We had a quite surprising but a very good rally from the fist week of January and is still going strong without any pause.One good thing happened on Friday would be the break out given by Bank nifty on the upside.As i said in the previous post 5330 would be the maximum upside for Nifty for me to square off my trading long positions.It does not mean that Nifty could not go up further, Nifty could go all the way upto 5400+ levels and nothing could stop it if it wants to.I would like to play any upside move would by creating a bull call spread with a delta neutral position.You have a much shorter expiry compared to previous months and Nifty is close to the top.Thus make use of the time value that is available in February options and keep 5230 as the cushion for all long positions.One good signal of a strong market would be moving higher without taking out the previous swing low. Except once (when it took out 5170) it moved creating new highs with out taking out the lows.If we carefully observe the Nifty chart we could see that traders are creating short positions on every rise at 5230 and 5290 levels.Both these tops were taken out because of the short covering happened above these levels. In a nut shell we could see that in the recent move from 5230 - 5350 levels bank nifty gave a break out only in the final hour of trading and metal index closed on a negative note. Thus there would be lot of short sellers at every top who wish to catch the top and go short in the market.If we look at the market situation there would not be any opportunity to buy puts before crossing 5230 on the downside and these short positions got stopped out at every new high. It would be illogical to go short in this kind of a market without any reason. It is a fact that Nifty got stretched on the upside and a healthy correction would be inevitable. A correction does not mean that Nifty would lose 400 points , it can correct 150-200 points and new buyers would get in on every dip. Use the current situation as a buying opportunity in the equity segment on every dip and for any short positions let it make a top by consuming some time.Let it be a bottom or top , any market has to spend considerable amount of time at the bottom or top.Cash flows are getting stretched on the upside so as an investor i would not buy any stocks in the current situation but would like to stay with my current portfolio.As per time cycle we have important dates coming up in this week for some major moves.The exact date would be 5th of Feb, but as it is a Sunday we could except the reversal moves in the coming week. Lets keep the weekly range as 5230-5400.
