Nifty has been pretty volatile in the range of 7900-8300 but the strategy is working well for the spread traders as i recommend in the previous post: ” Go long on stocks and short on index for next two expiry”…..And even long term investors are safe as they were recommended to buy PUTs on each rise…but short term traders Burnt fingers as stop loss was triggered at 8088!
Today, after a strong short covering move on Nifty, still we are in a Confused Box of Technical signs!
As you all could notice with the Green Trend line with today’s low, we have got positive divergence on Nifty which is a good sign of short covering. Even the options suggest that next two days can be for the bulls after a long time. But i am not convinced thoroughly with Candle stick pattern for a strong reversal. Even all short term moving averages have given a bearish cross overs to a larger degree of Moving averages signalling that yet the move is not completely in hands of Bulls. On the upside of the box we have 200 day SMA at 8252 which could act as a strong resistance for short covering.
Even on the fundamental side, we may get some boost from news and FII before budget as the stocks are much undervalued but the quarterly results would surely drag Nifty to last lag of correction before we completely take a U-turn towards new high. So Long term investors shouldnt chip in a hurry for Jan rally as this is just a relief rally for Bulls while investors will surely get a better chance after Budget and before March ending.
So strategy still remains the same:
Short term traders: Go long with Stop loss of 7920 and Target 8250
Safe traders: Buy PUTS for February on each rise with Stop loss of 8720
Spread Traders: Go Long on selective Stocks and Short on Index