Tuesday, September 9, 2008

Road to Nowhere

The Market continues to remain in a trading range, giving little indication of moving out one way or the other. A broad range betwen 4250 and 4650 has locked the Nifty inside it for over seven weeks. We have seen many small ranges develop inside the larger range. Anoher one of these small range is visible now, enclosing the last five days in its boundary. This small range is between 4350 and 4550. A move out of this small range will probably give a small trend, maybe down to 4250 and on the upside to 4650. This is not much to go by, but the Market is in a choppy, directionless mode. We have to follow market momentum. The momentum is confusing.
For short term traders, the best way is to trade these breakouts from the small ranges. For position traders, the circumstances are quite frustrating. There is no clear trend. The advice to go with the trend, is therefore of not much help. Traders should attempt to catch extremes, sell on signs of weakness after a rally, buy on signs of strength after a decline.A description of strength & weakness is found here.
So, where are we now ? Looking at the sharp rally in the Nify, we are probably on the rally side. Then, look for signs of weakness to go short. Those who do not like to take short positions, should take profits/ Cover any long positions, and step aside.

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