03 Jul '23 Post Mortem on Nifty
Another island formation by N50, gap up opening of 68+ points and then a rising with strong momentum. I was eagerly waiting for a pullback to take some contra positions. Although we had a small retracement from 10.30 to 11.20 approx 78pts - there was no follow-through.
So the only viable option trade was selling the PUTS. This is the 4th consecutive day where N50 is jumping gaps & never closing them intraday - pure island formations.
Usually when we have multi year breakouts & sentiment shifts we get to see consecutive breakaway gaps.
India VIX had an intraday LOD to HOD swing range of 11.4%, it was hovering between 8 to 9% higher than the previous working day. Quite unusual to have high VIX when the markets are powering through nil resistances.
I may be the only analyst who feels an interim top is getting formed at the current levels give or take 50–80pts. The rationale being, we have run out of gas. If the momentum has to continue - it has to come from NiftyIT and it has to come fast.
We cannot stay at these levels without pure momentum, otherwise the bears will start their game!
1hr TF
The island formations in blue color. The area that I personally feel may be an interim top 19334. Again I am okay to be proven wrong if we have further island formations! Even though I might feel a top is getting formed, I have not taken any bearish bets nor should you! As an option trader it is best to react to the market once it makes its move rather than predicting it.
So the only viable option trade was selling the PUTS. This is the 4th consecutive day where N50 is jumping gaps & never closing them intraday - pure island formations.
Usually when we have multi year breakouts & sentiment shifts we get to see consecutive breakaway gaps.
India VIX had an intraday LOD to HOD swing range of 11.4%, it was hovering between 8 to 9% higher than the previous working day. Quite unusual to have high VIX when the markets are powering through nil resistances.
I may be the only analyst who feels an interim top is getting formed at the current levels give or take 50–80pts. The rationale being, we have run out of gas. If the momentum has to continue - it has to come from NiftyIT and it has to come fast.
We cannot stay at these levels without pure momentum, otherwise the bears will start their game!
1hr TF
The island formations in blue color. The area that I personally feel may be an interim top 19334. Again I am okay to be proven wrong if we have further island formations! Even though I might feel a top is getting formed, I have not taken any bearish bets nor should you! As an option trader it is best to react to the market once it makes its move rather than predicting it.
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