Daily_Nifty_VP's View-03/08/12

LEADER POST for Friday (03/08/12)

1.         The support is in the zone 5225-22 while other levels to watch are 5212-04, 5154 and 5077. Resistances are at 5230-34, 5246, 5264 and 5364. Nifty is struggling to cross recent highs of about 5257 (19/07) and 5267 (13/07). A likely +WW gives about 5260 while two likely -WWs give about 5169 and 5124 (once below 5205). The other -ww with lower level is not mentioned. Two likely rising wedges, which were mentioned yesterday did break down and may give 5155 and 5078 unless 5295 and 5333 resp. are taken out.

         Nifty has moved in a very narrow range in the last two days and, as mentioned yesterday, nifty now seems set to break out above crucial level of about 5250 or break down below about 5150. Thursday's candle is once again a hanging man. Hence, it is important to see opening level on Friday to confirm the bearish signal of hanging man or otherwise. Market's future now seems to depend on outcome of ECB meeting on Thursday evening. If it is good, we may see a gap up opening on Friday and then the gap created on 12/07 (5306) could be filled up. If news from Europe is not good, nifty will react.

2.         PCR at 1.11 and VIX at 16.77. Pre-open high/low at 5227.75/5184.70 and close at 5195.60. It may indicate that, though it will open gap down, it may remain flat or mildly +ve.

3.         One more +ww gives 5238 but looks difficult considering today's mood in market.

4.         Freak opening shows opening at 5100 and high of 5220. There is no 9.30 strategy for NF due to freak opening but as per NS data, sell above 5178NS target 5156 SL 5208. As per another web based software target is 5160NF. Hence, those who have carried their shorts may hold same with 5225NF/5208NS, whichever comes later, as SL.

5.         A bearish flag may give 5160NS.

6.         First -ww target met. NF not remaining below PP level. Short sellers be aware. Itching to buy with 10-15 point SL, quite against morning call considering nifty movement as of now. Bought a little. Nifty is flat for 3 hours and just around PP level and hence the contra trade.

7.         If 5207NS is crossed then 5221 and 5230 may come. A likely (bullish) flag gives 5213NS. Carry (longs) only if NF seems to be closing above 5252 and NS above 5230. remember yesterday also it looks like closing above that but did not.

8.         Flag target met. (Nifty) not crossing 5221NS mentioned above yet but I feel it should. To be safe, keep SL at 5233NF and get out at 3.28pm if it doesn't go to 5248NF. Sold.

9.       In view of bad news from ECB, nifty opened gap down in line with global markets but, as commented after the pre-open, it recovered to close mildly +ve though below yesterday's close. In the process, today's candle is once again a hanging man. The target of first -ww was met while that due to break down of first rising wedge was missed by about 10 points. However, NF showed a freak opening value and hence 9.30 strategy had to be based on NS values but its target was missed by 9 points and then the SL was triggered due to a 55 point rally from the lows.

Target of a bearish flag identified in the morning was missed by 5 points. A reverse/contra "buy" trade, taken after nifty remained flat around pivot point level for 3 hours, proved to be successful yielding about 60 point gain. A bullish flag identified in the afternoon also gave its target. To summarise, a satisfactory day.

The intraday chart of nifty spot values with 5 min candles is shown below.