Trading ideas for 10/08/2011

Trading ideas for 10/08/2011(Wednesday)

Market is highly volatile play with hedge and be with cash and wait for clear direction

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FII DERIVATIVES
Index Future	Index Option	Stock Future	Stock Index
-168	+1978	+718	+24
FII Cash	-2104
DII Cash	+1412

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India VIX : 34.88
Call OI : 50075400
Put OI : 46022150
PCR : 0.919
SMR : 37.95

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Intraday support and resistance:

S2	S1	Pivot	R1	R2
5840	5958	5060	5180	5280

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• Nifty Open Interest for August stands at 2,36,94,450 down by 32,000 with decrease in price (very mall shorts by small players were covered)

• Bank Nifty Open Interest for August stands at 13,71,875 down by 55,250 with decrease in price (same here too very small)

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For 10/08/11 NF may take support at 5070

Above 5085 NF may rally up to 5145

Below 5070 NF may correct up to 4990

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OPTION DATA ANALYSIS

As per OI Table 4900, 5000, 5300 calls while 4200, 4300, 4400, 4500 and 4600 puts where written. .

Strong Resistance comes only at 5500 while 5000 may act decent support. Any good news will take nifty around 5400 and at the same time once break of 5000 there is not much big support. Market is highly volatile play safe.

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Expected Bullish Stocks For 10/08/2011: TECHM, FINANTECH, M&M, HDFC, IBREALEST, ITC.

Expected Bearish Stocks For 10/08/2011: GUJFLUORO, TCS, ABB, BGRENERGY.

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NIFTY VIX

• VIX above 60 are dangerous levels. Markets will be highly unpredictable. If Markets are on a high (Nifty P/E above 24), then its advisable to exit the markets completely. Markets may be hot and totally bullish, but will most likely face a darker correction. Its just a question of time.
• VIX below 20 mostly indicate a more stable markets, purely because the volatility is less. It does not mean that markets wont fall. It just means that markets will follow predictable fundamental supports and resistances.

SMR = Smart Money Ratio (India VIX / PCR)

SMR is a measure of fear in the market. A value of less than 20 indicates that market is lack of fear and volatility and the higher PCR ratio(greater than 1) supports such kind of action. And a value of 60 or greater than 60 indicates too much of fear in the market which is highly motivated with lower PCR ratio (less than 1). It is a kind of indicator which provides information about which kind of market we are right now.

Put/Call Ratio

Put/call ratio (or put-call ratio, PCR) is a technical indicator demonstrating investors' sentiment.[1] The ratio represents a proportion between all the put options and all the call options purchased on any given day.

The market has bottomed when PCR was around 0.8-0.9 and topped when it was 1.2 or above.

HOW TO INTERPRET THESE VALUES

SMR with a value less than 15 indicates the market is lack of fear and volatility and along with high PCR ratio more than 1 supports such kind of action. And a value of more than 25 indicates too much of fear in the market which along with lower PCR ratio of less than 1 confirms it. It gives the mind of players in the market.