TURNING POINTS FOR 19.08.2011

NIFTY FUTURE 30 MIN / NIFTY FUTURE EOD
NIFTY FUTURE:

While normally we look for guidance from US/European markets for cues, it seems today they are following us.

After a weak opening, Nifty Future saw a relentless and all round fall for the remaining day. During the day, Nifty Future made a high/low and close of 5075, 4926 and 4938 respectively. Needless to say that we had a weak close and at the time of writing US/European markets down by over 3%, suggesting further weakness for tomorrow.

We are now outside the triangle shown in yesterday's post and have also made a new 52 week low. In case the World markets close weak as they are now, in all probability we should see a gap down open. I do not advise going short, in the event of a gap down opening. Once below 4920, we have support near 4800 and then 4750. As I have been mentioning for sometime now, at these levels (4750-4800), in my opinion we are close to bottom for now and see a bounce. As such, I would advise closing all short positions if markets hit a panic button tomorrow.

Just ask yourself - isn't 4800 level a better level to buy then a buying at 5500-5700 levels which we saw just 2 weeks back? Please note that I am referring to delivery based buying or buying low priced calls for Sept series. In any case it would be prudent to liquidate the Puts if you have bought them in the last couple of days, as time to the settlement date is running out.
Put Call Ratio of Index Options remained almost unchanged at 1.04 as against 1.05 on the previous trading day.

Please do not trade without STOP LOSS and certainly don't panic.

With Best Wishes,

Ketan Asher.