Tuesday, May 4, 2010

Crucial level of 5160 (Nifty) has broken, avoid bottom fishing

Finally, bears out of the hibernation

  • The benchmark Nifty finally saw a downside breakout from the triangular consolidation and did manage to close below the support 50-daily exponential moving average (50-DEMA), which again boosted back the confidence among the bears. Moreover, the break of 5160 has confirmed the Dow Theory's sell signal with lower top lower bottom formation in place. In addition, the daily ADX has began to strengthen, after reversing from the oversold line, signaling the end of a trading range and a development of new trend in the downward direction. Hence the general picture is clearly a sell on rise story.

Crucial level of 5160 (Nifty) has broken, now from current levels traders are advised to avoid bottom fishing for time being. Reduce long position in derivative and maintain strict stop loss for all positions.

Investment Ideas

  • M&M: CMP @ Rs517 (Target Rs633)

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