Nifty update for 1st December 2011

As mentioned in yesterday's post Nifty took a pause at 4860-80 levels and it is still a major hurdle to cross.One good thing for bulls would be Reliance is consolidating quite well at 760-770 levels and trading with better accumulation on the lower range.If volume could push it to 800 levels Nifty could surpass the hurdle and move towards 4900+ zone , otherwise it looks quite difficult. Nifty took support at 4750 levels and had a dip if we compare with yesterdays levels. Dollar index is just taking a pause for the second day at 79 levels and that is really helping Nifty to stay range bound though with a negative bias.Bank Nifty and major banking stocks are looking dangerous on the long side as when ever these stocks go up they just form a cluster of resistance and come back. I would expect today's low as a major turning point for nifty and if it is taken out we could see 4630 levels once more. Anyway we are bound to test 4630 once more, let be after testing 4900+ levels or once 4750 levels are taken out.This is a classic bear market rally as i mentioned in my weekly update , it forms a bottom goes up with a sharp move , give side ways movement and again test the previous low. If it consolidates at these levels with out taking out the recent lows then there could be a trend reversal on the upside , so as of now the trend would be still down with some sharp whipsaws.As i mentioned in yesterdays post though it was a range bound market with a negative bias call options should have been bought on dips, but if it makes a dip tomorrow and take out 4750 it is not a dip and it would be a clear sell signal!!! The premium is getting reduced whenever it is getting near 4860-80 levels and it indicates lot of short positions accumulating at those levels. Thus even if it crosses the upside barrier it would be this short covering rally to push Nifty to 4900+ levels and not fresh buying,so be careful on highs.