The Indian markets ended almost flat for the weekly forming a weekly doji. A Doji depicts indecision and usually signifies a top or a bottom.
The Nifty made a triple top at 5182. So does this mean the rally has ended?
There just might be juice left for 1 final blow out rally upto 5350 or 18000 sensex. For that to happen, the indices may need to dip a bit.
1. The max open interest is at 5200 call for December series and 4900-5000 puts.This means lots of people have interests (Option writers are usually big institutions) to cap this up move at current levels for this month.
2. The Bollinger bands are at 4980 at the lower side and 5184 on the upper side. The Bollinger bands are mostly respected by the indices. The Bollinger bands are narrowing down implying a big down or up move is coming (+- 500 nifty points)
2a. The RSI is making a negative divergence. First time nifty hit 5181, it was at 63, then 59 and now 55. Price usually follows the indicators.
3. The 50 ema is at 4978, the 5 week low ema is at 4920. Usually these levels are respected by the indices.
4. Its the Christmas season and foreign brokerages will soon do some profit booking and go on vacation. I expect the usual December Jan rally to kick in for 1 final swing. But this should happen in the next series.
5. The US markets are rage bound and S&P is oscillating between 2 pivots 1091 and 1106. It needs to convincingly break either these 2 for a breakout or breakdown.
6. The Dollar Index is at 2 months high and this means commodities like gold, oil will become cheaper. The sovereign debts of countries like Greece and Spain are i question. December 14th is a key date for Nakheel bond repayment.
7. The dollar index may retrace its current up move before a final swing up. I would watch the 77-77.5 levels closely.
To summarize, I feel a dip to 4900-4950 is most likely with a final blow out rally of 1500-2000 points on the sensex.