Weekend Views On Nifty!!!

We had one of the most prolific weeks in trading history; over the week, the benchmark index gained 14.08 per cent, which is the sharpest since the week ended March 27, 1992. It has also risen for 11 consecutive weeks for the first time since August 2005. During these 11 weeks the index has gained a whopping 66.80 per cent (5,561 points) since the week ended March 6, 2009. In fact we just happened to give a new definition to Black Monday as something like Magic Monday or simply borrow the title of an old song by Bangles called “Manic Monday”! Anyway the euphoria will fade away sooner or later and once again we would go back to aligning ourselves with the global cues (enuff of decoupling for now!) the next domestic trigger for us would be THE BUDGET sometimes next month!

The Nifty chart below blasted through the 3800 resistance on what some would call The Manmohan Effect, and now staring at the over head resistance at 4650. Yes we have gone above the 200 periods MA on the weekly chart, technically a Bull market Zone. But it would be prudent to wait for perfect alignment of the MA’s to happen and that is the Price above the 20 MA and the 20 MA above the 50 MA and the 50 MA above the 200 MA!!! And like I mentioned that this was a euphoric move it would be only wise to add that a further retest of 3800 is warranted to really cement this move up.

Nothing much to add to the daily chart for now, the MA sequence I just mentioned above seems to be happening on the daily chart. Notice that the Price is above its 20 MA and 20 MA is above both the 50 and 200 MA and now the 50 MA is trying to crossover the 200 tryin2make the GOLDEN CROSS! One thing I wanted to mention that RSI the week before last was showing negative divergence; many must have traded it and lost. This only brings back to much repeated tenet that Divergences need to be confirmed by Price Action. And in this case the Confirmation would have come from decisive break of the TL and the failure to hold the previous peak marked P (remember P also stands for Patience and Patience is what you need in abundance when trading!).

If you felt left out in the recent run up, Please don’t berate your self and for heavens don’t go chasing stocks. Like I mentioned earlier we have a lot of “Reversion to the Mean” to do so you would get lot of chances to buy your favorite stocks on pullback to supports! Till then Patience is the mantra you need and what the heck having Cash in the market also makes you a market player; A Strategic Player!