The Bulls Win the Confidence Vote - Sainik

On Thursday, July 3, my trader friends were nervous when the Nifty futures closed at 3870. To cheer them up, I bet the Nifty futures would go up 100 points the next day. The caveat was that if I won the bet they would give a part of their gains to charity, and they agreed laughing uncharitably. Friday came, and voila, the Nifty futures crossed 3970 intraday.

Well, the Gods were kind to me and the charities. Encouraged by this, I made another prediction that the July-11's Nifty spot would close higher than the previous week (July-4)'s close. Second time lucky, you would say, as the Nify crossed 4000. Then came another prediction, that the Nifty would close higher on July 18. 'Do not test your luck so many times', cautioned my skeptical friends. However, all my indicators were all flashing green and I made my bold prediction.

Friday, the sharks were circling around me, even at noon, with the Nifty futures struggling about 3940 levels. My ardent supporter - my wife - too had given up because the market was "apparently" doing nothing. The day's open, at 3951, was the day's high, volumes were low and the market appeared comatose. While everyone around me was pressing the sell button, my mind went to an old market adage: "Never short a dull market".

How true it turned out to be! What a wonderful sight it was for the bulls, as the market climbed higher and higher, like it was Jack's beanstalk. As the CNBC anchors droned on and on, spewing decidedly "bearish talk", the market closed above last week's close.

With the week wrapped up, this now brings us to the prime question: Now what?

As we enter the "confidence vote" week, with all the talking heads analyzing and re-analyzing the magic number 272, the market has already voted in favor of the bulls.

Technically, the Nifty is at the 20-day moving average (DMA) resistance, about 4100. The Nifty has never crossed the 20-DMA resistance to the upside, which it had broken downward, on May 22, when it was trading above 5000 levels.

For all practical purposes, this resistance is formidable, but the price action in the last couple of weeks suggests that it is still "Advantage Bulls".