around the current lows ( 10200-300) but if turns out into something which is extremely rare ( seen only once in 10-15 years) then we can fall all the way to 9500. Markets touched 9500 today and took just 2 days. Speed at which we are falling is mindboggling indeed.

Lets now try to make a sense of whats going in market and what could happen in the times to come. We recently (last posts) talked about how weekly RSI has fallen to 30 levels and in case this correction turns into something major then it can further drop to around 20 which translates to around 9500 nifty levels. Now though Nifty has turned 9500, the weekly rsi is still at 23 so we can fall a bit more (9000-9500 broadly is the range). Nifty has turned way too oversold so one bounce back is definitely pending now which can take nifty back to above 10K levels. After the bounce-back fizzle out probably we can fall again towards todays low and even more towards 9k levels. 

Now lets take a step back and analyse Nifty on a larger time frame ( monthly charts). On Monthly charts, the RSI level is sitting at 37.6 today and last time such levels was seen on monthly charts was way back in 2008. In 2008 RSI had dropped to around 36 which again points to the fact that what we are seeing is an extremely rare event which happens only once in 10-15 years.  Before 2008 we had seen such levels in 1999 ( dot com bubble/nasdaq crash) & 1992 ( harshad mehta scam). Evne though such falls are painful they always present good opportunity to long term investors.

Though we are positional traders and only talk about swing trading, this is one time where we must say that this is a time to stay away from trading but this is not the time to be scared or to be afraid. Agreed what we are seeing is exceptional but exceptional times offers exceptional opportunities. This is the time one should start investing in good quality stocks from long term perspective (5-7 years). If you look at charts carefully you can find many stocks which are available at very good prices at the same time there are some quality stocks which have hardly corrected those are the stocks to invest. Please dont pick up garbage stocks which are available cheaply as those may not recover when markets start recovering instead invest in good quality (index based preferably) stocks. 

We all know what happened after 1993 , 2000 and 2008. Everytime market has shown these levels a new bull run has started afterwards. There are many who are saying that markets can fall to 6K levels,since in 2008 we had seen a 57% correction from top and in this fall, till now, we have just seen a correction of 25% so we can fall another 25% easily. While anything can happen in markets, we must understand that in 2008 markets were extremely leveraged so measuring correction with %age fall is not always the right methodology. Also note that monthly RSi didnt drop to <40 when Nifty fell to 4K, it touched 40 only when Nifty had made a bottom around 2.5K. Agreed after that markets spent nearly 6-7 months in 2008 at the same level before it started moving up. So same can repeat even now as well. Its possible that we spend rest of 2020 in 9-10K range ( just to frustrate investors) at the same time chances of a fast recovery is also there. Markets can go back to 12K levels even before you realise. Chances of both the scenarios playing out is 50-50 but like we said earlier, one thing is for sure, the levels we are seeing presents an extremely good opportunity to build a long term portfolio and invest in good quality stocks.


If you are not a leveraged trader, then you should not be see this as a threat but an opportunity.

Happy Trading ( or should I say investment).

Nifty Analysis: Outlook and Trend for12th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11095)

Halt in Carnage: After falling for more than 800 points in last 2 days, Nifty took a breather and prevented further damage. Though at one stage it was threatening to go down once again but it managed to move back in green to close flat near 10450.

Though Nifty failed to put up a sizeable rally today but many must be taking comfort from the fact that it didnt fall any further. Global markets were cautiously positive and did manage to cut some of the losses of last couple of days (but not nifty).

Corrections can broadly be divided under 3 Categories:
1. Which is common and seen frequently ( 1-3 times  a year).
2- Not so frequent and cause massive damage (once in 3-5 years)
3-and  major ones which totally destroys market but seen only once in 10-15 years ( like 2008/1999)

Once nifty broke below 11K levels, it turned into something more than a normal correction. Weekly RSI is sitting at 30 which is extremely low and like we mentioned in previous post, this level is seen only twice in last 12 years (2012 & 2016). In case market decides to end this correction as type 2 then there is a possibility that the worst is over ( though some more weakness cannot be ruled out and its possible that weekly RSI can remain stable or even go up while market go down some more but that could be a sign of strength and not weakness).

Continuous weakness from here could be indicative of something major and exceptional, in such a scenario we can fall all the way down to 9k-9500 levels ( that would push RSI to 20 like we saw in 2008).

For now we need to observe if market is trying to finish the correction around these levels and to do that it must fill the last gap down ( 4th consecutive gap) which is sitting at 10700-10850 in next few trading session. Trading below this gapzone could give more power and further encouragement to bears and could cause more weakness.  Closing above this gap could be the first sign that bulls are returning. In most market conditions 4th consecutive gap usually gets filled up in subsequent trading sessions ( but what we are witnessing nowadays is not normal hence the word of caution).

In Nutshell, the overall trend continues to be down and need to see if Nifty tries to fill (and make a close above) the gap area at 10700-10850 levels, if it does then some strength can be expected back in the market , failure to fill this gap and continuous trade below this zone would be negative and could push markets down again back to 10200.

Happy Trading!

Nifty Analysis: Outlook and Trend for11th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11095)

Bloodbath continues: Nifty opened (yet again) with a huge gapdow and kept on moving downwards. It hit a low of 10295 before moving back above 10400 levels.There was absolute carnage all around & it closed with a massive loss of 540 points.

Nifty is getting weaker day by day and though there were indicators that we could see some stability around 11K levels (and we had also said that as long as levels around 11K are held, there are chances that the fall is arrested around current levels). However another gapdown today made it clear that markets are not following any technical indicator as of now and this fall is turning into something which is not common or is of rare nature..

In last post we had shown nifty chart with RSI to point out that how RSI has come down to a level ( which has been generally seen only twice a year in last 5-6 years). Now today weekly RSI has gone below 30, which was last seen in 2018 (when nifty hit 9950) and before that in 2016 ( when nifty hit a bottom of 7k) and before that it was in 2012 ( when nifty was at 5K levels). Only time Weekly RSI for Nifty has fallen significantly below 30 was way back in 2008 ( 12 years back) that time RSI had dropped to 20 and Nifty had seen a low of 2K.

Now if this was a normal correction it should have stopped around 11K levels ( which it didnt) but even if its a rare correction or a rare fall ( which happens once in 2-3 years) then it likely to hold around the levels of 11200-11300 and not fall much beyond these levels.

Now lets consider the other scenario where this fall turns into 'extremely rare' (which happens once in 10-15 years like that of 2008), then weekly RSI can drop to 20 ( which means Nifty can go down as low as 9500).

Its upto market to decide what category of correction/fall it wants to achieve, depending on that either we fall another 1000 points towards 9500 ( going by current speed it can be achieved in 1-2 trading sessions) or complete it around todays low. There is no point predicting the next target cause when markets are in such mood generally no level is respected and no technicals are followed.

Having said this, would like to make one correction. In last post we had also mentioned about the possibility of exhaustion gap and had called the gap on friday , 4th gapdown in a row. looking at charts again it was only a 3rd gap down ( the second gap down around 10750 on 26th was filled intraday so doesn't qualify). Technically, todays gap was the fourth consecutive gape and generally the 4th consective gap is filled in subsequent trading sessions ( next 2-3) but the point is these days markets are not following 'general' rule. But still we need to observe and see if markets tries to fill this gap and move above 11800 levels in coming sesssions.If that happens then may be ( just may be) we can hope that bottom is done for time being.


Happy Trading!

Nifty Analysis: Outlook and Trend for 9th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11550)

Nifty Meltdown: Nifty went under a hammer today ( owing to Yes bank fiasco and weak global markets) and opened more than 400 points down. It managed to cut its losses  to less than 300 points to close around 11K levels.

Yesterday we had mentioned that 11100-11380 range is important from near term perspective. Now the logical target below 11100 was around 11800 .Which was near to the opening levels hence it becoming more & more difficult to trade ( thanks to ever rising volatility).

Now the overall trend of the remains down no doubts about it but at the same time its possible that we do try to make some sort of bottom around these levels. We have been saying so since last few days and today (even after a gigantic fall) our views have not changed. There are couple of reasons why we feel this area is important ( 200-300 point here and there is no big deal especially considering the volatility).The key reason is that this zone has always supported markets in last 5-6 years. Lets see the chart below

Nifty Weekly Chart

Whenever weekly RSI has fallen to 40 or below, market has always made an important bottom ( which is not breached in months to come) and again we are trading around same levels. Its only 1-2 times in a year that weekly RSI drops to around 40

 Now unless something material is changing which is impacting the long term picture then there are chances that we try to make a bottom here. Agreed we have come down to 11K which is disturbing but its too soon to conclude if everything is finished.

Also, usually in one down-move we see max 4 down-gaps (we have mentioned this fact in many previous updates as well)  and after 3 gaps its highly likely that the 4th gap is filled in next few trading sessions ( and becomes exhaustion gap). Todays gap down was indeed the 4th one and its a classic case of markets going deep in 'oversold' zone'. We need to see if market tries to fill this huge gap ( which stands in 11050-12250 zone). If it happens then again it will be a sign ( a strong one) of markets attempting to form a bottom ( permanent or temporary that will remain to be seen) around these levels.

For now we continue to see it as a normal correction which can finish around current levels. Further weakness from here could be indicative of change that are happening on long term charts. For now there are doubt but not enough evidence that things are changing from long term perspective.

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Nifty Analysis: Outlook and Trend for 6th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11700)

Inverted hammer : Nifty opened around 11300 and inspired by Dow overnight rally, it tried to move up but found resistance in 11380 zone and dropped to 11250 levels in the last hour. It closed flat at 11270.

Today nifty formed a "Inverted hammer" candle (inverted hammer candle has a long upper shadow but small body) which signifies that bulls were not able to sustain the rally and bears managed to push Nifty back towards opening prices. Its an interesting candle since yesterday we had a 'hanging man candle' on the charts which is the exact mirror of "inverted hammer". So what bulls did to bears yesterday was in a way dished out to bulls by bears today. Both these candle could signify trend change for near term hence going forward move aboe 11380 and a move below 11100 could well be a beginning of new trend ( for the short term).

Key thing to note is that now Nifty has started hitting new highs and is protecting the lows of previous day ( i.e, not closing below it). Today was 3rd such day. we had mentioned that it will be good for Nifty if we dont see a sharp V shaped recovery but instead see some consolidation and grinding. Nifty is indeed seen consolidating now around 11200 levels ( which can be positive for near term if it continue to protect some important lows).

Global markets (especially dow) continue to be all over the place with Dow rising 1000 points one day and falling 1000 points the next. Even today right now Dow future is down 500 points as we update this blog. As a trader if you are looking at dow and then deciding your trading strategy then I am afraid its not a best thing to do (One has to look at Nifty charts and then decide which way to trade). Now going forward as we mentioned  11380 and 11100 becomes important I know its a big range but VIX is sitting at 25 hence 250-300 point is not really a big deal in present scenario. Crossing above 11380 could give Nifty a shot at all imp gap zone which is sitting at 11450-11550 however on the downside if 11100 breaks then things could once again turn ugly.

In Nutshell, for now Nifty is trying to make some sort of base around these levels and if it manages to  make a move above 11380 levels then we can see some more bounce in near term but if we start seeing weakness below 11150-11100 zone then there is a strong possibility of Nifty going down and opening another downleg.

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Whatsapp message service will share buy/sell signals in real time basis purely based on algorithm designed by us. Please note there will not be any target area or market view and Buy signal or Sell signal will continue as long as its not cancelled out or reversed. 

Following message will be shared as soon as the signal is generated.

• Nifty enter buy/long position @cmp xxxx - Buy/Long position to be initiated
• Nifty SL @ xxxx  - SL provided for reference
  
• Nifty Buy Exit @ cmp xxxx - Existing long to be exited (but no short position to be entered)
• Nifty enter Sell/short position @ cmp xxxxx : Sell/short position to be initiated
• Nifty Sell Exit @ cmp xxxx : Existing short to be exited ( but no long positions to be entered)
• Nifty book part profits @ cmp xxxx : Book partial profits

Important points:

• All trading positions/signals will be generated with a time frame of 1-7 days (usually)
• All calls will be as per Nifty Spot prices.
• Its possible that sell signal is generated as soon as 'buy exit' is given similarly possible that buy signal is generated as soon as 'sell exit' is given (but its not mandatory)
• There will be no target and no market commentary will be provided, its a purely no noise entry/exit ( based on current market trend) trading game
• SL will be driven by volatility. Higher the volatility, higher the SL So one need to keep that in mind while trading. SL will be modified and revised Sl will be updated in timely manner
• Last 30 mins- confirmation message will be sent that position is carried for next day ( if no message that means position continues)
• There is no guarantee that every trade will be profitable and there could be a string of consecutive loss making trades. If you are not prepared to take loss then you shouldn't trade

 

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Traders should book 50% profit as soon as  Nifty move 100-200 points favourbly from our entry point and continue booking part profit on every rise. Part holding (around 25%) can be held till exit call is given. Exit call can be below entry point if volatility is high.

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Happy Trading!

Nifty Analysis: Outlook and Trend for 4th Mar 2020

Medium Term Trend: ↓Down (Changes to up above 11700)

Positive Day : Nifty finally had a day where it managed to protect the lows of previous day and closed almost near the high point. It closed at 11300 up 170 points.

Nifty had been continuously falling since last 9-10 days making new low everyday however trend reversed today and Nifty managed to regain some of the points it had lost recently. Yesterday we had clearly mentioned that Nifty has been falling since last 10 days and the zone around 11K-11100 is a good support zone for Nifty and its likely that market try to make some sort of base around these levels hence a bounce back is likely and expected from these levels. Today we got exactly that and Nifty put up a good rally of ~200 points. We had even suggested a buy near this levels and though we didnt get any opportunity today, there was a good opportunity available yesterday.

Going forward we need to see if Nifty manages to make a move up above 11400-11450 levels (yesterdays high). Trading above todays high and then ultimately filling the gapdown area of 11450-550 will be very positive for Nifty however its not going to be easy. For overall health of the market its important that nifty grind and consolidate for some time before attempting a move on the upside. If Nifty fails to take out 11400 then we are again likely to drop towards 11K and below that 10600 levels, all depends on how nifty trades in next few days. 

In Nutshell though the overall trend of Nifty remains down, there is a likely hood that the bounce extends further form here ( time wise and price wise). However if Nifty fails to cross above 11400 levels then there is a chance of nifty revisiting 11K levels once again and if 11k breaks then its heading straight towards 10600. From trading perspective positional shorts should not hold their position above 11400 and for those who entered longs entered around 11100 part/full profit booking is recommended at current levels. VIX is trading around 25 which is pretty high ( from Indias perspective).

Happy Trading!

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