Nifty MP charts

S&P500 fake move above 1130 today screwed all world markets!

No explanations needed -- just pictures are enough!

And when was the last fake move? The day when Nifty hit 5350 -- ES futures went down below the sacrosanct level of 1040 (around 1:30 or something).

Is this leg of Nifty's run done and consolidation will begin next few weeks?

Options/futures data for 16th Sep (EOD)

Summary:

1. Yesterday's rise above 5900 didn't have any options support and hence we saw a very decent correction from the intraday top above 5913.

2. The story of the day was -- finally there is someone writing calls at 6000/5900!! Not much though but its a good start. And given the pain options writers at 5800-5500 went through a few days back, I hope these guys are smarter.

3. Not many willing to write puts at 5700/5600 and infact OI is being shed at those levels. Either its profit booking OR because this market is too volatile and you never know when it can fall 100+ points.

4. And PCR close to or above 1.8 ROCKS! It has never failed to predict a temporary top in last 3 occasions. So its a metric one can't ignore. by EOD PCR had cooled off to 1.72 because of call writing at 5900/6000 and and some lower level put covering.

Nifty Futures:

SEP: 3.93Cr OI up 1.5 -- From last few days there is either OI covering or very small OI addition. So primary reason for this run is short covering. If longs get added - the market will sustain and go up.

OCT: 40L OI up 11%

Banknifty Futures:

26.3L OI down 3% - The short covering is more evident in Banknifty.

Weekly MP chart:

5802 being the weekly VAL - bulls need to defend it.

Options/futures data for 15th Sep (EOD)

Quick Summary:

1. Options data has "TOO MUCH BULLISHNESS" written all over it. Will too much turn out to be too bad? Only time will tell

2.Call writers at 5500-5600-5700 are still covering and there's no respite. Only 5800CE writers are daring not to cover today. Lets see if they are proved right or crucified tomorrow.

3. Put writing just continues @5900/5800. But interesting there is reluctance to write puts at 5700 - because if there there a fast fall the 5700PEs will gain very fast.

4. The last but the most dangerous one -- PCR has hit 1.79 now! Typically Nifty tends to reverse direction - even if its a temporary reversal --when PCR hits 1.8+ So we are not too far from there. Two such instances of reversal on account of "OVERDOSE Of BULLISHNESS" were -- around June expiry (Intraday 5370+ and reversed) and a few days back around August expiry (Intraday 5540+ hit and reversed)

Nifty futures:

SEP: 3.87Cr OI up 3.6%

OCT: 36L OI up 6.6%

Banknifty Futures:

27L OI flat

Summary:

1. Last few days in options world, we have seen something that's never seen before! Two words to describe options action "messed up". And its a call writers' nightmare for sure. Calls being covered furiously across all strikes 5500-5800. Can't blame them because some of these call writers have lost their shirts in last few days.

2. Only at 5900 - some call writers are willing to write calls - but not much though. So this market has NO STRONG RESISTANCE from options point of view - except for the fact that 5700CEs vs 5700PEs is still high.

3. On the other hand put writers are not willing to come out and write a lot of puts at some strike. But at least they are writing some at 5700 & 5800.

4. PCR is almost about to enter the danger zone. Now at 1.73 - one more day of action like this and we might put a temporary top here. PCR will cool off if the beaten down call writers start writing somewhere.

Nifty Futures:

SEP: 3.7Cr OI down 3.7% -- Some shorts covered here

OCT: 33L OI up 6.8%

Banknifty Futures:

27L OI down 1.6% -- BN short covering continues

Composite profile of Nifty from 1st SEP:

Trading well above VWAP & just above the value area from 1st SEP. Buyers in full control of this market. May be some consolidation is expected at current levels.

Options/futures data for 13th Sep (EOD)

1. This breakout has been an call options writers' "nightmare" for sure. For those who had made it habit of writing calls as a "free money collection" method last few months - this month has been a pay out time with interest!

2. To say that options picture with yesterday's action is bullish is an understatement. There was huge call covering at 5600/5700 and put writing at 5700 & 5800. The picture at 5700 is still not completely in favor of bulls 91L calls vs 59L puts. May be another 30L calls covering is needed there for sustaining 5700+

3. 5600 is also still not an extremely strong support yet. It needs another 10L-15L 5600CEs to be covered and an equal amount of 5600PEs to be written.

4. So the options picture now leaves us with range broad of 5500-5800 with 5600-5800 the spotlight range.

5. With yesterday's brutal attack from bulls PCR has inched up 1.6! Bulls are pushing the limits but they still have some room left to go before we hit 1.8+

I have a special chart for those who consider NAKED CALL/PUT writing as free money collection method:

THIS CHART SAYS -- NEVER EVER DO NAKED CALL WRITING!!! Look what happned to greedy call writers who wrote 5700CEs in the range of 5-8 rupees. Yesterday they owed 7-10 times more more. One may collect free money for couple of months by writing these options but eventually it will blow a big hole in the pocket for sure. So always consider backspread/ratio spread strategies.

Nifty Futures:

SEP: 3.88Cr OI up 1.6% -- Breakout with not so significant OI addition. May be initial burst was short covering. Need to see if OI addition happens this week.

OCT: 31.5L OI up 11%

Banknifty Futures:

27.3L - OI up 1%

Nifty profile from 5400-5770:

This is the composite profile from the day Nifty started rising from 5400 levels. VWAP is 5562 - shows bulls are very much in control. My observation is that eventually VWAP will be visited but no point in taking anticipatory shorts.

Options/futures data for 9th Sep (EOD)

Summary:

1. The highlight of the week was blockbuster (70L) addition of OI at 5600PE and covering of 26L 5500CEs which makes 5500 the new base for this market.

2. 5700 is the current resistance now with 1.2Cr OI on 5700CE. But something interesting is that 28L of these options were written on last Monday in the price range of 10-18. After that OI has been flat. So call writers are in wait and watch mode.

3. The market now depends on one thing -- the 5600CE writers. Only 3.5L calls have been covered despite two strong visits to 5600+. If 25-30L calls are covered at 5600 then Nifty will sustain above 5600 and make a dash at 5700

4. PCR is now at 1.48 - so we have some room till PCR pushes to 1.8 before Nifty puts a temporary top

5700CE MP chart

Something I noticed from OI and 5700CE chart was that - there was 28L OI added on Monday (6th Sep) in the price range between 10-18. And from that day onwards there was not much OI addition. It seems to me that the buyers are defending that option as its stayed above VWAP whole of last week. Only on Friday we had some sell off but it still looks like buyers are in control. If 5700CE remains above 19 for the most part -- then those 28L, 5700CE writers will be under pressure all the time.

Nifty Futures:

SEP: 3.82Cr - OI up 3%

OCT: 28L - OI up 12%

Banknifty Futures:

27L - OI up 9.8% -- on last Wednesday's update I had mentioned that Banknifty OI reduction was a cause for concern. Well, looks like that concern is addressed now with almost 10% longs added on Friday's session. Need follow up from here.

Nifty MP weekly:

For any pullbacks weekly POC of 5587 (and also weekly VWAP) should provide first support and then it would be 5562 - Weekly VAL

Banknifty MP weekly:

Banknifty went from P-shape profile to a bullish price extension on Thursday. Bulls will look to defend 11233 Weekly VAH.