False closing

When market closes at and about  round figures(for example on Nifty at 5400 or 5403, like today at 5550) this type of closing is called False closing.

Significance of False Closing

In 10 previous occasion when markets closed False closing, there was a selling off the next day on 7 such occasions. 

Today(2-6-11) was one such day when market closed at correct 5550. I am expecting a minimum fall in the market of 1%. As I said yesterday(1-6-11) also, that market will fall by 1%, morning market fell by almost 1.2% and then recovered. I was expecting atleast a 2% fall but the traders who had bought in the rally of last 2 days might not have thought to sell their holding at loss so they bought a bit and kept the market up. But if you observe in the graph at 2:30pm there was sudden fall. This was time  when the volumes suddenly surged clearly suggesting a heavy selling. Yesterday(1-6-11) Reliance communicaiton, Reliance Infra and Reliance Cap all the Anil Ambani group(ADAG) companies were good gainers. But today if you see the charts I placed below there was a heavy selling at 2.30pm during which all ADAG stocks came down in one straight line. This shows that some heavy investors sold in the market to exit his position. So you can expect ADAG companies to fall heavily in coming days and market also to slide heavily. I recommend a short sell trade on Relcom and Relinfra tomorrow. I am still maintaining my view of Nifty falling to 5450 in next 2 trading sessions based on my theory of False closing, heavy selling of ADAG shares and Global negative cues. People having the Put Options that I suggested yesterday should hold them for good returns in coming days. Happy Trading. :-)

NIFTY CHART

RELIANCE INFRASTRUCTURE CHART

RELIANCE COMMUNICATION CHART

First Post

It is very ironic that my First Post on this blog comes on a day when US markets have crashed almost 2%. Dow jones is down 231 points as I type this post. The reason for this fall is due to the week jobs data that ADP had announced. Unexpectedly private companies in US stopped hiring in May causing a sharp fall in hiring data which showed weakness in US economy.

Effect of US markets on Indian Markets
I see a minimum 1% fall in Sensex and Nifty and maximum of 2% fall. This fall will come due to cues from US coupled with negative sentiment in Indian markets.

Trading Strategy for 2nd June
People doing intraday trading can SHORT SELL Real Estate Stocks like DLF and UNITECH for tomorrow expecting a minimum 3% fall in these stocks. Do not buy any stocks tomorrow as more fall in markets might come and stocks will be available at cheaper prices. I am expecting Nifty to touch 5350-5400 in coming days.

People trading in Futures & Options can buy Nifty PUT* options of Strike price 5400 which might open at 45-50. The target on these put options is 100  with a stop loss of 35 for next 2 days. So there is a chance of doubling your money.(*Put Options are contracts which rise in price when the share corresponding to it falls. Here I am suggesting to Buy Nifty Put options whose price will rise when Nifty falls)