Update for 4th March 2011

  Nifty Futures Poised for a Test of the 200 DMA at 5660 ?

• Although, Nifty futures closed flat on a close to close basis on Thursday, the contract has retained all the positive momentum at the close.
• Nifty futures tested the lower supports twice during the trading session on Thursday, once in the morning and the second, in the afternoon session. But both the tests ended above the lower reference level of 5450.
• Therefore, Nifty futures seemed to be set for a test of the upper resistances. 
• The next higher resistance above the present swing high of 5598 is the 200 DMA placed at 5660.
• The next higher resistance above the 200 DMA is around the 5800 levels, where the futures contract and the underlying index, Nifty,  may meet the upper boundary of the long running trading channel.
• Due to the lack of time, this update is kept short, but with all the usual charts and data. 

    Nifty Futures - Intra-day Chart

     Nifty Futures  - Daily Chart 

Update for 3rd March 2011

  Markets Rally Hard and What Now ?

• Markets rallied hard on the second day of the budget. It seems that the reason for the rally was not the actual budget proposals but those many things which were not in the budget. The rallies in the Asian and western markets following the then correction of oil prices after the spike also helped.
• On Tuesday, Nifty futures opened higher above the reference level of 5350 at 5375 and started to rally right from the opening. In this process of higher open and a rally from there, a subtle gap ( the gap between Monday's last traded price and Tuesday's trading range ) has been formed in the Nifty futures contracts. These subtle gaps may sometimes indicate further strength or weakness, as the case may be, especially when formed near lows or highs.
• As the general mood of the public including this author was negative on Tuesday, the rally was expected to fizzle out either at 5400 or at the higher reference level of 5450. As this author has written on some earlier occasions, too much of consensus is a dangerous thing in the market, the market turned dangerous to the bears once it broke out above the 5450 level by around 12 noon of Tuseday.
• Thereafter, Nifty futures rallied almost nonstop to close just above the higher reference level of 5550. This close, incidentally, is inside the earlier resistance band between 5550 and 5600 levels.   

    Nifty Futures - Intra-day Chart

     Nifty Futures  - Daily Chart