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SGX Nifty 27th April 2016
SGX Nifty / Nifty Futures rallied today and finally closed the day at 7955 spot Nifty levels mentioned. As of right now we are holding positional shorts in Nifty and our average for those four parts comes to 7841 spot Nifty (Please see the post dated 25th April 2016. Complete detailed explanation is provided there). As per our analysis / Nifty Prediction / Nifty Future tips we maintain that these prices are to sell and not to buy (Minor variations are possible but they do not seem important to us, the larger point is upsides are minimal and downsides are open now). When Nifty Futures was at 7000 levels those were prices to buy and now 7800+ prices are to sell. We have booked profits in NMDC and Kesoram and we will reenter them on the lower side, please understand we are bullish on them from the longer term but in the near term we see a correction in them too and we will get lower prices to reenter those stocks.
The overall sentiment indicators are showing us a clear top out sign and since this rally has been mostly of Global nature where the best performing markets are not the ones with the best fundamentals rather they have been markets like Brazil, Russia where there was significant under ownership. The same goes with the Indian Stock markets most of the under owned sectors like Public Sector Banking, Metals have really moved higher while the percentage returns in some of the better and well managed companies have been lesser. Anyways if we look at the VIX it is showing clear red flags. The perception that VIX is showing is that all is well globally and locally and all the problems of China and Global growth have been taken care of. To our mind we do not think that is the right picture. The current over bought situation in most global stock markets and a combination of extremely low VIX levels are telling you a story that most of the world markets have gone from extreme pessimism to extreme optimism and that to our mind is a clear sign that we are at the top or almost there. Further the sentiment indicators show us a totally bullish picture locally as well. Everyone is talking about 8100-8400 and all of them at 7000 were talking about 6500 as a given (look at this perfect Rahu signature) .
Further if we take a look at the Nifty Charts are clearly indicating fatigue and further to that there are multiple resistances lined up right ahead. Like for e.g. 9119-6825=2294/2=1147=6825=7972 (as per gann theory the 50 percent retracement of a larger fall is a critical area for reversal) Then if we look at the momentum indicators most of them are showing us clear signs of divergences and historically whenever we have seen such divergences we always have see the markets make a significant top. There are multiple other reasons which do not support bull move now.
Bottom line we are not bullish and we do not think it makes any sense to be in buying positions here.
Good Trading To You!