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The Elusive Breakout

July 2, 2010

Its not funny anymore.
And I mean it!

Back in Jan, in my numerous tweets and thoughts which popped up,on markets in this blog post, I have talked how sceptical I am of ever increasing claims of outperforming Indian markets. Folks went home with great predictions of 25%+ growth and Sensex at 21000 by June and Moon at 100INR. Okay the last bit was a joke.

But you get it. I was sceptical and brought this thing up time and again, that its possible, we might not see more than 5300 before the first half of the year.

Given that,I had been validated, it will be of course natural for folks to believe, I must have made full use of it. Partly, would be subject of your awe and reverence. Okay, thank you. I love it. But truth to be said, being right and making money is totally different thing. And there is no credit, in being right like this, when I couldnt really profit from such an insight.

For the past six months, 5300 had been a graveyard in the sky. Each time NIFTY attempts to go past it,it crashes under its own weight. In June atleast it,attempted to go beyond at least 4 times.  A classic and absolute flight of volatility.

Quite some time back, on May 28th, I posted a chart, here talking how the big picture is, we are trapped in an upward sloping channel. Not too bad, for those who read it, and went long after the decimation of May.

I myself, went long in my personal account and it was good. But the inability to make a higher high is getting me. 5300 is proving too good for NIFTY. And with this, each time NIFTY closes above 5330, its brought down to 5350ish. or so. Almost within the next trading session.

Take, it from me, it will take a major act of strength and resilience to cross and stay over 5300. Am I getting worried. No. Am I getting frustrated. Yes!

In my belief, we are in the end game of this. The charts show, a couple of inside bars preceded by the 30th June big fat candle. Typically this is a classic sign of missing volatility. I believe,we are on the last stages of such a test.

Its possible, that NIFTY drops 40-50 points more, to shake out weak hands. So that will make it close to 5190.  But, I am overall of the belief that its time,for the next leg of the rally.

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