Stock To Trade 29 03 2011

• INDIAN BANK :- TA Turtle upside breakout in Indian Bank 30 mins. Buy with stop loss below 224.
• Apollo Tyre :- NR7 bar pattern in Apollo Tyre. Buy above 69.50, Sell below 68.

Five days of gains in Nifty, consolidation likely

We had a wide range day (WR) seen on Friday when the Nifty had a range of 140 points (including the gap). This is the widest range in many days, hence it qualifies as a WR7 (widest range in 7 days). What happens after such wide range days? Markets will usually consolidate giving rise to noise and choppiness. The correct way to trade such noise is by using lower time frames.

What is the trend? We measure the intermediate trend is different ways: (1) The TA-Insync(55-5) is up (2) Zero Lag Moving Average 34 is moving up (3) Ichimoku is in an uptrend with the red line above the blue line. Now, readers should use any one of the three methods to measure the trend. If you use Zero Lag then check the direction. Moving up means UP trend, and, moving down means downtrend.

My point is: trend is up, no matter what you use. Second point is: do not fight the trend. If you feel that the rally is unjustified, then stay away, but selling short is not a good idea. Traders can take short side trades only when their intra day charts give a short signal in any of the above trend methods. Volume should be low since the short trades will go against the trend. If the trade appears to work out, then add volume. The correct trade is to buy on corrections. use 5 minute or 15 minute charts to get buy signals from any of the three methods. When you get this siganal, go for it.

Is the Nifty making an inverted head and shoulder pattern? Answer is: Yes. The neckline is sloping up, currently at 5700. A close above this number will confirm the pattern. I will give the chart on tuesday evening.

Market Outlook for 29 03 2011

The week began on a happy note as markets had a steady day. In fact, Sensex as well as Nifty briefly went past the psychological level of 19000 and 5700 respectively. Autos, Capital Goods and Banks had a good day while some profit taking was seen in Healthcare, Metals and IT stocks. Index heavyweights that helped the indices move higher were Bharti, L&T, IDFC, Tata Motors and HUL. LIC Hsg however hogged the limelight by posting intraday gain of around 8% amidst huge volumes. Some other prominent gainers were Sterlite Tech, GT Offshore, Noida Toll, IDBI, LITL, IVRCL, TVS Motors, IRB, Dena Bank, Vijaya Bank, Sintex, Godrej Ind and Federal Bank. Auribindo Pharma was the biggest loser as it shed more than 6%. Some others that lost were Pantaloon, Piramal Health, Sun Pharma, Core, Jain Irrigations, Suzlon, Unitech and GMDC.

It was fifth successive day of gains for markets as Nifty moved towards 5700. In fact, Nifty has gained around 350 points over last 5 sessions. There could be a brief consolidation/resistance as market grapples with twin psychological resistances of 200DMA as well 5700/19000. 5735-5770 could provide stiff resistance to the uptrend and one need to be careful around these levels as far as long positions in Nifty are concerned. Stock- specific moves could hog the limelight even as indices consolidate/correct. The mid cap banking counters could see action as technically some of these like Andhra Bank, Federal, OBC, Uco and Dena Bank are looking positive. IFCI has given a breakout above 55 and could target Rs 61-62 if it sustains above 55. Auto stocks like Bajaj Auto, TVS, Ecsorts are also showing positive intent. LIC hsg closed at almost 4 months’ high and sustained trades above 215 could take it to around Rs 240-245.

Nifty faces stiff resistance around 5730-5750 while support is seen around 5620-30 and then around 5545- 60.