TURNING POINTS FOR 04.02.2011

NIFTY FUTURE 30 MIN / NIFTY FUTURE EOD

NIFTY FUTURE :

Today's trading day provided much needed relief from the hammering we have seen for the past few days. After making the day's low of 5421 in the opening session, it maintained a positive bias throughout the day and made a high of 5546 and closed the day firm at 5539. The rally was led by Banking sector, Reliance and Bharati - after reporting drop in profit by 41%.

Interesting part of today's up move was that it did not cross major resistance at 5555 and more importantly, on the EOD chart it has remained sideways for the past 4 days and thereby forming a flag pattern. This pattern would get cancelled once Nifty Future remains above 5555. As such, in the (unlikely!) event of it going below the previous low of 5411, it opens up the possibility of Nifty Future going down to 5000! While today's move does not indicate this possibility, but as I have been mentioning for some time, downside remains open, as long as we remain below 5555 - and hence this observation to caution the readers to be on guard, when Nifty Future moves below 5475. Moreover, oscillators on the EOD chart yet do not confirm that "All is well".

For tomorrow, long position should be considered only if Nifty Future is able to remain above 5555 with a strict stop loss of 5525. On the higher side it will face resistance at 5570 - 5600 and strong hurdle at 5650.

Short position may be taken below 5475 with stop loss of 5510. On the down side, it will find support at 5430 and 5380.

Put Call Ratio of Index Options increased to 0.95 as against 0.86 yesterday.

Please do not forget to put the stop loss if Nifty Future goes below 5475 and as such - never trade without STOP LOSS.

With Best Wishes,

Ketan Asher.