Nifty update for 20 - Jan -2012

Finally it broke out above 5000 and it is close to the upper band of 5050-5060. It would be an exit call at any levels above 5000. As I said in earlier posts anything close to 5000 or above should be considered as a bonus for a long position is Nifty and use dips for further long positions. The immediate support levels are around 4880-4900 and it is expected to have a good profit booking session to create further buying positions. Thus no need to buy breakout highs as it would be a risky call just because we are close to the upper end of the channel. The whole market set up still appears to be quite bullish and when ever we talk about a correction in the short term it should be considered as a profit booking session instead of a short sell. It is time for experienced options traders to start writing far month calls instead of buying put options. As of now the current rally is being built up by relevant consolidation and profit booking sessions and thus the setup looks quite attractive on the long side. Volatility data shows buy on dips would continue for some more sessions and profit booking is happening at highs. Cost of carry is increasing but on regular intervals it is giving time for profit booking sessions too. Thus traders are getting enough time to book their positions and not many people are getting trapped at the highs. If it is a downward movement the cost of carry would be at the peak and the market would be biased towards the long side. We are close to that kind of a market where every body is bullish and it would be extremely biased towards a single side. Thus one needs to be really cautious on the highs if you have a buying position. The range can be 4880-5060