Nifty for 06 Aug 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.

When the market constantly breaks downside targets, we re-evaluate the position. With revised calculations, we arrive at a short term target of 4234. The target of 4234 falls just within the grey band which I have been carrying for the past two months. Readers must have got tired of hearing this everyday, but the fact is that the bottom for today is another very significant bottom. If this bottom is broken, and if the grey band below it is violated, on a closing basis, then things could really get ugly for the investor.

The probabilities were higher for the Index to move back up, but even that has failed.

It is a reflection on the current weakness of the market that it took the index almost six weeks for the market to move up from the 4100 to 4650 regions. It has given up almost 60% of its gains in just two weeks.

Normally, we witness buying interest when the price gives up around 62% of gains. So we may again witness bouts of buying from tomorrow. However, we would need to evaluate how strong the buying is to really decide whether the short term trend has indeed changed from down to up.

As far as the longer term perspective is concerned, I can only repeat my suggestion of many days … technically the position remains as a suggestion to buy on dips. Profit taking also may be done quickly, unless we are long term investors.

Plan your trades and trade happy.