Nifty Weekly Forecast From Sep 24, 2012 - Nifty to Follow US Market for direction! (Expected Trading Range: 5180 - 5780)
Sep 21, 2012 - Nifty closed today at 5691.15 which is about 114 points up from the last week close of 5577.65 on Sep 14, 2012. Nifty was trading between 5534.90 and 5720.00 that is the swing of about 185 points.
Last Week Analysis - China Manufacturing Index Signals Recession, but technicals won
Weak China Manufacturing Data tried to push the indices down but technicals won again as usual. Fundamental can only win in the long run!. Market was going up on track beliving that S&P will touch its all time high of 1565.15 again! Currently it is just 90 points down for S&P 500. A strong 2 days rally can help to push the market to set a new all time high before US presidential election.
Fed mentioned that it is going purchase 40 billion per month towards mortgage-backed securities. The following is the link to read the complete Fed Statement release on Sep 13, 2012. This also helped housing recovery by creating huge inflation.
No matter what, Fed has already created the credit bubble by keeping the interest rate low for over 3 years. And this credit bubble will burst; this is going to be a very surprise and another disaster to the economy. The american workforce dropped to the lowest level in 31 years. Market is getting ready to crash! But the only question is whether it will happen immediately before or immediately after the US presidential election.
US will hold presidential elections on Nov 06, 2012
With respect to US long term treasury prices, TLT closed today at 121.55 which is a signifcant recovery compared to the last week close of 118.30. However TLT reached its all time high point of 132.21 on July 25, 2012. Now TLT is trading at 3 months low. In the short time, TLT may make a siginificant upward move. So if you are trading on US treasuries in the short term, it is a good time to take long position on US treasuries.
Last Week Low: 5534.90
Last Week High: 5720.00
Not Safe to hold your long positions on Nifty
Nifty trading well 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 13.98 which near flat from the last week low of 14.51. The strong slump in VIX in the recent past signals that market does not have any fear but VIX 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:
Strong Resistence level at: 6312.45 on Nov 05, 2010
Psychological Resistence Level at: 5600.00
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: 5340.42 Set by 50 days EMA
Strong Support level at: 5180.00 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 23, 2012