Nifty for 25 May 07

These are my personal musings. These are not in any way meant to be trading advise. To view the full chart, right click and open in a new window.

As was suggested yesterday 24 May, that the correction does not seem over, the market opened with a downside gap. It was also suggested that “according to calculations, the market could see short term supports at 4170, 4095 and 3980. Allow the market to confirm these short term bottoms, before we change our mind about buying in.”

The market did take support at 4141, between the two calculated levels, and then there was no looking back. Today’s upward move has all the signs of short covering by panicked bears.

Another reason could be the weekend factor, where the bulls have masterfully trapped bears. Very frankly, I am very apprehensive of such a market move. In such an event, normally, we can expect a bear attack soon. Therefore, for any buy action we take, we must keep the low of today at 4141 as a stop, to avoid calamitous losses.

Sometime, we cannot plan for such a situation, where the market tanks at the open, giving the impression of weakness, and carries up all through the day.

After today’s move, the sentiment is fragile, but back in the positive direction.

Plan your trades and trade happy.