Nifty Weekly Forecast From Dec 05, 2011 - Liquidate Long positions and Accumulate Short Positions (Expected Trading Range: 4600 - 5100)
Dec 02, 2011 - Nifty Closed today at 5050.15 which is about 340 points down (7.22%) from the last week close of 4,710.05 on Nov 25, 2011. Nifty was trading in between 4754.80 and 5062.55 which is about the swing of 308 points.
As I mentioned in the last week forecast - Time to enjoy bear market rally happened so fast. It is the time to liquidate your long positions and accumulate short poistions.
Last Week Analysis - Bear Market Rally (7.22%)
Nifty rallied for 7.22% for the last week. Nifty enjoyed a very nice bear market rally. It is one of the biggest weekly gain for Nifty in 2011. Nifty went briefly above its 50 days EMA of 5049.05.
Go long on Indian T-Bills and INR. With respect to US long term treasury prices, TLT closed today at 118.67 with a small loss of 1.76% for the week compared to last week close of 120.79. US treasury is too early to buy and too late to short. US treasuries (Ticker: TLT) would bottom near 100 - 103 and TLT is a good short position if it moves above 125.
Note: US Interest Rate Bottom retesting will happen again in the coming months.
Last Week Low: 4754.80
Last Week High: 5062.55
Nifty technical levels clearly suggest that liquidate your long positions now. Because Nifty has got strong resistance level of 5050 and 5100. US treasuries are flat eventhough market rallied up significantly more than 7% suggests the market correction is imminent.
Note: Nifty is very risky to go long, eventhough it may have a false attempt to retest its 200 days EMA of 5334. Take short positions gradually with a ladder of orders. You can initiate short positions now. But if it goes up further, you should be in position to short it again. The next downside target for Nifty below 4500 and 4000. We may not reach this point directly. There might be many bear market rally and wild swings on the way.
If you are conservative investors, then exit from your long positions now and hold currency or indian T-Bills. The key support level for Nifty is 4747, 4639 and 4000. The key resistance level is 5400.0 and 5050, which is very much unlikely we will reach and go beyond this level. Nifty might experience a double dip in Indian Market along with world market correction in the long term (about 2 years). With double dip, Nifty is expected to touch 2600 levels set on Oct 2008 and Mar 2009. Wait for some more time to get more clues on "double dip on Nifty"
For Speculators and Intraday Players - Short Stocks with Stop Loss Orders and Long Options Strip
1. Buy 2X OTM put option and 1X OTM call option.
2. Short Stocks and stop loss orders.
3. Short Stocks with long call options
Note: OTM - means Outside the money.
10 days EMA: 4899.11
21 days EMA: 4947.90
50 days EMA: 5021.92
200 days EMA: 5334.53
Next Resistance Levels:
Strong Resistence level at: 5334.53 - 200 days EMA
Strong Resistence level at: 5021.92 - 50 days EMA
Next Support Levels:
Strong support level at 4940.95 set on Sep 13, 2011
Strong support level at 4806.75 set on May 25, 2010
Strong support level at 4747.80 set on Aug 26, 2011
Strong support level at 4718.00 set on Feb 05, 2010
Minor support level at 4639.10 set on Nov 24, 2011
Strong support level at 4003.90 set on Jul 10, 2009
Strong support level at 2620.10 set on Mar 06, 2009 Will reach here with double dip
Strong support level at 2584.00 set on Oct 24, 2008 Will reach here with double dip
Posted on Dec 03, 2011