Dated :- 18. 01. 2015

                                                                       NIFTY SPOT : 8513.8

Hi,

Readers,

Nifty gave respect to the words of my previous blog. Wherein it was mentioned to have patience and wait and watch till Nifty is in the range of 8150 to 8360.

It was also mentioned that :-

Ø Close above 8305 will be the first indication that bulls want to survive and 

    fight back.

Ø 8200 is major support level and is also the confluence of many indicators, 

    thus do not short Nifty till it is above 8200.

Ø It is only some news event which can propel short covering and can take 

    Nifty to higher levels.

In light of above Nifty gave a close above 8305 on Jan. 12, 2015 and after that the surprise news of rate cut by RBI on Jan. 15, 2015 gave a trigger to bulls and propelled short covering.

Readers of the blog had the edge in that up move as no body would have been short as it was mentioned that close above 8305 would be first indication that bulls want to survive and also it was also mentioned that do not short till Nifty is above 8200. Both the conditions/ situations were present on Jan 12, 2015 itself.

However I don’t expect readers to be long either before the surprise news of rate cut by RBI as it was cautioned to be light till Nifty is between 8150 – 8360.

 But, the range breakout on Jan. 15, 2015 (on which RBI cut interest rates) gave the opportunity to buy. Nifty gave a range breakout mentioned in my previous blog above 8360 on the up side and never looked back.

Now What :-

Nifty has given upside breakout of the range above 8360 and charts are indicating that this momentum should continue.

But how this upside momentum shall continue is difficult to justify. Because this up move is supported by unusual moves in some Nifty 50 stocks which also indicate index management or may even forced breakout. Also some of the Nifty stocks are showing fatigue. Also the result season is not so great so far.

But as I always say that WHAT is more important than WHY. We need not to justify the move. It is the charts and future events which will find their reasons to justify. We have to trade only and only on the basis of the charts.

And those charts are supporting this up move and are suggesting that higher levels are coming, thus one should look for buying opportunities. Whether this breakout is real or forced time will tell, but as per charts the only trade is either to be long or have no position.

What this breakout has done is that it has turned the Technical indicators to positive. The kind of breakout Nifty has given, as per my observation, it should keep going up without consolidation from Monday onwards(i.e. Jan 19, 2015 onwards) without spending time. Rather if Nifty starts spending time again at current levels or starts consolidating again at current levels in that case one should lighten the long positions and can even close the long positions and step aside again. Because spending time again at current levels can be –ve for the breakout and in that case Nifty can even come down again.

Why I am saying that run through move is required???

Because :-

Ø Technical indicators have turned +ve.

Ø Stocks which want to go up have already spent time and have given breakout or are ready for breakout.

Ø Most of the Indicators which have turned +ve and are showing full strength at present.

Ø  Spending time would mean that indicators will start losing momentum.

Ø Once technical indicators start losing momentum in that case the Nifty stocks which are showing fatigue will have their say.

Stop losses for the long positions are 8360 closing basis and targets can be 8610 – 8690 – 8730.

With the caveat again that if Nifty do not move run through then book profits and wait again. Because it is always better to be safe than sorry.

Trade Accordingly.