Wednesday, May 28, 2008

Small Uptrend Could Continue Upto 4990

We were expecting the Nifty to bounce back a little today as it had reached its short term support and also there were other short term positive signals available. It opened about 20 points higher, came down, went up again then lost about 40 points from there before it went in a small 20 point range for about 3 hours and it was only after 1:30 in the afternoon that the Nifty started obliging us by moving in the direction we predicted. The move up was sharp, rapid and almost correction free.

I had a meeting with a client today evening, which then got converted into a dinner meeting and came back late and am not in a position to write too many things right now. Am already dozing off. Please excuse me if this newsletter is a little incoherent today.

Seen above is the daily chart of Nifty. As expected in yesterday’s edition, the Nifty did give us a blue candle today. This rally was expected to last upto 5000 levels with some resistance between 4935 and 4950. As mentioned earlier too, one should not be tempted to take any long positions there as we would expect the markets to come down again. I’ve mentioned earlier too that a trend is our friend and we should follow it till it ends. When it ends, it will tell us so. As of now, we are in a short term and intermediate term downtrend and we shall follow it till we get a signal that it has ended. That signal will come if the Nifty were to cross its previous pivot high which is at 5168 in the intermediate term and it is surprisingly close at 4932 in the short term, though, I would take the high before the last one which is at 5058.

Have got lots of other ideas to talk about as well, specially about the RSI finding support at 40, but will probably do so in tomorrow’s newsletter. And I’m not expected to be in town over the weekend so tomorrow is the last day that I’ll be writing for the next 3-4 days. I shall be back Monday evening so expect the next newsletter (after tomorrow’s) on Monday night or maybe Tuesday night. Of course, I’ll try and keep something ready which I can shoot on Saturday or Sunday to keep my readers occupied, but, at best, it will be another lesson on investing and no charts. Hope that should be okay with you.

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