Nifty Weekly Forecast From Dec 26, 2011 - Start accumulating Long Positions (Expected Trading Range: 4500 - 4910)
Dec 23, 2011 - Nifty closed today at 4714.00 which is about 62 points up (1.34%) from the last week close of 4651.60 on Dec 16, 2011. Nifty was trading between 4531.15 and 4763.45 which is about the swing of 232 points.
As I mentioned in the last week forecast - trading range of 4500 - 4873 became very accurate as the last week low of 4531.15
Last Week Analysis - Buying For Long Term
Nifty was up by 1.34% in the last week. Selling pressure and volatilty is related with Euro zone news. Some investors strongly belive that Nifty short term correction is coming to end. As technical levels are clearing forming the step down pattern of 200 days EMA and then 50 days EMA and then 21 days EMA. It is not a good idea to go short on Nifty as the rebound can happen any time. Go long on Indian T-Bills and INR.
With respect to US long term treasury prices, TLT closed today at 118.17 which a loss of 3.4% for the week compared to last week close of 122.34. US treasury is a bit late to create short position and very early to create long position. US treasuries (Ticker: TLT) would bottom near 100 - 103 and TLT upside would be maximum of 125-130.
Note: US Interest Rate Bottom is currently happening, it may test the bottom in the coming weeks.
Last Week Low: 4,531.15
Last Week High: 4,763.45
Nifty technical levels clearly suggest that liquidate your short positions now. Because Nifty has got strong support level of 4600 and 4000. It is very much unlikely Nifty will go down below 4000 in the short run. There are so many investors waiting to take long poistions on Nifty.
Note: Nifty is risky to short now, even though the next downside target for Nifty below 4500 and 4000. If you have any short positions on Nifty, it is good time to liquidate and keep them as cash. If you want to take long positions on Nifty, You can wait for couple of weeks to see the market trend. If Nifty started moving below 4500, then gradually accumulate your long positions with a ladder of orders.
If you are conservative investors, hold currency or indian T-Bills. You can take long positions on Nifty between 4000 and 4500. 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 - Bet on volatility
1. Buy 1X OTM put option and 1X OTM call option.
2. Long Stocks and stop loss orders.
3. Long Stocks with long put options
Note: OTM - means Outside the money.
10 days EMA: 4723.30
21 days EMA: 4795.19
50 days EMA: 4910.74
200 days EMA: 5265.00
Next Resistance Levels:
Strong Resistence level at: 5265.00 - 200 days EMA
Strong Resistence level at: 4910.74 - 50 days EMA
Strong Resistence level at: 4795.19 - 21 days EMA
Next Support Levels:
Strong support level at 4718.00 set on Feb 05, 2010
Strong support level at 4639.10 set on Nov 24, 2011
Minor Support level at 4531.15 set on Dec 20, 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 24, 2011