The Nifty gained 36 points over the day to close at 5124. Despite
the gains it was not a very encouraging day of trade at the
markets yesterday as the indices were just not able to register
any incremental strength. Even last Friday the markets opened
gap-up but thereafter follow-up strength was missing. At the
same time the pending bullish pattern target of 5170 is not
allowing the markets to correct significantly and hence we
continue to trade higher with a positive bias. After the rally
yesterday the set-up has further turned overbought along with a
sell trigger on a few oscillator studies. Even on the hourly charts
there is a clear divergence between the price action and
indicators. This is because the three recent higher highs on the
Nifty have seen lower highs on the indicators we follow. This
clearly suggests that a substantial pullback is in the offing (60-
120 points atleast) after the indices test the supply levels of
17300/5170. Some stock specific long-side opportunities are
likely from the Mid-cap space. Overall, another day of ranged
volatility is seen as the indices prepare to get into pullback mode.
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