1. As expected yesterday ,above the midpoint of 5460, Nifty touched the upper range at 5520 levels.
2. Interesting was the close of the day ,above 5500 levels and 5dema, and near day's high. There is a negative diversion in 5min and hourly Indicators.
3. The 5500 calls gave way and reduced in O.I. by approx. 14 lac .The 5400 puts consolidated with 11lac + and its total O.I. reached 93lacs+. Also 5500 calls have exceeded 5500 puts now signifying building support at 5500 levels too.
4. For a change ,FIIs were buyers today in excess of 500 cr.
5. Trading above 5500 levels ,(High Volume node of today ,vwap and fresh long addition level ),will target 5550 and 5600 levels .See Fibo. chart .The 200dma is near 5625 level.
6. One Important observation is that ,it has been seen in last couple of years that option analysis may predict the movement of the smart money and hence the likely direction of trade .During such times of sideways movement generally the Put addition provides a good support at the strike level , also O.I. reaching near 1 cr. apprx. empahsizes the same (that too in the first week of the month).This pattern has happened repeatedly during turns of the market after significant correction .Now it's showing up in 5400 strike Puts after today's trade (93lac+) . (Alternatively the break of 5400 level will give flash 200-300 points ) .
7. This observation also brings to the drawing board the alternate EW count . The Primary count is shown in the charts but now the alternate count of 5 - C -4th since 4675 should also be taken into account .Last 4 days of trading is in the triangle pattern and can be an ending diagonal ,before the 5th starts.
When in doubt ,stay out ,calculate the probabilities ,let market show its hand ,then enter with low risk and clear direction.Time to be cautious ,unbiased and flexible.