Friday 24 August 2012

The Nifty on 24 August 2012



A good opening by Nifty at 5426 was good to see. It was well on the target when it touched 5448 the second resistant level. But after wards it came down to 5393- the support level. Finally it has managed to close at 5415. In the Asia pacific region too except for Nikkei and Hang Seng the rest have not made significant upward moves. The most important level nifty should have maintained is 5433 the first resistance level. What we need to observe is the sustainability of Nifty’s stand. If Nifty can manage to hold on to these levels even at these level of 5400 + it is still good. To say something more about Nifty we need to watch its moves for the next 2 trading sessions. 

I have posted below the pivot levels for 24th August. 2012

Mid R3
5487
R3
5499

Mid R2
5459
R2
5474

Mid R1
5432
R1
5445






Pivot
5419








Mid S1
5405
S1
5390

MID S2
5377
S2
5365

Mid S3
5350
S3
5335












The below written pivot levels are based on
Fibonacci method





Pivot
5419








R3
5474
S1
5398

R2
5453
S2
5385

R1
5440
S3
5365




































































































Thursday 23 August 2012

Lead Zinc spread


I thought of writing about inter commodity spread that I have already explained in my previous posts. After seeing the spread gap in the month of July which averaged 1.758 I think the current month gives us at least two windows  to enter into spread.  Kindly take a look at the chart below which is current month MCX rates for Leadmini and Zincmini.

Date
Leadmini
Zincmini
Spread
8/1/2012
105.50
101.85
3.65
8/2/2012
104.95
102.05
2.90
8/3/2012
105.25
102.45
2.80
8/4/2012
105.25
102.45
2.80
8/6/2012
104.80
102.40
2.40
8/7/2012
105.15
102.40
2.75
8/8/2012
105.35
102.75
2.60
8/9/2012
105.80
102.60
3.20
8/10/2012
104.85
101.80
3.05
8/11/2012
104.90
101.90
3.00
8/13/2012
103.85
101.25
2.60
8/14/2012
104.10
101.60
2.50
8/16/2012
103.00
99.70
3.30
8/17/2012
105.10
100.15
4.95
8/18/2012
105.15
100.20
4.95
8/20/2012
105.40
99.50
5.90
8/21/2012
105.55
99.75
5.80
8/22/2012
105.85
100.60
5.25

On the 14th we see from the chart the spread gap is 2.50. There is a good chance for this spread gap to get widen. Therefore let us consider a Bear spread.

Let us assume that we have entered a Bear spread on the 14th. We would have sold one lot of Zincmini at the rate of 101.60 and bought Leadmini at the rate of 104.10

On the 20th we see the spread gap of 5.90, which seems to be a good target to close the deal. We have to buy Zincmini at the market price of 99.50 and sell Leadmini at the market price of 105.40

The result is Zincmini covered  ((101.60-99.50) * 1000 ) with the profit of 2490/- Leadmini gives us a profit of ((105.40-104.10)*1000)  1300/- a total profit of  3790/- sometimes we can make money on both legs like this trade. 


The above is another example of spread trading. In the coming weeks whenever an opportunity to construct a Bear or Bull spread arises I shall post it here for the benefit of the viewers.