Month: October 2012

Let's revisit the chart posted here- https://www.vtrender.com/sites/default/files/MP_BN_2.png on Monday evening prior to the RBI.

 

Here is the updated one :

 

 

The chart above shows a clear move through the balance area of 8-22 OCT done yesterday visible in the form of single prints in the profile of yesterday.

 

This is a clear indication of short term rejection of that value area.

 

Meanwhile the profile developed yesterday in the lower part where we can see a bulge or a standard distribution.

 

This implies again that short term the market quickly found value at the lower levels and was accepted by the market as fair price post RBI.

 

This zone was roughly 11280 to 11170 yesterday.

 

Come to today's developing profile on the extreme right which shows the market staying below the mode or POC price highlighted in purple.

 

This shows that within that temporary balance established yesterday, the seller still retains the edge.

 

Currently at 11.00 am there has been no new selling below yesterday's lows and the market is still within the safety of yesterday''s late distribution.

 

The imbalance has ended and the balancing is already under way. Next wait for a break of the short term balance.

 

 

The morning after

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.

 

 

Eyes on Subbarao

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.

 

That post is here – https://www.vtrender.com/content/ahead-holiday-spx-preview

 

Even though the cash spx came close to a 30 point fall, the balance of positions made for expiry ensure that we have a flat open.

 

2 hours into the day so far, it is still the writers with existing positions calling the shots and no big moves have been seen so far.

 

Here's a chart of the Nifty and the bank Nifty overlaid with volumes and the 5 day and 20 day medians.

 

 

 

The yellow bar in the second pane and the yellow curve of the third represent the medians of a 5 day and 20 day structure respectively.

 

As can be seen the current volume is much less than the medians and not a sign of the longer time frame entering the market.

 

 

The bank Nifty chart above reflects the same.

 

Till you see an increase in volumes, do not take large bets on the markets.

Volume-less

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.

 

 

 

 

Ahead of the holiday- SPX preview

Let's look at some profile levels for commodities this week.

 

Gold Dec Future :

 

 

In last week's note posted here-( https://www.vtrender.com/content/mcx-weekly-update) I had mentioned that "31454 on a closing basis is a minimum condition now for aggressive upsides".

 

The index hit 31438 and rebounded to hit 31000 again today.

 

31454 remains the level to chase long positions with stop below 31300.It will be a good risk reward ratio for a potential move to 31900 immediately.

 

Historically Nov and Dec are extremely good periods for Gold and drivers of physical demand.

 

30840 is the level to watch on lower side.

 

Silver Dec future :

 

 

Silver put in a 1000 points from it's lows on Monday but for the second week in a row gave up all it's gains on Friday.

 

Charts now show 60300 to be the minimum condition to regain upside momentum.

 

Target above would be 61000 again.

 

Crude Oil Nov :

 

 

The crude chart above shows a balance developing at 4890 for the past two weeks.

 

4803 below and 4972 above are the levels to break for the sideways move to end.

 

Natural gas November :

 

 

Natural gas has support at 200 and 193.

 

212.4 is showing big volumes and can be a potential resistance for the future.

 

The range still shows up as 200- 217.

 

Copper Nov :

 

 

Copper has shown a big reversal from 444 and is currently resting at a big support at 430.

 

Expect price to move back to 435 where the seller will want to step in again.

MCX weekly

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.

 

 

 

MCX Weekly update