Is this Rally for real?

(Caution: Time reference of this post is Friday 22nd September 2012)

Whoa... NIFTY made a 52 week high today. What a rally. Honestly speaking, how many of us were expecting it? We were around 4770 in June with all gloom and doom. We usually have these extremes moodswings before any turnaround. In Jan 2008 there was this height of optimism where one could easily hear all our everyday friends like Chaiwale Bhaisaab, Doodhwale Bhaisaab, Autowale Bhaisaab talking about Sensex and all rag to riches stories that they had to share. And just at the start of this month there was so much pessimism regarding Government, Policy Logjam, Coal-Gate, Parliament Adjournment and what not. Then this massive move today made my last post expecting some fight between bulls ans bears look like a silly joke... so much for news based Markets. So are we out of the woods really... is this rally real and is actually start of a massive Bull Market?

Obviously I do not know. Definitely not yet.

But let us see some facts. That's what we can do and try and decipher some signals from those facts. Today along with NIFTY, there are not one or two but 20 stocks which are close (within 7%) to their 52 weeks highs. Many of them are real close within 2% and some 5% while 4 of them have actually made these highs today itself. These 4 are; Grasim, ICICI Bank, Kotak Bank and HDFC Bank and real close are L&T, HDFC and Ambuja Cement. No wonder most of them are Banking stocks (that actually worries me as well) with all reforms, CRR cut and all that. It may take me few months to write everything about these stock from fundamental analysis point of view and by that time data might have changed already... ruining all my efforts. So I will do what I can do in lifetime of this post... post charts. I will post only one bank stock so that we also cover many sector's stocks in the process (note that stocks here may not be true indication of their respective sectors).

1. Grasim

Found really nothing remarkable about the chart. Just that it is following up NIFTY movement. RSI is in overbought zone but it can stay there at higher levels for longer time. Just look at RSI in August.

2. HDFC Bank

Nothing special again. This script has been taking good support and resistance levels from Moving Average lines. Multiple occasions can be seen above. Right now however, it is comfortably placed above MA lines.

3. Larsen and Toubro

Move from 1300 to 1600 in less than 4 weeks. Very impressive. This script is one of my long time favorite for intra-day as well as long term investments. Its been a laggard for some time in tracking NIFTY but surely trying to play catch up.

4. Ambuja Cement

4 out of 4 charts are showing a Golden Cross where 50 MA has crossed 200 MA from below.
4 out of 4 charts are showing no serious overbought condition.
4 out of 4 charts are showing good moves with above average volumes.
4 out of 4 charts are showing values stretched above their MAs

I am trying to see some sign of exhaustion in the rally and unable to see anything wanting serious caution on NIFTY or its components as of now. What this entails is enjoy the rally while it is in play but keep strict profit targets and stop losses. It is very easy to make notional money in the present market, difficult is to keep it.

Wanted to do this post on Friday itself but was unable for one or the other reasons.... very sorry. I will make another post on similar lines where I will examine major World markets in details to see if they help us in understanding the trend and timelines for this rally.

I should be able to do that tomorrow. Happy Trading till then.