1000 hits and counting... I thank all the blog readers from the bottom of my heart.. Wishing u a great 2010

The index is waiting for cues or fresh triggers to continue its upmove after the big breakout above 5180. This upmove will get capped at anywhere around 5350-5550. The first sectoral index to show some weakness is CNX IT which is due to fundamental reasons of rupee appreciation. So all exporters like IT solutions providers, gold jewellers & Textile manufacturers will have to lose out due to lower conversion price of dollar and their margins will get hit. Margins contraction can be overcome by creating appropriate hedge positions in currency market. This all will be seen when these companies will post their Q3 and Q4 results and disclose their other income component which includes income due to hedge positions.


Options Strategy:

Try using Long Straddle if the market opens earlier than Infosys results are announced because until last quarter Infosys results came at around 9:15 am and the markets opened at 9:55 am. But due to earlier opening at 09:00 am you can use this strategy

Buy INFOSYSTCH 2450 PA at 56 rupees
Buy INFOSYSTCH 2500 CA at 53 rupees

TOTAL COST: 109

If the results are good then cover it when Infosys is around 2530-2550, and if they are bad then cover both call and put when Infosys is around 2380-2400. Profits will be max if there is anything majorly positive or negative in the results.



Nifty View:


NIfty has overhead resistances at and around 5350-5550. If you see in the chart there are two red lines which join Jan, feb & March tops & that comes at 5350-5500 plus two black parallel lines from June 2009 have its upper range till 5550. So if it has to be non-stop rally without any meaningful correction then it will stop at 5550 or earlier than that. So keep trailing stop losses and keep booking profits and don't be over-leveraged.




Dow Jones View:

11000 on Dow Jones seems likely only if it moves above 10700 with volumes. At 11000 Dow jones will face resistance as the line joining major tops since May 2009 is currently at 11000. If it crosses that as well then it can go to 12000 as the next major top is around that level only which was made during july-sep 2008. All longs on Dow Jones should have 10200 as their trailing stoploss on closing basis.




Stock View: Satyamcomp


Nice inverted head and shoulder pattern seen in Satyam stock which is a bullish pattern plus there are huge volumes before the breakout above the red resistance line which indicates that stock can be bought on dips till it doesn't close below 100 or if sustains above 116. Closing below 100 will negate the whole pattern.




Stock View: Petronet lng


Petronet stock did gave a breakout above the 6 month old resistance line which was formed joining major tops during this 6 month period. The stock is now a buy on dips candidate with a stop loss of 72 and target of 80-82.




Stock View: Videocon Ind


The VIDEOIND stock is witnessing a huge cup and handle breakout pattern above 270 plus there is a triangle formation pattern also. The stock becomes a buy if it closes above 270 for a minimum target of 320-330 for short term.




Today, this big post will compensate all the smaller posts that were published earlier. I am tired after this one.

Have a nice trading day

Regards

Ankit