So Near yet so Far

Today 5300 PUT Option Premium reached 70.20 but yet did not go below 70. I had placed an order in the morning for 70 and then did not get time to check it again. Right now I am not sure whether I should be happy or sad. Given that the US Markets are closed for Independence Day holiday and closing price of 5300 PUT around 75-76 I think we may just about get my target entry tomorrow.

However, with every passing day the probability of a upward spike in NIFTY is waning. Similarly the time remaining for NIFTY to make down move is also reducing and so is our risk.

Have a look at the chart:

If you see the peak made sometimes in Nov 2010; from then it has been a free fall with lower highs and lower lows. This is first rule of finding trend. This continued till around Dec of last year when Market was about 4500 from where it took off to above 5000. Now here Market violated  the earlier High and it went above that. After that came correction but it did not go below earlier low in May-June of this year. From there we are again going up. This picture become a lot clear if you see the weekly chart.

Fibonacci levels for this move are also plotted. Fibonacci is one of my favorite topic and I could discuss that for hours. I am really clueless how I am gonna write about it during Tutorials but it will be very interesting I am sure.

Short term view, markets are stretched above all EMA levels as well as fundamentally not much has changed to warrant this rally (apart from new FM and few positive announcements). Few broker houses have given positive reviews for India equities in recent days but that is it. Nothing has changed fundamentally for World or for India barring probably the sentiment. All in all we should see some correction. Technically I am not able to come up with any indicator which is telling me that the fall is imminent. We are hardly in overbought condition. MACD is not giving any sell signal and even Fibonacci levels are not conclusive.

In such scenario, it is worth thinking that whether we should take one sided call and buy only PUT Option betting for the fall. I probably have to study S&P 500 Index of US more closely as that is the one which affects us more directly. Will have to do a lot deeper analysis but in the meantime will stick to earlier stated position and will buy PUT call if opportunity is there. Though I may reduce the entry point (risk) a bit given the information in this post. Let me know what you think. Happy Trading.

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