Month: October 2012

The earnings season is underway and the markets have reacted by putting in a 100 point range.

Well not totally unexpected as overall the results have been good with "beats" exceeding "misses". On the back of FII sponsored liquidity and government reforms, the markets have held on to their gains awaiting the next trigger.

That trigger could be the RBI event tomorrow.

Though more people are asking for status quo to be maintained, markets by large have priced in a 25 basis point cut in the CRR.

The CRR cut whilst bolstering liquidity will help banks earn more from the money it has and propel rate sensitives like realty and autos to move forward.

However the important thing about tomorrow will be to see if the rate cutting cycle paused in January comes back to life again.

This should have far reaching effects on most stocks, the bank Nifty in particular.

Here's how it shapes up ahead of tomorrow :

The chart above is the BankNifty composite of the spot.

It shows the market achieving balance at 10416 twice and a move above 10664 not sustaining.

Roughly 10416 and 10664 remain the outer boundaries for the market to think about it's next move.

Today's upmove got stalled at 10580 which is the upper POC of the profile on the right.

The biggest level to watch tomorrow will be 10416 where a breakdown can send the market to 11250/ 11270 in a hurry.

Bias remains positive above this point and will cement the positive momentum if 10580 gets taken out along with 10664.

That's it- just 3 levels and you should be on track for whatever the RBI does tomorrow.

Crude Oil November :

Crude Oil is balancing as we observed earlier in the week.

That balancing act should give a low risk high probability trade.

The idea would be to take a buy above 4684 for 4729 and 4760 as targets. Stops can be kept below 4635.

Gold :

Gold chart shows two tops in the 31450 region and 2 bottoms at 31860 in the past two weeks.

Longs can be taken above 31140 with stops below 30980 for 31350 and 31440.

Silver :

Silver is exhibiting signs of a bottom formation at 58800 and should resume the upmove above 60200 next week.

The immediate target above 60200 would be 60950 and 61650.

Natural gas :

Natural gas stayed below the 212 high volume zone pointed last week.

The high volume point has now shifted below to 205.5.

Lower support is at 201 breach of which should bring 197.4 and 193.5.

This chart from the close of the session yesterday suggested lower supports at 5705 and 5695.

5705 was also the close of the series yesterday.

11598 is the level to watch in the BNF.

In our last weekly update – https://www.vtrender.com/content/mcx-weekly, we had mentioned about the balance developing in crude and how a break would set up a low risk high probability trade.

The conservative trader was watching the levels given in the post above "4803 below and 4972 above are the levels to break for the sideways move to end."

Have a look at this chart –

Crude broke through the 4803 zone and made a quick 150 point move before testing old support at 4636 today/.

Profile chart above again shows a mini balance developing signaling that shorts are booking out.

There is no evidence yet of new longs entering for a swing.

Aggressive longs can only be considered  with stops  below 4636 for a target of 4707 and 4745.

The profile structure is damaged and the seller will come back in at higher levels.

I had mentioned in my previous post made on Tuesday on how the option writers have a complete grip on market action and global cues not withstanding.

As we close out today's session and get set for the expiry move on Thursday there is a holiday in between when global markets would be running and important events scheduled in Europe especially Germany.

As a rule the option dominated markets in India do not react to overseas news in expiry week especially expiry day.

But it helps to have an understanding of where the US markets would be as they complete 2 sessions ahead of our open on Thursday.

The chart above is a composite SPX chart showing two auctions on the left and two auctions on the right and the sideways consolidation in between these 2 .

6th Sept was the day when Draghi announced his plans for Europe sending the equity , currency and commodity markets into stratosphere.

That reaction on the spx was seen in a wave of single prints which were new buyers coming into the market.

The two high volume points were 1430 and 1433 on the 6th and the 7th of September when that buying happened.

The big reversal on Friday (trend day) and the sideways auction of Monday on the spx had the same two high volume points.

The point is that the markets are poised to do a 30 point  move in the next two days targeting 1463 or 1403. At the moment the seller is strong in the latest auction on Friday which was an open drive down.

It's an excellent trade setup as the seller from Friday meets the old buyers from the 6th.

Let's see how it shows up on Thursday morning.

Here's a chart which shows a typical Monday trade for the past six months.

All the bars are only on one day- Monday which is the first day of the week.

From mid June except for a 3 week losing streak in July, most Mondays have been positive days to trade.

Infact from mid June we have 6 losing sessions against 14 positive ones.

Here is a profile check of the Nifty for the current month.

The chart above is a TPO chart and shows the various places the NF traded during the month.

The green shaded region is the value area and the purple horizontal bars denote high volume points.

5772 and 5664 has been the accepted value for the month and a breakout of this value area on a daily closing basis marks change.

We also see high volumes entering at 5755 and the region marks the minimum condition for the swing trader of today to build long positions in the market.

The BankNifty shows an even flatter performance than the Nifty and 11466 has been a constant high volume zone through the month.

The developing value area is 11540 to 11330 and a breakout of this zone will mark change.

Here are the profiles for Nifty and BankNifty which show the sideways trend short term.

yesterday was the 4th session within the range established on the 11th of OCT.

The grey volume bars on the extreme right show the balance developing.

Yesterday the profile moved within the lower region of the move done on tuesday with a single print at 5695.

This level is critical to the day today. Any move above takes it to the upper distribution and to 5720/ 30.

No clear indications of a break of range yet, but profile building up steam for a move.

Here are the reference levels for the day based on yesterday's auction

We were not too surprised with the market giving up all most of it' gains on Friday as the delta from the day before showed longs exiting near the close on thursday.

Have a look :

In today's trade 5664 is the big support.

BankNifty :

The week gone by worked differently for metals and energy.

Here is an update :

CrudeOil October Future :

Crude Oil went sideways for three days as it consolidated the move from 4603 from end of last week.

Profile chart above shows the balance developing and the end of the imbalance from 4603.

This balance is developing around a previous high volume region at 4880. Hence the probability of a bigger move from here is good.

On the charts, 4942 and 4836 represent short term resistance and supports respectively.

A breach of 4942 can create upsides to 5051 and 5138. On the other hand a break below 4836 will bring 4733 and 4675.

The composite HVN at 4880 will be the stop loss as and when the break comes

Natural gas October :

Natural gas broke out from 174 to hit 192 in 2 good moves during the week.

Charts show some longs booking higher, but the uptrend is still intact and valid.

The region of 185.50 to 186.7 is now short term support as NG seeks levels of 197 and 207 higher.

179.5 is the high volume zone in the chart above and big support for the instrument going forward.

Copper November :

Copper got rejected at the high volume zone of 439.5 on Thursday ending the mini uptrend which began on 08/10.

Friday's profile showed value developing lower.

Chances of a revisit to 431 are ON in copper. reversal of momentum is only above 443 now.

Gold Dec :

Gold moved in a 300 point band all of last week.

Charts show loss of upside momentum even though sellers have not been able to push it lower below 31050.

Profile picture above is sideways with No trend.

31454 on a closing basis is a minimum condition now for aggressive upsides.

Fundamentally as Gold approaches the big festival season, the demand for physical gold is bound to drive prices higher during the month.

31584 and 31774 are short term targets.

Silver December :

Silver moved down on Thursday and Friday erasing all the gains it made on Mon , Tues and Wednesday.

The net result was a flat performance for the week

63240 is an HVN and the point from where price got rejected this week. The instrument will be weak as it trades below this HVN.

Support lower is now at 60587.

At Vtrender about a month back we launched Vtrender Quant Pairs ( VQP) – our new offering designed to take advantage of the opportunities in the market whist minimizing risk.

The idea was to reduce risk and simultaneously seek profitable opportunities which would work in rising/ falling or flat markets.