Nifty Index updated on 16 August 06

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.

In intervening holiday seems to have brought strong bullish emotions to the fore. The Index broke out up with a large gap. The breakout is more significant because it has moved out of an ascending triangle, which is considered to be an extremely bullish pattern. The high of today hit a roadblock due to profit booking. This profit booking is understandable, as a previous swing low on 16 May at 12:00 hrs registered a low of 3383. The previous demand zone normally exerts a supply resistance, as those who would have bought at higher levels, would be trying to exit at breakeven.

The turnovers on both BSE as well as the NSE were extremely good, again reflecting strong pent up demand. My personal trending indicators are still showing no weakness. True, the short term indicators are in overbought region, but that does not mean that the Index will collapse. It is natural to expect some mild correction.

The climb up of the Index over the last nine weeks has been laboured, no doubt, as it had to break through a lot of resistances. Now these very same resistances would turn as supports.

This brings as back to our mantra of buying on dips. And keep tight stops to lock in profits.