NIFTY FOLLOWING LEVELS SO FAR

Nifty has followed the road map charted a few weeks back and is at a very crucial resistance band.


5180 - 5220 is a band which will be extremely difficult to cross, in the same way that 5090 - 5110 acted as a support.

However, the fall might not be fast, since lots of traders are stuck with short positions and they will cover on every drop, thus supporting the market.

A close near the lower band - as close to 5100 as possible - will be an invitation for bears to attack overnight, taking Nifty below 5090.

As seen on numerous occasions, such levels are generally crossed only with the help of a gap down.

Time for caution to hold longs overnight, since bulls might run out of steam any day.

EDGE OF THE CLIFF

The stage is set for the bears.

Will they? Won't they?......

They need to ensure Nifty gapping down below 5060, else be ready for a fightback.

AAL IZZ WELL.....Is all really well??

A lot of people have a wrong understanding of the science and art of Technical Analysis.

Technical analysis is not a tool for prediction, like what astrologers attempt to do. TA takes help from historical data and shows what are the possibilities for the future. There are those who just follow the trend and and prefer to get stopped out, or there are some who pay heed to the various possibilities and take action in 'anticipation'. The former use TA only as a science and the latter understand the science behind TA and use their mental creativity as an 'art.

Hence, I always maintain that TA is a science and also an art!

It all depends on perception. It was this perception that did not allow any shorts till 4830 was being held before the budget, and the result is a 6% rally in Nifty in 4 days.

However, now, there are some roadblocks ahead. Although TA as a science says to be long, TA as an art suggests caution.

A glance at the daily chart shows a striking similarity between the chart when Nifty was 5310 and now. What happened after 5310 is known to all - whether the same will get repeated is something no one wants to even think of at this stage. The post budget rally has brought in a sense of euphoria and the market is HOT now. The bears are known to strike when the market is HOT.Is all really well??

If the similarity between the first week of January and now holds true, we might have already seen the short term top, or are very close to one.

The hourly chart also shows a lower top in Stochastics and also a sell on MACD, and hints that Nifty is headed down.

If Nifty cannot cross and close above 5115 - 5135 on Monday, it is safe to say, we are headed downwards.

Downwards to where?? Everyone knows the huge support at 5050 - 5070, and if the bears cannot break this intra day, they will try and do it overnight.

Below that, the level 4960 -70 is also a critical level, and if Nifty holds this level, it is safe to take longs again, with a stop of 4930 and stay long for this month!

An interesting combination to go long will be Nifty near 4970 and the leader near 980 once again.

It might sound funny that I am cautioning against fresh longs and advising possible shorts - especially when the US market squeezed the shorts on Friday, and FTSE of UK made a new 2010 high.

But yes - the risk: reward ratio is certainly not in favour of fresh longs at this red hot stage !

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ANNOUNCEMENT - A full day course has been planned - on the Science of Technical Analysis and the Art of trading stocks and Nifty futures - in Pune; The date is Saturday, 3rd April.

Those interested in more details can get in touch on the yahoo id timethemarket@ymail.com

FOLLOW CHARTS AND IGNORE NOISE.....

As mentioned, the 2 key stocks that held the 200 dma outperformed the index by a long way - Tata Steel and ICICI Bank.

It is amazing how, if one just follows charts, and keeps the 'noise' out, a completely different picture emerges. I have heard many are still going short or averaging earlier shorts, believing that this is just a pullback rally. So what is it is just a pullback rally!

A rally is a rally is a rally; it is no untouchable that one is not supposed to trade long in it.There will be enough signals when this uptrend ends, to sell longs and go short.

The long call at 4870, with a stop of just 40 points is 150 points ahead, and a reversal will also be spotted within 30-40 points from the top, if not earlier. The 2 key levels that all will be looking at now are 5060 - 80 and 5160 - 5180; however, there is another important level which will come into play tomorrow - no, it is NOT 5050! If Nifty manages to cross this level smoothly, the writing is on the wall, and Nifty will follow the levels posted 2 weeks back - yes, who says the trend changes every day?

The low on Nifty spot today needs to be keenly watched, and if bulls manage to hold this well, bears are in serious trouble in this 'pullback rally'. It is too early to talk about the importance of the low today, and it will explained at an opportune time.

Amongst the key stocks, the 'leader' of the Indian stock market is fast losing its credibility and it has to do something as early as tomorrow - readers will know which stock is being referred to; and a 3% rise is expected in this stock sooner rather than later.

So, ride the uptrend till it lasts and be ready to sell and go short.

You can get 'live' updates on

http://twitter.com/ap_pune or

http://twitter.com/TimetheMkt


A full day course is being planned - on the Science of Technical Analysis and the art of trading Nifty futures - in Pune; The tentative date is Saturday, 3rd April.

Those interested in more details can get in touch on the yahoo id timethemarket@ymail.com