The Nifty took a day off yesterday, marking time as the bulls were probably tired. But, the trend does not change. For the second consecutive day, the Index closed above 5120. Now, I am not a big fan of numbers. Often, we hear someone say: "If xxx closes above XXXX and remains below YYYY then do this if DDDD is not violated". I always wonder at such statements: what exactly does this mean?
So, the number 5120 is not sacrosant. It is just a convenient level I have identified to focus on. The Nifty was inside a range, and to me, a close above 5120 is required to suggest that a range breakout is taking place. That sems to be happening, as the Index is likely to close above 5120 today, giving us three consecutive close above the resistance.
Our task is not to look at valuations. The NSE website says that the PE for the Nifty is 22.8, hardly low. But, so what? Markets can remain irrational for long periods of time. The trend is up, so go long on dips. Always follow your stops.