Nifty close to intermediate high: Udayan

Mkt pre-empted global rally?

We have made a pre-attemptive move to 5,100, which is the resistance area where the Nifty has been pausing for a couple of times. Can't say that there is extremely great momentum in the market coursing through the screen but the trend seems to be still moving along nicely - without too much help from Asia that is - but we are in a nice groove. We may just flatten out a little bit and take a bit of time to take out this area of congestion of 5,100 but there is no indication of the screen that will falter in reaching our target of that intermediate high once again. So yes, things are okay for the market as we head for settlement this week and we should be on our way hopefully if the US markets holds up to another fresh intermediate high.

Disconnect between US, Asia

That is the curious part of the picture over the last few days. Asia sort of stopped responding to the good US cues and that disconnect worries you a little bit. In any case, if you look at all global indices that we monitor nowadays on a daily basis they have sort of gone completely sideways. The S&P is at 1,100, 10 points higher or lower. You look at the MSC Asia index that is hovering in a really tight range of a 118-119 so that is not moving too much on either direction.

The dollar index which creates the maximum amount of noise nowadays is pretty much at 75 sometimes 50 higher than 0.5 points higher than sometime 0.5 points lower than that.

All the critical indices whether it is the SPX or the Doll X or the MSCI Asia Index they are all tightly in a range and something will give at that point. I do not know which way but it will not continue like this it cannot for a very long time. Because either you will see a breakout well past 1,100 on the S&P, which is possible before the end of the year and the dollar will crumble once again to 73-72 odd and that would pick up the MSCI Asia Index as well or the reverse will happen but we have just spend fortnight or more essentially doing nothing but creating a little bit of noise within a very tight range with any of the big global commodity parameters or indices that are monitor so yes markets have held very well.

There seem remarkably resilient or you can even call them strong but this kind of sideways kind of trend will not last very long. I think it is just a matter of time before you see a more decisive breakout or a breakdown.

Levels for Nifty

We are just about knocking about the doors of the old intermediate high so you would have to say that the screen is strong because standing 80 points away from a intermediate high - you cannot call the market weak at all. Can it spend a bit more time in this zone of 5100? It can give up 20 points, put on 20 points and spend a bit of time circling this level before heading towards an intermediate high, it is entirely possible. But for the traders at least the screen is pretty much well cut out. The Nifty is trending higher, it is showing no signs of breaking down, it just attempted a little bit of a fall a few days back but did not go to 4,900, which meant that the trend was very much in place and they will just simply trade long. I think the positional traders will keep a stop loss around 4,900 because that is the pivot point below, which you start reassessing your positional long trades. As long as the Nifty stays above that, the target very much remains the intermediate high and if it gets there probably even past it, you have got to be a bit nimble footed out here because you are trading in an environment, which is not exactly exhibiting huge momentum globally. We are not seeing markets move 5-7-10% in the burst out four-five sessions. We are not in that kind of a market at least yet.

Could it happen if there is a decisive breakout? Sure it could but right now it is that hesitant cautious kind of an up move which you are experiencing so traders will still continue and should continue to trade long maybe with stop losses so that they are not held carrying the baby if the market turns around but for the moment I think you need to be holding pretty much what the market is saying which is longs.