Nifty Strategy 2nd September 2011

Lets ask ourselves a few questions before we commit ourselves to any decisions regarding trades on Friday

1. Do you have any trade right now in the market - Yes: Calls of DLF, JP Associates, Tata Motors and Idea Cellular.
2. Why did you go for this trade - Because my signals told me to do so
3. How has the action been in these trades - Action conforms to the signals
4. Are the signals right now telling you to get out of the trade - No, since the markets were closed
5. What have global markets done in last two days since Nifty was closed - They have been positive, but US markets have not been able to break out of the resistance line of the triangle in which its consolidating since the fall
6. What might happen on Friday - The index may open with a gapup due to positive global cues, contingent to the fact the US markets are positive tonight. After that surge, the internal strength or weakness of the market should take over. There is a turn date as well on 4th September 2011.  
7. So whats your plan of action -  This is a sell on rally scenario we are right now in. Hence Longs should be treated with swiftness. Lets look at some of the critical levels of NIFTY which might give us a clue for general direction of our scrips as well - 5060-5080 is an important high volume node. Above that we move into the bracket of 5120-5130 levels. Above that we move into 5190-5200 levels. We have closed at 5001 and 1%gap up will take us through to first high volume node zone. So we will look for weakness at these levels and will book profits if we think we might be having a sell signal emerging. Ofcourse - we will not second guess the market, we will just follow it. Moreover our individual calls might and can act differently to the market. But remember - its a bounce from oversold conditions, its not a trend upwards.