Nifty for 24 Jan 08

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.

For prudent traders, we just need to look at the chart. The true deciders of the long term trend would be the levels marked on the chart. The top of 5350 and the bottom of 4450.

Traders with deep memories would be equating this crash to the 17 May 2004 crash. The bounce was equally sharp. The market meandered around for almost a month, and then resumed its upward journey.

However, it is not necessary that the same pattern would be repeated again, but the probability is high. A 900 point difference between the trend deciding levels are enough to unnerve even the best of traders. It is human psychology to buy when the prices suddenly start looking cheap. It is just two weeks and we have seen a 1900 points fall.

As of now, the indices have made a short term bullish pattern. It does make sense to buy at this point. But short term traders could work with tight stops. A drop below 4495 should send out warning signals for short term traders.

Slightly longer term traders could keenly watch 4890, and long term traders could monitor the last frontier 4448. I know that the ranges are large, but then it is not everyday, that the indices make a ~10% drop or a ~5% recovery.

Trade happy after planning your trade.