TURNING POINTS FOR 18.12.2009

NIFTY FUTURE 30 MIN / NIFTY FUTURE EOD

NIFTY FUTURE:

Although Nifty Future managed to stay within the normal trading range, intra day volatility was high. Another notable feature for the day was that Nifty Future did not break 5000 levels and thus kept the hopes for the bulls alive. Despite effort, it could not cross yesterday's high and closed @ 5036. As anticipated, MACD has today entered the -ve territory (below zero) and thus bearishness is confirmed. Infosys remains the lone torch bearer for the bulls.
For tomorrow, short position should be created below 5000 with stop loss of 5050. On the way down, it will find support @ 4920 & 4865. If you share the bearish view, it will be better to buy 4900 Put Option which is available at about Rs. 50/- and hold it till expiry. In any case it will be prudent not to make fresh buying unless there is significant correction.

On higher side 5100 looks like a strong resistance level.

It will be interesting to note that, although charts are indicating bearishness below 5000 levels, the same is not reflected in the Put Call Ratio of Index Options which was lower @ 0.92 as against 1.14 yesterday. This may be a good reason to consider my bearish view with caution.

I am sure, those following TP GRID will have nothing to worry as long as they follow it as per the rules. For their benefit, i will clarify here that as long as CMP is below H & L the scrip/Nifty should be considered bearish and any long position is to their detriment and hence if at all u have compulsions for bullsih view, either protect it with buying a Put or have a strict stop loss.

Whatever may be your view, the time to protect your wrong (long) positions seems to have started now and hence please do not forget to use STOP LOSS.

With Best Wishes,

Ketan Asher.