TURNING POINTS FOR 25.02.2011

NIFTY FUTURE 30 MIN / NIFTY FUTURE EOD

NIFTY FUTURE :

In today's trading, Nifty Future opened weak and after a feeble attempt to go higher, made a top of 5430 and thereafter maintained a downward bias throughout the day to make a low of 5251 and closed at 5265. Needless to say that the close has been weak that too on the FNO settlement day. With today's low, we are now very close to the previous low of 5175.

Will Nifty Future break the previous low?

Well it can, but I would still like to believe the answer is NO - for the following reasons.

1. Today was FNO settlement day and I would consider the nervousness on account of this.

2. Oscillators are not falling at the same speed and hence not looking too weak.

3. Assuming that weakness continues tomorrow in the opening session - we can take support around 5200 and bounce back.

4. Friday effect - If you consider the weekly candle with one more low tomorrow and break of 5175, then we seem to be heading for a much deeper levels right away. With budget announcements on Monday, this argument doesn't gell, as the weakness should continue after the presentation of the budget and assuming that the same is not found favorable.

While there can be different point of view on the subject as well as the arguments given above, I would not advise going short at lower levels. (Even after being wrong in being optimistic today).

Considering the above, I would suggest going long at the first sign of Nifty Future taking support around 5225 with strict stop loss of 5175 or 5200 depending on your comfort level.

In case of steady opening, one can consider going long above 5300 with stop loss of 5250. On the higher side, it will find resistance at 5340 - 5390 and 5420.

Put Call Ratio of Index Options increased marginally to 1.01 as against 0.98 yesterday.

Whatever may be your view, please do not trade without STOP LOSS or better still protect all future positions with buying suitable options.

With Best Wishes,

Ketan Asher.