Nifty Weekly Forecast From July 09, 2012 - Go back to 200 days EMA! (Expected Trading Range: 5100 - 5320)
Jul 06, 2012 - Nifty closed today at 5316.95 which is about 38 points up from the last week close of 5278.90 on Jun 29, 2012. Nifty was trading between 5263.35 and 5333.65 that is the swing of 70 points.
Last Week Analysis - Job Data and Interest Rate Cut by Central Banks
China's central bank, European Central Bank and Bank of England cut thier benchmark interest rate gave some support to the stock market. However It is not enough to hold the rally and as expected market started moving south on Friday. We may have to face the increased voltaility in the coming months and until stock market finds their clear downward direction. The huge rallies happening in the coming months would be because of short squeeze and would be considered as bear market rally. Eventhough the long term view looks negative, occascional powerful rallies would shake the market with panic buying. So trading without hedging is a clear risk in the coming months.
Right now Nifty is critical point and it is time exit from the market and it is not safe to hold long positions on Nifty.
US will hold presidential elections on Nov 06, 2012
With respect to US long term treasury prices, TLT closed today at 127.06 which is little gain for this week compared to the last week close of 125.20. It is the perfect time to initate short position US treasuries. The upside is very much limited on US treasuries and downside is huge.
Last Week Low: 5263.25
Last Week High: 5333.65
Not Safe to hold your long positions on Nifty
Nifty trading around 200 days EMA, is considered as an exit point for your long position on equities. It may continue its bull run but it does not promise anything. 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 one and half 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
CBOE Volatility Index (VIX) closed today around 17.10 today which is near flat for the week. The collapse of VIX signals that market does not have any fear and is going to make a powerful upmove. Still fundamentally the US market is very week due to unemployment and slumping house prices along with US debt downgrade. Always fundamental wins in the long run. You can consider taking long positios on VIX also.
Only if you are day trader, you can have the following options:
1. Buy 1X OTM call option and 1X OTM put option - Long Strangle.
2. Long Stocks and stop loss orders
3. Long Stocks with long put options
Note: OTM - means Outside the money.
10 days EMA: 5248.86
21 days EMA: 5177.80
50 days EMA: 5125.89
200 days EMA: 5100.88
Next Resistance Levels:
Psychological Resistence Level at: 5300.00
Strong Resistence level at: 5360.70 - Set on Oct 28, 2011
Strong Resistence level at: 5633.95 - Set on Jul 22, 2011
Strong Resistence level at: 5884.70 - Set on Apr 28, 2011
Strong Resistence level at: 6134.50 - Set on Dec 31, 2010
Strong Resistence level at: 6274.30 - Set on Jan 04, 2008
Strong Resistence level at: 6312.45 - Set on Nov 05, 2010 (Double Top of Jan 04, 2008)
Next Support Levels:
Strong Support level at: 5100.88 Set by 200 days EMA
Psychological Support Level at: 5000.00
Strong support level at 4835.65 set on May 23, 2012
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 July 07, 2012