Daily_Nifty_VP's View-08/08/12

LEADER POST for Wednesday (08/08/12)

1.         The supports are at 5325, 5273/68, 5237 and 5223. Resistances are at 5351, 5368, 5380 and 5406. Two likely -WWs give about 5282 (once below 5327) and 5251 (once below 5304). The other -ww with much lower level is not mentioned.

Nifty finally broke out of crucial zone of 5286-95 to cross above the previous high of 5348 but could not sustain. So to begin with, Tuesday's high of about 5350 must be crossed and sustained to ensure further rise. Otherwise, in the event of a mere retesting and retracement from Tuesday's high will invite selling. Market players seem to be upbeat about new FM's recent announcements considering that FIIs have been buying incessantly. Hence, a bear trap by retracement from Tuesday's high can not be ruled out. At the same time, generally nothing happens when Parliament session is on (though a number of important bills are due for approval) and big players may take a breather. Best is to trade with good SLs or even hedge.

2.         PCR at 1.15 and VIX at 16.21. Both have gone up. Pre-open high/low at 5380.25/5258.50 and close at 5345.25. The 10tf candle is a long legged doji and may indicate uncertainty and volatility.

3.         AS PER 9.30 STRATEGY, BUY BELOW 5371 TARGET 5395/5415 SL 5341. EXPECT VOLATILITY IN VIEW OF CONFUSION AMONG TRADERS/PLAYERS ABOUT FUTURE OF NIFTY. NOTE NS AND NF HAVE CROSSED YESTERDAY'S RESPECTIVE HIGHS.

4.         A likely flag gives 5371NF unless killed below 5354.

5.         Flag target considered reached being only 1.20 below 5371.

6.         Crossing and remaining above 5359 NS now is a must for any further upmove.

7.         First target almost reached. Book at least partially and raise SL to 5364 or cost whichever is higher. Remember change time 2.22pm. Also, 5380NS may be max.

8.         Made a high of 5376.45.

9.         Once again nifty opened up with a small gap, went up to as much as 5376 before reacting sharply. Both NS and NF closed above yesterday's close but slightly -ve w.r.t. to today's open. NS candle formed an inverted hammer while NF candle was a doji star.

The uncertainty and volatility was as indicated by the pre-open candle. The target of 9.30 strategy was almost met. A bullish flag identified during the day also gave its target. NF closed above 5353, an important number as per one number theory and hence it doesn't help being extremely bearish form here.

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