Edelweiss Technical Reflection (ETR) March 15, 2011

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Edelweiss Technical Reflection (ETR)

§  Despite bearish global cues, Nifty opened lower and quickly started notching up gains, and maintained the same throughout the day to close above 5500 (a gain of 1.58%), making it the best performing market in the region for the day. Nifty has managed to break above previous week’s consolidation triangle signaling higher prices in the coming sessions. Additionally it has moved comfortably above the hourly moving averages which will now act as trading supports. Momentum oscillators on the hourly chart have whipsawed by giving a buy crossover, and the daily oscillators too have turned bullish. Market breadth improved to be marginally in favour of advancing stocks. Nifty 50 stocks A/D was robust at 15:1. Nifty has triggered a bullish triangle breakout which will take it higher towards a test of the larger consolidation pattern at 5615 (also close to the 200-DEMA at 5595). From a trading perspective one can look to build longs positions at hourly MA support of 5460 and place stop-loss reversal below 5430.

§  Yesterday’s strong bullish day resulted in buying across the board as all sectoral indices closed in the green. Oil & Gas and Metals shares gained the most, followed closely by IT and Banking stocks. Autos and FMCG managed to underperform the market. Bank Nifty is on the verge of bullish breakout above 11000, for a test of 11280 initially. BSE Oil & Gas index is in a clear uptrend making higher tops and bottoms on weekly chart. We look for a test of 10225 over the coming week. Bullish Setups: Reliance (RIL), SAIL, CIPLA, DLF, Maruti (MSIL), EKCL, RCOM

§  Bearish Setups: HUL (HUVR), GMR Infra (GMRI), Glaxo (GLXO)

§  Risk aversion continues to be the trade in western equities as the SPX drops below 1300 and DJIA drops below 12000. German DAX has closed below 100-DEMA and is now eyeing the 200-DEMA at 6675. Silver (SLV) has made a ‘spinning top’ candlestick pattern on the weekly chart signaling indecision with a potential to decline in the coming days.