Sector Technicals for the week ending – 26th October 2014.

Sector Technicals for the week ending – 26^th October 2014.

The below table is just a scan that I run to check the overall trend of an index and its performance vs. the benchmark Nifty. For further information please read the signal description and the detailed sector technical analysis further below. For more information on relative strength please click on the Relative Strength section above.

Nifty Weekly Technical Analysis:

The price action on the index was mixed over the last 2 weeks, with a breakdown the week before and a negation of that last week. The Bank-Nifty however is at life time highs and banks having the largest weight in the Nifty could push the Nifty higher near all-time highs. On the derivatives side, the VIX slipped back below 13% and FII’s increased long positions in the index futures space and we also saw an increase in net longs in the call option space. On a longer time frame the 40 week moving average is at 7226 and we have an upward sloping 40 week MA which augurs well.

Sector Technicals:

CNX Auto: Like the Nifty, the Auto index also showed volatile/mixed moves over the last 2 weeks by breaking below its price channel and then closing the week back above its lower trend line. On a relative basis, the RS line of the auto index made a new high and is signalling continued strength in the auto space.

 

Bank Nifty: After giving mixed signals over the past 2-3 weeks the index closed at lifetime highs and on a relative basis the RS line has inched up sharply and we could be setting up for a rally in banking stocks.

CNX Pharma: The index has broken its uptrend-line shown below but the 10000 zone seems like a good support zone to increase longs in pharma stocks. 

CNX FMCG: The FMCG index is also not giving any clear signals and it would be better to wait and watch if the index manages to give 2 successive weekly closes above or below the 19000 mark. The FMCG index is not likely to outperform the benchmark Nifty as the RS line is still in a downtrend with a downward sloping 40 week moving average.

CNX IT: The IT index is no longer an outperformer as its RS line is back below its 40 week MA. Price action wise the index is back near its supports and can give a tradable bounce from these levels.

 

CNX Infra, Metal, Energy & Realty: Infra and Energy still look positive on a short term basis as they are trading above supports. Realty and Metals look the weakest as they are at/below important supports.   

      

CNX Small Cap and Mid cap: The Mid cap index outperformed last week and managed to close above critical supports of 11400-11500. The next support zone lies around 11000 and then 10500. Small caps are still positive as they are trading above an important support zone of 4500-4600 and a weekly closing below 4600 could lead to a sharp fall with next support zone around 4000.  

Sector Technicals for the week ending – 19th October 2014.

Sector Technicals for the week ending – 19^th October 2014.

The below table is just a scan that I run to check the overall trend of an index and its performance vs. the benchmark Nifty. For further information please read the signal description and the detailed sector technical analysis further below. For more information on relative strength please click on the Relative Strength section above.

Nifty Weekly Technical Analysis:

The index closed below the important 7800-7850 zone which was its previous resistance. The short to medium term trend remains down as long as the index closes below this zone on a weekly basis. In the derivatives space, FII’s continue to be net long in index futures and but have decreased their net longs over the previous week while simultaneously increasing their long positions in put options  suggesting some expectations of downside. The India VIX is at 16% and looks like a failed breakdown as it has crept back above its previous lifetime lows of around 13-14%. To conclude – A rising VIX along with a failed breakdown below key levels does not bode well for the markets. 

Nifty - Short Term Timing Model - Updated as of 19th Oct 2014.

Nifty - Short Term Timing Model - Updated as of 19th Oct 2014.

This short term timing model is a long only model which buys and exits the Nifty index based on a 50 day moving average and an additional filter. This strategy will not outperform every year but it keeps one out of possible down-periods and has performed well over a 20 year period. Performance can be boosted by using short call options along with long positions.  

Buy : When the index closes above the 50 day moving average for 2 consecutive days

Exit : When the index closed below the 50 day moving average.

Current signal: Exit given on 7^th Oct 2014 Nifty closing level of 7852.4.

Yearly Performance:  (2014 figures are YTD)

               

Nifty - Short Term Timing Model - Updated as of 12th Oct 2014.

Nifty - Short Term Timing Model - Updated as of 12th Oct 2014.

This short term timing model is a long only model which buys and exits the Nifty index based on a 50 day moving average and an additional filter. This strategy will not outperform every year but it keeps one out of possible down-periods and has performed well over a 20 year period. Performance can be boosted by using short call options along with long positions.  

Buy : When the index closes above the 50 day moving average for 2 consecutive days

Exit : When the index closed below the 50 day moving average.

Current signal: Exit given on 7^th Oct 2014 Nifty closing level of 7852.4.

Yearly Performance:  (2014 figures are YTD)

                

Sector Technicals for the week ending – 12th October 2014.

Sector Technicals for the week ending – 12^th October 2014.

The below table is just a scan that I run to check the overall trend of an index and its performance vs. the benchmark Nifty. For further information please read the signal description and the detailed sector technical analysis further below. For more information on relative strength please click on the Relative Strength section above.

Nifty Weekly Technical Analysis:

The 7850 support zone looks likely to be breached in the near term as the MACD sell trigger seems to be an overhang and other major sectors saw their supports breaking in the last week. Also, if the index closes below 7850 for the week then this could be a failed breakout and could see a fast downward move in the coming weeks. In the derivatives space, FII’s continue to be net long in index futures and but have decreased their net longs over the previous week while simultaneously increasing their long positions in put options  suggesting some expectations of downside. Though the India VIX is at 14.33% the CBOE VIX closed at a little over 21% which is surprising as most of the time the India VIX has trader higher than the CBOE VIX.

Sector Technicals:

CNX Auto: As you can see the Auto index has traded within a price channel since the start of the year and last week closed at the lows of that channel. Any closing below this channel could lead to a fast sell-off to supports near 7200-7300.

 

Bank Nifty: 15500-15600 did not hold on a weekly closing basis and this could be a potential failed breakout. A failed breakout along with a sell signal by the MACD does not bode well for the Banking index. Once could sell on rallies till we do not manage to close above 15600.

CNX Pharma: The uptrend seems to have broken as per the trend-line shown below. A weekly close below 10000 would induce further weakness.

CNX FMCG: The FMCG index could not sustain above prior resistance and a weekly close below 19,000 would endanger the short term uptrend.  The FMCG index is not likely to outperform the benchmark Nifty as the RS line is still in a downtrend with a downward sloping 40 week moving average.

  

CNX IT: The IT index is in an uptrend and momentum readings favour the bulls as it is in the overbought zone and with no overhead resistance. The uptrend is intact as long as long as it trades above the 10400-10500 zone. The index has outperformed the benchmark over the last few weeks, and is an outperformer as its RS line is trading above its 40 week moving average.

CNX Infra, Metal, Energy & Realty: Infra and Energy look still look positive on a short term basis as they are trading above supports. Realty and Metals look the weakest as they are at/below important supports and most important – they are trading below their respective 40 week moving average.   

      

CNX Small Cap and Mid cap: The Mid cap index outperformed last week but did not hold critical supports of 11400-11500. The next support zone lies around 11000 and then 10500. Small caps are still positive as they are trading above an important support zone of 4500-4600 and a weekly closing below 4600 could lead to a sharp fall with next support zone around 4000.