Friday, June 11, 2010

Rally to top of range

Thursday saw a rally to the top of the trading range, which is between 4970 and 5150 for the Nifty. We have strong chances that the Nifty should reach 5150 today, given strong cues from international markets.

The trading range remains intact with support now at 4970 and resistance at 5150 (so far!). A close above 5150 will give the first hint that the range is breaking to the upside. If the market remains higher above 5150 for at least two to three trading sessions, we will assume that the range has been broken on the upside.

We are traders, not forecasters. It is our job to follow the market. While I have been consistently holding that we are going lower, it is the market which decides what it wants to do. A move above 5150 (as explained above) will then become a buy on dips trade.

More than the Nifty, we should be watching the S&P500 in the USA. This index closed at 1084 approx which is lower than 1104 that it saw last week. If the S&P500 were to move above 1104 decisively, chances are that most of the other world markets will follow. My point is: a breakout in the Nifty is only half the picture, the other half is the S&P500.

Humble Pie
The markets teach us to be humble, all the time. On Monday, I suggested on CNBC that the Nifty (then at 4990) was unlikely to go back to 5150 this month. Just four days later the market proves me wrong. That is not an issue, since the market will have its own mind, and we do adapt to the market. The problem is: why should I even think about what the market will do or not do? Why not just follow the setups / signals? When I start getting these periods of overconfidence, the market shows me my place and keeps me humble for the next few months.

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4 comments:

rocky said...

sir please update the track record it has been more than 07 days and if possible can you disclose about the ifty positions as you suggested on cnbc and if possible can you paste your achdule for the week on tv which is to be telecast

satishhere said...

I start getting these periods of overconfidence, the market shows me my place and keeps me humble for the next few months.>>>
Sir,
Just one more reason you give me that why i Should Follow you....

One Need A GREAT DARE , COURAGE to Accept not so perfect comment....

vivek said...

Sir, I am a very old subscriber of trend mechanic. In ur todays trade idea biocon is a triangle pattern. Sir Reliance & Brittania are making similar paterns but on monthly charts. Being on monthly charts are these of any consequence for a positional trader.

mbansalicy said...

not a single thing in this world are perfectly right.how can a trader be sure 100% times on his predictions ??