January 27, 2014

Market outlook

Markets open gap down and close 2% in the red. Close was near day's low and also the year's low (2-3 days before it closed at the year's high).

Important support exists at 6100-6000. This level has been holding since 2-3 months. Because of this, some buying may set in at lower levels.

On a different note, VIX shot up by 16% indicating increasing fear. This will however become a problem as we head into expiry week as a sudden drop in VIX + time decay can knock off premiums from the options.

FEB series option writing points to support at 6000.... this is tentative and can continue to change this week.

All this might mean that markets may play the fool for some more time before giving a clear direction.

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