1. Periods in the markets where there is low volatility is followed by periods of high volatility and big moves. The ATR (20) which is a measure of volatility has come down to 73.Before the falls in Oct'09, Jan'10 and the rise in March'09, the markets had similar low ATR values.
2. A big move is coming up. But in which direction.The Bollinger Bands are at 5200 and 4700. Since we are at the upper end of the range, this typically favors a downmove to test the lower Bollinger Band. Taking into consideration of time factor, we may test 4600.
3. The rise 14 is at around 65. See the trend line of the tops in recent past. If we continue to move above, we may hit 79 and test new highs. If we break the trend line, we move down.
4. Shorting levels would be break of 5100 and 5092. I would wait to see 5092 broken first.
5. The trend line joining the tops from Jan'08 to Jan'10 comes to around 5200, this is a very good indication of markets moving up.
6. The Bollinger bands have expanded to move outside the Keltner Bands. This is often an indication of a breakdown coming.
7. Huge Open Interest at 5000 puts. This may mean 5000 is a rock solid support or someone is creating a smokescreen.
8. Long term Gann supports come at 4900. 4900-5000 has 20,50,100 emas around it. If it breaks 4900, its bye bye time.
Fundamentals:
1. The Advance Tax numbers would be out next week. I feel they are already discounted by the market.
2. Good IIP numbers, but market did not respond to it.Markets not responding to good news is a negative.
3. Borrowing costs going up. 10 year bond yield at 8 pc. Rate hike is imminent.
4. Monday is 23rd day of this rally.We fell 23 days and we have achieved time equality. We still have retraced only about 75 pc. Monday is also new moon day.If we dont rally, it could be a turning point.
5.NMDC IPO has come and gone. There are slew of IPOs raising money.Signs of toppishness.
To summarize, break of 5180-5200 would signal potential new highs. Break of 5092 and then 5000, 4900 would signify the party is over. Lets wait and watch.
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