Charts indicate exhaustion of trend

The buoyancy is continuing in the market for the seventh consecutive day. The Nifty reached a new lifetime high of 18,543.15 points and settled at 18,477.05 points with a 138.50 points gain. Barring Pharma and Media indices, all the sectoral indices closed with decent gains. The two-sector indices declined by half a per cent. The PSUBank and Metal indices are the top gainers with 3.98 per cent and 3.89 per cent, respectively. Followed by the IT index with 1.57 per cent. All the other sectoral indices are higher by half a per cent. The India VIX up by 8.99 per cent and closed at 17.18, which indicates, volatile move on cards. The overall market breadth is positive as 1035 advances and 995 declines. About 208 stocks hit a new 52-week high, and 169 stocks traded in the upper circuit.

The NSE Nifty opened with 161.55 points gap up and traded just in the range of 87.85 points. It formed a very small body, doji like a candle. The projected cup pattern breakout target 18,444 points met in the opening itself. As mentioned earlier, no weakness signs were witnessed in any timeframe at this juncture. The market is surprising everyone by reaching new highs every day. The Nifty formed a small body candle with a gap and closed below the open. In any case, a gap down open below the 18445 will be a negative for the market. All the major indicators are in an extremely overbought condition. At least in one time frame, either daily or weekly, the Nifty has to close below the prior day low for short-term weakness.

As mentioned yesterday, it may enter into a consolidation once the cup breakout target is met. The index rose over 1,100 points or 6.31 per cent in just 10 trading sessions since the 1st October low. Three gap up openings in a row is showing optimism in the market. For the seventh successive session, the Nifty closed on a positive note, after May and August. On a 75 minute chart, the Nifty shows the exhaustion of the trend. A gap down open and negative close will result in an island reversal. Lets wait for a healthy consolidation from now onwards. But with cautiously optimistic. Take out the partial profits from the table.

(The author is financial journalist, technical analyst, family fund manager)