TURNING POINTS FOR WEEKENDED 04.02.2011

NIFTY FUTURE WEEKLY

What a week it was or rather what a Friday it was - when it managed to do the full weeks' high (5566) and low (5357) on the same day - giving the weekly range of 209 points but done just in one day.

Though we made a new low for the week and maintained lower top/lower bottom, we are very close to two major supports at 5338/5318 as shown on the attached chart.

At this level I would not recommend going short, but instead suggest delivery based buying. Those who have sold at higher levels should be more comfortable in replacing what they have sold. When I say this, I am referring to front line stocks and not to midcap/momentum stocks. One can even consider buying small quantity of 5700 call option which was traded yesterday at about 14.

We are just about 3 weeks away from the budget, and I am sure the event itself will generate expectations and optimism as we approach the Budget day. Moreover, there are couple of signals on the EOD chart which instill optimism, that we should be near to the bottom - at least for the time being and for a pullback. I will deal with the reasons in my post for Monday to avoid repetition.

While majority of traders/investors are more comfortable on the buy side, what to buy is always a worry. While I will not be in a position to give individual stock ideas, I would like to draw your attention to the mid point of 52 Week high/low. Incidentally, out of Nifty Fifty, 34 stocks are below the mid point, where as 16 are above it. Alternatively, one can even consider the monthly mid point as a reference point to get into a buy trade once your stock crosses this level. Please have your own logical stop loss level to take care of any unforseen eventualities.

Once we decisively cross 5555, we have 5640 and 5850 as major resistance levels.

Have a nice weekend!

Ketan Asher.