Still in a Trading Range

On the back of ‘good’ news, the Nifty rallied with an opening gap, closing 130 points higher. Today’s market action should be a bit of a disappointment for the bulls, since the less than 3% gains are lower than the gains recorded by the Asian and European Markets. Also, the Nifty drifted down to close at the lows of the day.
Too much should not be read in intra day movements. Maybe, tomorrow could be different. The facts are:
The Nifty closed 130 points higher. Short term momentum is up.
The Index remains inside a trading range with boundaries between 4200 and 4650.
Movement inside the range can often take the shape of a drunkard’s walk, meaning the moves are random, with no pattern. This seems to be happening now.
Inside this trading range, a smaller four day range is now visible, with boundaries between 4330 and 4530. This smaller 200 point range will determine the next move of the market. A close above 4530 calls for buying, below 4330 calls for selling. Inside this range, there will only be minor day trading opportunities.

Never Fight the Market

This is a pre-market post (7:54 AM) on Monday. I received many comments on the Saturday post where I suggested that the Nifty could touch 4650 now, and, 5200 maybe. Some comments have been published.
The underlying theme in most comments is: : “This is a suckers rally”. “The Nifty will face resistance “. There is even a suggestion to go short at higher levels.
In my humble opinion, this is the wrong approach to trading.
Never fight the trend. An individual trader may not be in tune with the current momentum. Often, the best traders devlop mental blocks. This is always possible. But, going against the momentum or trend is almost like financial suicide.
What is the evidence ? The Nifty is likely to see a big rally today. Probably touch 4600 easily. This is not just the Nuclear Deal, today morning, the USA has nationalised two of its housing finance companies. This news is giving a 4% rally all over Asia.
But, the reasons for the rally are not important. The evidence is that the market will rally. We should let the market eventually decide what it wants to do. Meanwhile, either we go with the flow (which is Up) or stay away. Going short is not a good idea at all.