Does it means that we are almost at BOTTOM?............

I am pasting a post I read somewhere....which makes a good sense..:

A comparison between the savage corrections of May-June ’06 and the current one highlights some startling similarities. After closing at the then all-time high of 3754 on May 10, ’06, the Nifty plunged, losing just under 30%, before finally bottoming out at 2633 on June 14, ’06. This loss of 1,121 points was a 78% retracement of the rally that had started after the correction of June ’05, from a level of 2316 on the Nifty. In technical analysis, the 78.6% retracement is seen as a significant support level and the fact that it was not violated augured well for the Nifty. The result? The Nifty rallied sharply and reached a new all-time high within the same calendar year. This time round, after hitting a new alltime high of 6357 on January 8, ’08, the Nifty witnessed a savage correction, losing a similar 30% at close on March 17, ’08. But the point to be noted is that this loss of 1,854 points is close to a 78.6% retracement of the rally that had started from the lows of August 17, ’07, from a level of 4002 on the Nifty. So, if last Monday’s closing value of 4503 is not violated on a closing basis, we have a strong case for the resumption of a rally.


WHAT MORE?

At close last week, the Nifty March put-call ratio was quoting at 0.79, oversold by any stretch of imagination. And almost unbelievably, the 5100 put continues to see a build-up of close to 19 lakh shares, the highest among all put options. Although the Nifty has swung wildly between 5000 and 4500 in the past 6-7 sessions, the 5100 put has hardly seen unwinding. Neither have these putwriters bailed out at higher levels, nor have they panicked at sub-4500 levels. This suggests that a level of 5000+ is still possible on the Nifty, though it will require a monumental effort by bulls. Traders willing to bet on this should buy call options, as that will limit the downside. And the best one looks to be the 4700 call, which is available at an absolute bargain, at an implied volatility (IV) of 37% and a downside of less than Rs 40. However, brave-hearts betting on this would do well to keep it small and have a strict stoploss at a close below 4503, because all we are trying to do is catch a falling knife. At the same time, the 21% of Nifty futures positions that have been rolled over into the next series also reflect that bears are trying to bail out and are not very confident of rolling over into the next series, whereas the bulls are slowly, but surely, trying to put at least their first foot forward. On Tuesday, while March futures shed close to 44 lakh shares in open interest, April futures added more than 20 lakh shares and in the process, shot up from a discount of about 50 points to a slight premium. This suggests that a majority of the futures rolled over on Tuesday were long positions. Interestingly, the very next day, while March futures shed more than 28 lakh shares in open interest, the April futures added only about 16 lakh shares and in the process, pushed itself from a premium to a discount of over 20 points. Although most of the rolled-over positions on Wednesday were shorts, the fact that they were probably lower than the number of long positions rolled over the previous day indicates that bulls are slowly trying to muscle their way in.



Does it means that we are almost at BOTTOM?............