INDECISION

                                        Dear Investors

 On Tuesday markets moved in wild swing with great volumes. Nifty opened with upward gap but could not maintain it due to profit booking. There was a time when ‘Bears’ had a ‘kill’, this took Nifty to important support level 5408. Volatility was at peak leading to choppy movements, during afternoon ‘Bulls’ gathered strength to push ‘Bears’ to the wall. Rising  Nifty with great volumes compelled traders to ‘Cover shorts’ which took Nifty nearer to the first resistance level 5512(5506). Day trader at the end oh the day booked profits leading to a close at lower levels, 5481. Wild swings   and volatility are indicative of ‘Indecisive’ state of mind of ‘Bulls and Bears’ both

What Next

On Tuesday Nifty tested important resistance level at 5512 to close below that. In next few sessions if Nifty sustains above 5512 with volumes it will try to move towards 5557 which will be a stop gap for  a move towards 200DMA at 5630.  Traders must exercise care in creating large positions and maintain strict stop loss because ‘all this may not happen in near future’ Markets may move ‘Sideways’ till Expiry (on 24^th Feb) and Budget in a range 5420/5515. Any break below 5410 will take Nifty to lower support at 5380/5330.As long as these supports are maintained ‘Up move ‘ will continue with some ‘Breathing Gaps’ in between

Levels to watch

 Upward: 5512/5557

 Downward: 5410/5380/5330

Significance

 Traders can carry long positions as long as Nifty is above 5410 to be booked at 5557

 Traders should cover all ‘short positions’ if Nifty moves above 5512 or can create fresh shorts if    Nifty breaks 5410

The trend still continues to be Indecisive as the Nifty is still below its short term moving averages. The 20 DMA which is now placed at 5507 which will act as first major resistance and stability above that point could only trigger for further positive development. But,

 when and how much?  Is any body’s guess, till that time play safe keep booking profits. Consolidation is the key before any decisive move.

Technical View

PIVOT For Nifty: 5465

R1(First resistance)is @ 5522

R2(Second resistance) is @5563

R3(Third resistance) is @ 5620

Significance

Nifty stopped just short of R1(5522),Nifty has to clear this to move forward

So also R2 (5563) .The range between Pivot (5465) and R2 (5563) is important.

Nifty must consolidate in that range to move to R3 (5620) which is nearer to 200

DMA (5630).

All long positions should have stop loss at 5463 as a first level followed by 5410

Short positions should be covered once R1(5522) is taken off

S1 (First support) is @5424

S2 (Second support) is @ 5367

S3 (Third support) is @ 5326

Significance

When markets are in an upward move supports are very important.

First signal of threat to the on going up move will be at S1(5424)

Which is nearer to the psychological support at 5400 from where the up

 Move has started. So S1 will be first stop loss for all long positions in near

Future

 The gap between S1 and S2 is very small signifying the importance of it, i.e

Both can be taken off in one sweep once the down move starts. So traders should

 be cautious below 5367.

Break of 5326 will start new ‘Down ‘move

Technically Watch for

5522 FOR UP MOVE

5367 FOR DOWN MOVE SIGNALS

VXI (Volatility Index)

Pivot is at: 22.34

R123.93 / R2 25.01 /R3 26.60

SIGNIFICANCE

Resistances for VXI are more important than supports because as seen above

All the values are above 24 which very important signal of increasing volatility.

Rising volatility is suggestive of ‘Nervousness’ in the market. Once it moves above

30 then ‘Panic’ starts.

DMAs(Day Moving Average)

5DMA 5345

20DMA 5504

40DMA5639

50DMA5765

200DMA 5630

Significance

Nifty is moving way above 5DMA, which is a definite sign of short term bullishness.

Nifty after testing (intra day) 20DMA (5504) closed below 5500, indicating stiff

 Resistance. Any further up move will take away 20DMA, but real test will be

40DMA (5639)200DMA (5630), these will act as strong resistance for next trading

 Sessions

Once 200DMA is crossed new Up Trend’ will emerge till that time this rally

 Will be a pull back rally

Close below 5DMA will resume ‘DOWN TREND’ AGAIN

 Comments

 Now the near term events are

a)       Expiry on 24^th Feb.11

b)       Budget

Both the events are important from volatility point of view. Budget is not relevant

to the market or to traders because over the last few years, Budgets have ceased

 to become a pivotal point. But the key thing is that you have two days of very strong

rallies which did not happen earlier on when we had pullback rallies. This rally

seems to be durable than rallies before,

Market has to consolidate in a range 5410/5515 to move upward, if volatility

       Persists then the up move will be threatened

       Market will be under the 'bull control' as log as it is above 5330,which should act as

      stop loss for  bulls.Use every fall to Buy with a target of 5557/5600 in mind

      Bears should wait till Nifty breaks 5400 to create fresh shorts

Impressions

This looks like to be a short term ‘Pull back’ rally. Unless there is a period of

‘Consolidation’ Nifty/ Market will not move to significant upper levels. Events

Will be the trend decider. To me it looks that ‘Bottom’ is still not formed, wait

Till the end of on going rally, if it breaks below 5330 during next few weeks

Then Nifty may drag down to 5060 and in the course of time will test 5000

Levels to form ‘Higher Bottom’

‘So all is not well’ time will tell what lies ahead, so do not throw your

All the cards on table

Stock specific

One can trade long In

M&M

RIL

HINDALCO

STERLITE

KOTAK BANK

LUPIN

Bajaj Auto

Twilight Litaka

Sanjivani Parenterals

Tilaknagar Ind

Gateway distripark

Spicejet

Hercles Hoists

GMDC

Rolta

HCL tech

Polaris

Hexaware

NIIT Tech

All the trades should be with stop loss

WATCH THE ‘PENDULUM MOVES’ CAREFULLY

Thanks

Dr. Vasnt Bele

All the views are personal, invest after consulting experts