Nifty(5018): Nifty continued to rally and closed above 5000. Round numbers are not resistances but they help in pushing sentiment to the extremes.

Let’s quickly do a check on the positives and negatives.

Whats favouring the bearish case?

1) Our proprietary which has a stellar record since 1997 says the bear market is not over.

2) The rise still looks corrective rise – a three not a five in Elliot wave terms

3) Sentiment on Nifty and INR are getting very one-sided and excessively bullish ( I’m hearing calls for 5600 Nifty and 2008 highs for for ADAG)

4) IT stocks may have rolled over the bearish side

What’s favouring the bulls?

1) The breadth so far has been encouraging.

2) Markets have been penetrating through big resistances

3) Reliance trying to offset the negatives through a buy back

So here we are with Nifty making a dash at the December highs. It is very likely that if market is going to reverse it is going to do it either today with a pop at open or on Monday.

Nifty Resistance : 5065-5075 Support 4960. Watch for the first 15mins, note the highs and lows at 9:30IST. If market drops below the low, high chances that markets have seen an exhaustion. Try a VERY SMALL short with stop at above 5100 or the high of the first mins IF AND ONLY if Nifty drops below the low you have noted.