Bulls fought a very ferocious battle today braving all that was against them with a Dow correction, Asian markets all trading weak, a very weak opening, down 100 points, over bought indicators and what not.
In the end, it really proved that the undercurrent was very much bullish and bulls could rise against all odds. The moment the key level of 3140 was not broken and that most of the end-of-the-day bears were all sitting in pain already added fuel to the fire and bulls took complete charge and proved their might.
Now that it is history, what next is the big question?
The 200 DMA is now very near at around 3437 which is another milestone for the bulls. But then if that is reached will the bulls be able to penetrate through that with full might and reach further high levels.
This is where my view is extremely cautious.
9 out of 10 analysts have all gone bullish and the retail sentiment has started to fly high and there are headlines seen as to sensex could see 21 K levels again and so on...
The weighted volume for NIFTY that we saw today is the highest in the past six months and it looks like everyone is getting sucked into this as if there will be no gravity tomorrow and going forward.
Now if we have a close eye on the technicals, NIFTY has had a consequtive 5 day bull streak and most of the indicators are in the over bought zone which might start showing its impact going further.
It might be high time to think in terms of a bearish trend reversal, though it will certainly be premature to initiate a trade in the direction. The best strategy would be to go for a 'bear call spread', selling 3500 calls and buying 3700 calls for a net credit if at all NIFTY breaches the 200 DMA tomorrow as my take now will be that, there will be a reversal atleast in the short term before this expiry and the 'bear call spread' seems to be a safe bet.
-
Happy Trading
http://www.tripleint.com/
Chart courtesy: nseindia.com
No comments:
Post a Comment