Nifty has retraced till 78.6% of the entire rally and is expected to trade till 6000 - 6030 with a reversal below 5640 "BUT". Lets talk about the IF's and BUT's in this scenario.Bank nifty should give a leading signal for any decent reversals which has not happened yet as both nifty and the banking index are moving almost with the same momentum. If we observe the charts of other indices including the small cap and midcap we could see they are making lower tops and in a good bull market all the other indices follow nifty and it has not happened yet. The small cap index has even broken 52 week low and it gives a negative picture regarding the market. In the short term the retracement was good enough on the downside and nifty is trying to make 5500-5600 as the floor for some time but it is ready to break 11600 in bank nifty. If we see the chart of nifty we could see lot many trend lines can be drawn to offer the so called 'support', but the chart of bank nifty gives only a level of 11600 to break the bullish pattern of higher top and higher bottom.Now coming to the US market S&P is finding decent buying interest at 1590-1600 zone but it is all set to break below these levels and as a trader who watches the global markets closely one should be aware of this danger and below 1590 -1600 can be considered as a break down point. Despite the heavy fall in dollar index dollar/inr futures could touch 59+ levels and it also gives a word of caution in the near term. I had mentioned a few stocks in my previous posts and those were JP associates and SBI. L&T is also driven by momentum and it can go to greater highs to 1530+ where the higher end of bollinger bands are placed. As long as there is no consolidation there is enough reason to consider the rally as just a pull back and we should see some consolidation before stating it as a bull market in the short term.
