If one goes through my previous articles, one will find that I had clearly asked to buy in dips (if at all). Hopefully most of my readers benefitted from that. Targets of 3350 was completely met and the index started hovering in the range of 3350 - 3400 since then for the last 3 trading sessions. In fact, I had advised to remain hedged around this zone. I will now explain the next possible moves.
If one looks into the Nifty daily charts, one will find that 200 DMA is paasing around 3437 levels. What does that mean or might possibly mean?...........
The answer is that most of the traders (including many big shots) trade by watching the mathematical indicators like moving averages, MACD, Stochastics, etc. [Please note that mathematical indicators are nothing but effects of the index/stock movement and not the cause of the movements]. And to many of them 200 DMA is a supposed to be a stiff resistance or supply zone. I dont know why? But since many people will try to book profits at that level, it will definitely be tough for Nifty to break that easily. Infact, Nifty didnot break it today and fell down 50 points near the close of day. It may so happen that Nifty becomes ranged-bound between 3340 and 3390 for a few days with one or two attempts to break the barrier. If that happens, most of the shorters will again derive confidence and try to play the short game. And that might just prove to be the trigger for further upward movement.
As of now, the volume has been really supportive. There is no sign of distribution in the markets. The FII's have bought 2300 cr of stocks in April alone. If there is no bad news globally in the coming week and Indian companies deliver a decent result, the 3437 or the 200 DMA barrier should be broken and Nifty will straightaway head for 3650 zones (1-month futures) which is again the 61.8% Fib retracement of the previous Oct falls. Infact the resistance zones will start from 3600 onwards.
Till now, I am amazed to see that very few people were actually taking deliveries back home. Until n unless, the % of deliverable shares increases, the chances of any major fall is minimized. Infact, I would recommend to go long on the bankex, junior index stocks and midcap 50. RIL in my view will face stiff resistance around 1770 (spot). SBI should be the major leader.
Remember one thing: When midcaps start to run, never short the market. They move very fast. Its only when they fizzle out and large caps try to make for it, the actual weakness settles in. Lets see how it spans out. But do keep an eye on 3330 on the lower side (1-month futures). 2 days of closing below that level might change the scenario. And always keep on booking profits at regular intervals. Small profits when compounded gives huge returns rather than watching notional huge profits and finally settling with small absolute returns.
Wish all the traders a happy and enjoyable time ahead. Stay tuned for next update.........
If one looks into the Nifty daily charts, one will find that 200 DMA is paasing around 3437 levels. What does that mean or might possibly mean?...........
The answer is that most of the traders (including many big shots) trade by watching the mathematical indicators like moving averages, MACD, Stochastics, etc. [Please note that mathematical indicators are nothing but effects of the index/stock movement and not the cause of the movements]. And to many of them 200 DMA is a supposed to be a stiff resistance or supply zone. I dont know why? But since many people will try to book profits at that level, it will definitely be tough for Nifty to break that easily. Infact, Nifty didnot break it today and fell down 50 points near the close of day. It may so happen that Nifty becomes ranged-bound between 3340 and 3390 for a few days with one or two attempts to break the barrier. If that happens, most of the shorters will again derive confidence and try to play the short game. And that might just prove to be the trigger for further upward movement.
As of now, the volume has been really supportive. There is no sign of distribution in the markets. The FII's have bought 2300 cr of stocks in April alone. If there is no bad news globally in the coming week and Indian companies deliver a decent result, the 3437 or the 200 DMA barrier should be broken and Nifty will straightaway head for 3650 zones (1-month futures) which is again the 61.8% Fib retracement of the previous Oct falls. Infact the resistance zones will start from 3600 onwards.
Till now, I am amazed to see that very few people were actually taking deliveries back home. Until n unless, the % of deliverable shares increases, the chances of any major fall is minimized. Infact, I would recommend to go long on the bankex, junior index stocks and midcap 50. RIL in my view will face stiff resistance around 1770 (spot). SBI should be the major leader.
Remember one thing: When midcaps start to run, never short the market. They move very fast. Its only when they fizzle out and large caps try to make for it, the actual weakness settles in. Lets see how it spans out. But do keep an eye on 3330 on the lower side (1-month futures). 2 days of closing below that level might change the scenario. And always keep on booking profits at regular intervals. Small profits when compounded gives huge returns rather than watching notional huge profits and finally settling with small absolute returns.
Wish all the traders a happy and enjoyable time ahead. Stay tuned for next update.........
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