Painful start to July Series...june 27, 2008

The global cues for today are very bad. We will have a gap down opening of around 2 - 3% today. The clearest sign of bearishness came from the FnO rollover yesterday. In spite of more than 1% rise in market yesterday, the puts did not reduce in value and the calls did not move up. NIFTY discount was very high indicating a very high amount of short rollovers. A lot of call writing in the system is a strong indication for a bearish case. Though I expected the short rally to touch around 4350 - 4400 before going down to touch 4000 again, global cues are not helping this cause. It will be interesting to see how market behaves here on. Strongest downside support for today comes at 4080 - 4090 in NIFTY spot.

I am not posting a NIFTY chart today as there is nothing much from an academic perspective. I am posting RCOM chart today. Just to understand the importance of trends. See how RCOM is nicely locked in a proper downtrend. If you see this chart, you will notice that the lower channel support comes around 463 today. 464 level is also a major support. So if we open gap down today and around this level, if we see RCOM stabilizing we can buy this stock with a stop loss below 463 for trading. On the other hand 2 successive closings below this line will give us a new downtrend from the current primary downtrend. This is just one of the readings. We will need to take into account other indicators like RSI and stochastics which are not yet too oversold. Lets see how it plays today...In case you buy RCOM for trading likely target can be 478 (15 rs intraday is very good profits anywayz). Also, keep in mind how NIFTY moves when trading stocks.

The overall trend is pretty difficult to guess today. Its quite possible that we will open low, go more lower and show same late recovery. Its better to go with the trend during the day. No more stock picks for the day, lets watch RCOM and see how it behaves of course market should also support it.