views of Shrikant Chouhan, Technical analyst

The week past and expected

The market is under compression mode as the market is failing to trade above 5450/5470 levels even though the world

markets are doing well. As per daily chart the market is diverging negatively which is an indication of pause of the current

trend or likely shift in coming few days. Even if we look at the daily trend of the market then one can clearly notice that

it is under rising wedge formation that suggests us phase of distribution. Currently it has final support at 5350/17840 but

it seems difficult to break in the near term.

As per our past experience and findings it seems that it will spend time between 5350 and 5520 (maximum on the higher

side) and dismissal of the range will trigger "massive break out or break down on either side. We feel that the market will

break the lower band but while looking at world markets and status of the domestic currency it may even break upward

range. On the dismissal of the lower range we may expect minimum 5200/17370 lower side.

Sector specific: Banks, IT, Auto and Consumer durables may do well however, buying is advisable only at major supports

or on declines. Reality and Cement stocks one can trade on recoveries from lower levels and not on dips. Capital goods,

Infra, Pharmaceuticals and Metal stocks may find resistance at higher levels as profit taking will minimize the upside for

the same. Even midcap and small cap stocks may come under pressure of profit taking as the current move seems to be

over extended; be cautious or choose while investing at current and at higher levels.

Nifty Strategy: For the day, selling is advisable below 5430 with a tight stop loss above 5460 and for the target 5380 and

5365. In the second half, if the market sustains above 5460 then buying is advisable with a stop loss below 5430 for the

target 5490 and 5520.

updates from VIVEK PATIL

9/08/10

updates from vivek patil.

*************************************************************************************************************************

Even if we do see further rallies, the question right now is whether the same would keep facing profit-booking, even if they do hit higher

levels. Previous two new highs of Jul'10 did get sold into, firstly at 18167, and then at 18238. In fact, the bigger picture since last Oct

shows all news highs of this rally attracted selling, each time Sensex shaving off 2100 to 2400 points.

Structurally, the "i" leg appears to be developing as a Contracting Triangle. The "c" leg was 61.8% of "a", and "d" was 61.8% of

"b", forming into contraction. The "e" leg will achieve 61.8% ratio to "c" leg at about 17325.

Though not resisted at 80% retracement level, topping formations can even show Double Tops or measured higher highs.

Topping action usually turns out to be a tricky affair, and the same will be expected as long as the Sensex keeps its head

below the maximum potential of 18357.

That potential was also explained as the upper end of the year-long channel shown on the Daily chart.

To keep any bullish option open for the next week, Sensex should not only move above last week's high of 18295, but

also above 18357 level.