Nifty update for 08 - Feb - 2012

We had a negative closing in Nifty after a decent rally till 5400+ levels. Nifty futures held our upper range of 5400 but did not take out the low of 5330 levels. Thus wait for a confirmation of a correction once it crosses this low and this could possibly take Nifty to 5230-5250 levels.The volatility data shows that it is a normal profit booking session and some shorts are placed in 5380-5400 levels.The volume data shows lot of buyers were there at the break out of 5400 on the upside and surprisingly short are placed at lower levels than 5400.Short positions will get added once Nifty futures crosses 5330 on the downside.As of now it looks like a normal bull market correction and lets wait for our range of 5230-5400 to be fully filled. Bank nifty is yet to make a reversal pattern and this could be watched carefully. If there is a profit booking session it should happen in those sectors which have rallied the most and they are metals and banking.Dollar index is all set to move up after forming a base and this could adversely affect Nifty's possibility of breaking the highs of 5400.If Nifty breaks 5330 l&t and Tata steel would suffer the most and as usual reliance gave a break out on the upside at the wrong time.On the upside above 5400 we could still see some short covering rally and it could help nifty to gain some points on the upside.Volume data shows a clear exit signal in nifty close to 5400 and it is time to close some of your trading longs and wait for a good correction to get in. Lets keep 5230-5400 as the trading range.