Om Sri Ganeshaya Namaha

Om  Sri  Ganeshaya  Namaha
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Monday, May 4, 2009

Reigning The Nifty --5th May 2009

Nifty Daily Divergence Chart

Nifty Daily Chart

I wrote, "Daily charts show negative divergence on the stochastcs, Rsi and Macd. A rising wedge formation which is bearish in nature is seen, which calls for caution to longs. The resistance of 3517 if taken out , will undo this bearishness".

Breaking out of the 220 point range on the upside , we now have a target of 3737 which coincides with the 61.8% retracement level of fall from 4650 to 2253. However the negative divergences are intact inspite of the huge rise today.

The entire rise has defied all negative divergences and bearish patterns. I would recommend remaining long as the trend is up , but with a proper hedge. This could be by way of Covered calls, Bull spreads or Put protection.

Happy Trading !!

Lakshmi Ramachandran


Anonymous said...

Hi, I have lossed lot of money buying naked puts.. I would like to trade causiously this time. Your bull spread is good idea. Please suggest me good stirke prices for the same.

Lakshmi Ramachandran said...

it is always sensible to buy ATM (at the money) strikes and sell strikes a 100 to 200 points away. Dont wait for expiry reverse the transactions and take profits when you are making some.