So Nifty has been rocking the charts at it’s all time high and with many speculators claiming each day to be a top while prices keep on rising. This is not something new in a bull market rally however today here are the list of reasons why I feel that it could a short term top meant for correction till 9000 or lower.
- The OI Buildup in 9500CE is greater than the 9500PE Buildup while Nifty closed at 9525.75 (spot).Though roughly balanced, ideally CE OI greater than PE OI denotes conviction by the smart money that the prices are expected the close below 9500 in the near future. If the prices do close above 9500 the writers will be underwater and the short cover could catapult Nifty to knew highs!
- A very basic indicator is the market breadth, shows a divergence and 588 stocks advanced while 817 declined. This generally shows that most of the stocks are not participating in the rally and is very unhealthy for a steady upmove.
- If we look at the charts of Nifty and Bank Nifty, there is a divergence, we saw divergence initially where Bank Nifty went to ATH while Nifty consolidated, now we saw Nifty at ATH while Bank Nifty yet to form the ATH. This again shows that the conviction of the upmove is not reliable.
These are some of the reasons why you could pinpoint this price 9530 is the short term top. This does not mean shorting is the best idea, I would probably suggest buying more equity at lower prices as the bull market still has some steam left before the tables turn!