Edelweiss Technical Reflection (ETR) March 25, 2011

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Edelweiss Technical Reflection (ETR)

§  The Nifty continued its winning streak for the 3^rd consecutive day taking out 20 DMA & 50 DMA resistances in the process. It is interesting to observe that the move is fast becoming trending in nature & the index is possibly exiting the consolidation zone on the upside. With the gap up opening expected in today’s trading session the resistance of 5540 which has seen selloff as many as 7 times in last 2 month , can be taken out. Oscillators continue to paint mixed picture with slight drift I favor of the bulls.  +DI crosses over- DI suggesting the trend reversal to the positive. Similarly MACD remains in bullish mode along with the RSI. The immediate near-term outlook has remained positive after last 2 day’s move. With the 50 DMA resistance taken out a rally till 200 DMA (5687) is now on the cards. The near term bullish bias should be protected with stops around 5450 which seems to be new support level only thing which is weak in overall technical setup is volumes which have remained tepid.

§  A positive trend was witnessed in all the sectoral indices yesterday. Interest rate sensitives Realty and Banking remained strong for yet another session. Healthcare & Oil & gas remained subdues .IT stocks made smart reversal after being in selling pressure for last few days. Bank Nifty has triggered a bullish breakout of the declining trend from November peak with the momentum also rolling bullish. Follow up buying will lead the index to test 11300 initially and 11700 thereafter.

§  Bullish Setups: ICICIB, Voltas (VOLT), Ambuja Cem (ACEM), REC, JP Assoc (JPA)

§  Bearish Setups: Maruti (MSIL), HPCL, Wipro (WPRO)

§  Stocks in US and Europe traded rallied sharply to break past their intermediate resistance & resume the uptrend. SPX advance above 1300 definitely provides some confidence