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 24^th 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

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 14^th 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 14^th. 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 20^th 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.