Ramblings Of An Insane Mind! A Bit of Nifty Analysis Too!!!

Had a little time this weekend so thought why not delve deeper into Nifty? The first two charts above are that of monthly and weekly time frame. Both of them have been adequately marked. The Head and Shoulders on the weekly have some ominous targets which I believe are too far fetched. But then a friend pointed out take a peak at the historical chart of Nikkei and nothing will seem far fetched after that! They plummeted from 40k to 10k! Scary??? Can’t help it that’s the way the market goes and it surprises most of the participants. Below are the daily and hourly charts. So far technically the first line of defense is 4250 and below that 4050. Going even deeper you get 3800 and further below we have….forget it, this is giving me a sinking feeling and nausea so we better be content at 4250 and something below that for now! For some solace we should apply Newton here “For every action there is an equal and opposite reaction”. So if this is the reaction to the bullish action we had witnessed then we will also have reactions to this bearish move maybe some fast reversals and pull backs worth trading! As I always say Hope springs eternal in a bull’s heart!

Technically the markets will react the way they ought to react but sometimes in between we have certain anomalies which result in more skewed reactions albeit temporary. But these reactions are violent enough to shake quite a few people or let’s say majority of people. I am talking here about some external factors we are faced with. You see the cRUDE shocks and rising Inflation are a part of life and they are people intelligent enough to tackle them. It is only when politics starts interfering with economics this produces a heady cocktail that the Markets abhor. For us we have a few more indicators and oscillators to watch while we trade in Nifty;

1. Left Oscillator: The Left is an important part of our coalition government. But they have been oscillating violently (stochastics behaves much better!) between support and withdraw support. Damn it’s very difficult to pin point there OB and OS levels!!!

2. Nuke Deal: Here again Left is playing a role of nuking the government rather than having a Nuke deal with the U.S Of A. This is more like a falling moving average providing resistance on the up move!

3. Inflation: This is more like a sentiment indicator. It elicits spasmodic reactions in the end it is quickly forgotten till next Friday when new set of numbers are released!

4. Political Hullabaloo: This is more of an Open Interest scenario. Yeah every political party or rather every leader (here the leaders are bigger than the party!) has his own open interest. This goes up and down with the spoils he can lay his hands on.

Who said trading Nifty was easy? Apart from classic technical techniques you need to keep the above mentioned also in mind because they are the culprits which might result in the draw down in your account!