Market Out Look 20-12-09

OM NAMO BHAGAVATHE SREE RAMAKRISHNAYA

The Nifty closed at 129.60 points down compared to previous week close. Let us examine the Nifty movement

Date Open High Low Close

12/11/2009 5136.05 5182.55 5088.40 5117.30

12/14/2009 5117.45 5156.70 5090.15 5105.70

12/15/2009 5105.75 5129.45 5018.25 5033.05

12/16/2009 5032.95 5067.25 5001.80 5042.05

12/17/2009 5046.65 5064.20 5013.15 5041.75 Change %

12/18/2009 5042.00 5043.40 4979.05 4987.70 -129.60 -2.53



Will the nifty continue the downward journey? Will it make a come back ? Let us examine with the help of Technical Analysis.

Nifty traded lower on first two trading days of the previous week. On the Third trading day it posted small gains of 9 points and again resumed the downward journey on Fourth and fifty trading days of the previous week. On the last trading day it swung low and closed near the low of day. Nifty closed below the important support level of 5092.00 on 7th December 2009, there by gave indication about the forthcoming things. It again closed below that level again on 8th December 09 and on 15th December 09.


The Chande Momentum Oscillator almost touched the over bought area of 50 and started the downward journey from there and trading below the crucial 9 day moving average of indicator which is a bearish sign.

The Chande momentum is yet to reach the over sold area or cross it’s 9 days moving average. It failed to cross it’s moving average thrice during the period of its downward journey from over bought area.



The positive Vortex indicator is turning down and the negative vortex indicator is turning up, but yet to cross.

The Nifty is yet to touch the lower band of envelops, which is good over bought/ over sold oscillator, whose reading is at present at 4817.00.

Let us examine the Nifty chart with projection bands and R-squared

Nifty started it’s downward journey from projection bands and yet to touch the lower band. The present reading of lower band is at 4953.85. The R-squared is above it’s critical value of 0.27 ( 14 days) indicating the present trend is strong statistically.


The Nifty started the downward journey from upper band of Bolinger on 11th December 2009 and yet to touch the lower band whose value is placed at 4968.41 as of now. See the chart below.
Based on the above I am of the opinion that Nifty is likely to find support around 4968-4954 and after under going some relief rally the down ward journey again is likely to continue in days to come


Regards

Subrahmanyam