Don�t trade till 2 days of buying happen: Jai Bala

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » RELATED NEWS Logics that drive Stock Price Patterns Mkt reprieve in Fed hands: Experts Mkts trade higher: IT, metal, oil, realty stocks It's still a difficult period for mkts ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 10/02/12 Are Mutual Funds betting on Nifty? Other Stocks in this news State Bank of India | Tata Sponge Iron |

Jai Bala , Technical Analyst, cashthechaos.com , said he wouldn't advice anyone to venture out and try a long trade until one sees sustained buying for the next two days. "There could be a short-term rally, but it is going to be just a traders market. It has to be just an intra-day play or probably an overnight play at best," he told CNBC-TV18.

 

Excerpts from CNBC-TV18's exclusive interview with Jai Bala:

 

Q: At 4,700, do you think it is conclusive enough to initiate a long right now?

 

A: We had two important technical formations on the charts because of what has happened yesterday. The Sensex has actually broken January lows, which was quite obvious. The other technical formation that has happened is Nifty has for the first time in almost five years closed below its five year trend line on a daily closing basis. This has come very close on the heels since it is closing below the long-term trend line on a weekly closing basis last Friday. So, the market is trying to work off an oversold level.

 

Q: You are suggesting that the recovery is not strong enough. What is the advice for a Nifty trader at this point in time?

 

A: I wouldn't advice anyone to venture out and try a long trade until one sees sustained buying for the next two days. There could be a short-term rally but it is going to be just a traders market. The pay out has to be just an intra-day play or probably an overnight play at best.

 

Q: Is there any level you are looking at which point you may shift from probably selling at rallies to starting to buy at dips?

 

A: The previous support was about 5,050 on the Nifty. We need to see two consecutive closes above it and in fact the 200-day moving average is at about 5,080.

 

Q: Is there any stock that is showing you a pattern of having bottomed out?

 

A: I don't see any stock that seems to have bottomed out. In fact, Reliance has given a negative breakout. It has now got into an island formation like what the Sensex did on February 6. We have a similar negative formation on Reliance . In fact, it has come below its 200-day moving average for the first time in three years and State Bank of India has fallen below 200-day moving average for the first time in 12 months. One stock that might be looking strong at the moment is Tata Sponge Iron .