Nifty Weekly Forecast From May 14, 2012 - Market short term bottom near 4718? (Expected Trading Range: 4718 - 5000)

May 13, 2012 - Nifty closed today at 4928.90 which is about 158 points down (3.11%) from the last week close of 5085.85 on May 04, 2012. Nifty was trading between 4906.15 and 5114.70 that is the swing of 209 points.

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Last Week Analysis - Euro Zone Created Panic in the Market

S&P downgraded indian market outlook from stable to negative that pushed the market down for 3rd consequtive week and closed in red. The continuous news coming out from Euro Zone created a huge panic in the market.

I have been saying in the past couple of weeks that oil prices have been gone up so fast in the last 6 months. As we are getting closer to election, oil keeps moving down every week.

US will hold presidential elections on Nov 06, 2012.

With respect to US long term treasury prices, TLT closed today at 119.50 which is $ 1.36 up for the week compared to last week close of 118.14. US treasury is bit late to good buy now. US treasuries (Ticker: TLT) TLT upside is huge now that is towards 125-130. You can short US treasuries again when it reaches above 125 onwards.

Last Week Low: 4906.15
Last Week High: 5114.70

It is time to liquidate all of your long positions on Nifty and create new short position. We do not have any history of running into bull market crossing over 200 days EMA in one shot. It has to go through a couple of retesting. Still market has to go through lots of bad news from Euro Zone, downgrades, unemployment, etc.

If you are conservative investors, hold currency or indian T-Bills rather than creating short position on Nifty. 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 - Options Strip

1. Buy 2X OTM put option and 1X OTM call option - Options Strip.

2. Short Stocks and stop loss orders.

3. Short Stocks with long call options

Note: OTM - means Outside the money.

Technical Indicators

10 days EMA: 5061.57
21 days EMA: 5138.23
50 days EMA: 5195.67
200 days EMA: 5191.48

Next Resistance Levels:

Resistence level at 5000.00 set by psychological level

Strong Resistence level at: 5191.58 Set by 200 days EMA

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 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