Analysis and Game Plan - 26 December 2018

  • Dow closed on a weak note. Analysts are saying it is little far from bear market, but if one looks at weekly and daily charts, then it already is in bear market. Although inherent nature of market is bullish so it can change, but trend right now is bearish.

  • There does not seem to be solution to government shutdown before 3 January 2019.

  • Trend was positive till 4 days back, but suddenly it is bearish. The day there is a resolution mixed with start of earning season, we may start to get some sense of direction.

  • Nifty current and next month OI shows short buildup.

  • Nifty max pain has finally started moving down and is at 10700 with PCR at 1.03 which is bearish to neutral.

  • Call writing OI shifted to 10800/10900 showing limited upside and negative bias.

  • Bank Nifty future also had a slight short buildup.

  • Max pain moved down to 26800 and PCR is bearish at .74.

  • One thing worth noting is that despite max pain moving down, it is still in hh and hl pattern which is bullish and only a pattern retrace unless we get some lh and ll formation for Nifty and Bank Nifty.

  • Call writing was way more than put writing.

Conclusion: Trading with bearish bias.

  • Game Plan:

  • Planning to hold on to my bear call spreads.

  • Planning to add more lots today for 20 - 22 point profits. Will add it based on market condition as I cannot rule out a technical bounce any time. So might even go with a put calendar or a call calendar by eod.

  • Not planning to cover my bear call spread, but will do if need arises.

Rohit Katwal

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