Nifty Weekly Forecast From Sep 03, 2012 - Focus changes to US Election and Job Numbers! (Expected Trading Range: 5000 - 5400)
Aug 31, 2012 - Nifty closed today at 5258.50 which is about 128 points down from the last week close of 5386.70 on Aug 24, 2012. Nifty was trading between 5238.90 and 5399.15 that is the swing of about 160 points.
Note: US Market will be closed on Monday, Sep 03, 2012 for Labor Day.
Last Week Analysis - Nifty is down back to its 50 days EMA
Nifty is down in the last week and closed just above its 50 days EMA of 5257.57.
S&P was trading in narrow range of between 1397 and 1416 which is unusal and it shows that market is getting enough fear to cross this boundary. Since the next target would be a testing of all time high for S&P 500 which is also unsual with the current market weak fundamentals.
US will hold presidential elections on Nov 06, 2012
With respect to US long term treasury prices, TLT closed today at 127.72 which is a significant gain of 2.33% for this week compared to the last week close of 124.81. However TLT reached its all time high point of 132.21 on July 25, 2012. The upside is very much limited on US treasuries and downside is huge. In the short time, it will go up. So if you are trading on US treasuries in the short term, it is a good time to liquidate your long position on US treasuries.
Last Week Low: 5238.90
Last Week High: 5399.15
Not Safe to hold your long positions on Nifty
Nifty trading above its 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 at 17.47 which is a strong gain of 15% from the last week low of 15.18. The strong recivery 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 2X OTM put option - Long Strip.
2. Long Stocks and stop loss orders
3. Long Stocks with long put options
Note: OTM - means Outside the money.
Next Resistance Levels:
Psychological Resistence Level at: 5400.00
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: 5257.58 Set by 50 days EMA
Strong Support level at: 5148.45 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 Sep 02, 2012