June 25, 2018 – Weekly Market Analysis

This is what was written last week as I skipped writing a blog due to lack of an edge.

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This is what $Nifty Did Basically Ended Up Doing.

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Did I See All This Coming? No, Ofcourse Not. This is not one of those moment where I self-praise myself. My Point is when I look at charts, my focus is to find imbalances in demand-supply. How Do I do that? Well, I think my excuse of sub-conscious doing it’s job after watching for long hours would seem like an egoistical statement; not denying the fact that it is however true. I look at chart structure, the way it is tweaked, those zones which are stretched like a rubber band which will force itself to take original curve once released, price movements in market are nothing but real-life incidences as the participants moving it are composed of people, it can be difficult to explain as something visual cannot be expressed in a better way just by writing about it.

Here’s the main question? Do we have an edge this coming week? Yes, we do. Market gave a signal on Friday, it could be defined in 2 ways here.

  1. Traders were basically seeing 10820 kind of levels being rejected several times and saw resistance along those lines, probably the best case scenario here was to take a short position. Market was smart too, as it was not letting 10700 getting breached as that would have triggered stoplosses in many of my positional trades. The short buildup might have squeezed shorts as tired bears ran to cover up their position going into the weekend which sparked a “Domino Effect”.
  2.  I disregard the theory of support/resistance while trading as it doesn’t help retailers whose Stoploss keep getting hunted by Big Fish, exceptions do exist in index trading and fundamentally strong scrips. More probability of resistance getting breached is when an upside level is rejected and a given market bounces strongly from lows. This is what is happening in $Nifty right now. I do always use a statement which goes like “It did not come this far to reverse”. If market is rebounding like that, I do think we have got another leg higher.

Talking about Banks, As much as I would like to Buy SBI, I would refrain from doing that next week as many retailers are bullish on this counter. Charts are not bearish but even if I would have to negate the position of retail, risk reward going long looks slim.

Among Private Banks, HDFC is evergreen, I won’t go long but one should be doing that at this point, reason for not taking a position is that my trading style is not buying something going up or selling a broken down stock. God Bless those who do and I know there is good money in that but I will save my money here on HDFC not shorting like a maniac. There is no edge in Kotak, so maintain a neutral view. ICICI is a beautiful chart, as long 300 is sustained, won’t be surprised it doing 320 as we have a small gap there to fill. Mind you, gap filling is not a mandatory exercise done by market, we just tend to connect it with some other trades that did so but cannot be said for certain of that event to happen. Neutral View on Axis Bank. Indusind remains bearish as long below ATHs of 1995 as explained in past blog post through huge volume observation. One can take a positional long on Yes Bank, it is not breaking 330 kind of levels and still remains bullish.

Among PSU Banks, I would have never bought BOB ever, reason was quite simple, most PSUs are trading near lows of 2002 but this stock has not seen a similar fall, some might argue this to be sign of strength but on a cautionary note, would stay away as the risk on downside remains large.

Among IT Stocks, there is no point in ripping individual stocks as I see no edge in any of the stocks specifically, however would be more inclined towards the short side here.

Coming to Pharma Stocks, runup has been huge and I see no slowdown in momentum at least this expiry. SunPharma might breach 600 next week. Cipla has formed a beautiful chart, this is the only stock which does not have a downtrend chart as the damage was relatively less compared to other Pharma Stocks. I was particularly bearish on Lupin in my last tweet but things seem to have changed now as it has successfully sustained 900 levels, so can see another spike. AuroPharma has always been confusing for me but last night was looking at it’s weekly chart and it has just taken rest on 200EMA Weekly so we have a positive signal for now. There is no edge in DRL at this point.

Among Auto Stocks, Maruti is retail’s favorite so I avoid trading this scrip, I have got this weird nature of not trading something accepted by the majority, same reason why I never touch Bank Nifty and yes, you can go ahead and judge me on that 🙂 No edge in Maruti right now.  TAMO is trading at an interesting juncture, keeping 310 level on radar, either it should reject it to slide down or give a breakout above. M&M should not be touched, it gives breakout once a blue moon and frustrates a trader for coming weeks. Bajaj Auto/Hero Moto are not speaking much to me, so leaving them too. Eicher Motor is looking bearish here.

Among Cement Stocks, Ambuja Cement and ACC are both seeing rejection of lower levels by market aggressively and have formed pinbars on weekly chart, would wait for this week to get over for a more clear view.

Talking About Individual Stocks, ZEEL has come to my radar after a long time, months basically, being a long-bias trader I never saw an edge going long but recently found it forming a good base and has closed well above 10EMA on daily chart. It has also stayed out of limelight since last few weeks so can surprise by giving a move on the upside.

Recently, was mocked on Bajaj Finance by one Twitter user – I never short 52 Week-highs or go long vice-versa. This was a different case as I saw something in Bollinger bands and did use the word  “short-term top” but of-course no mention of specific time-frame does make it obfuscated for a reader to understand, hence the trolling when the move came after a WEEK after remaining rangebound for few days.

Honestly, there is no edge I have been able to find in other FNO Stocks, I think more clarity will be given once the month is over as operators keep retail trapped who are stuck in their position and can keep the stock manipulated longer than expected for a given expiry month, only observation is that MSFL is not looking good at all, If the scrip is not able to find a buyer on Monday, we might see a fall here. BPCL as mentioned in the first blog post is having a clear chart and I am still very much bullish on this scrip ignoring the crude factor. Also, India Cements should be kept on radar, a strong candidate of seeing big bounce-back.

Lastly, TIME IS UP FOR BRITANNIA INDUSTRIES! 

Keep sizing in check and see you on the other side of field next week. Peace 🙂

 

 

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