Difficult Situations

Our current market has been creating waves of confusion among everyone's mind. We are probably the only known market in the world, where the Index is near to its 52 week highs. All other markets, developed and emerging, are almost 12-14% off their highs. China's Shanghai Composite has been trading at 52 week lows.

The question of India being completely decoupled with global markets have risen once again. Whether it is or not, I dont have an answer to it. Neither anyone can say it for sure. To my understanding the downside had to come. It came but alas !!! It came in all other markets except ours. So, I am wrong...atleast as of now....

Now what might happen ?

Two scenarios are present. One, global markets continue the fall or consolidate laterally and India slides down from hereon.....OR secondly, global markets being oversold gives a 5-8% type of bounceback and India, being an outperformer, moves up another 10-15% to new highs.....I dont know exactly as to what will happen.....

Weekly stochastics have moved in the overbought region. Daily stochs is negative. So we might see a downmove towards 5210-5180 region after which a fresh look has to be given. Only a fall below that might continue the downtrend. For any fresh upside, a close above 5335 is necessary, which is the extension of the brown diagonal A1-A4-S' described in my previous article. (Attaching the photo for reference)

So, as of now, one should maintain a cautious approach and be hedged in their positions. Maybe a better trend will emerge by next week....

GOLD

One more thing, in case, I forget to mention later. As some asked me regarding gold a few days back, my sense says Gold had made a short term top around 1265 dollars. The simple reason is the 5-times theory. When any asset class moves from a major trough, it sort of hits a major resistance at 5 times its price. Gold rallied from around $ 253 in 2001 after coming out of a 20 year depression in prices. That means that 5 times of that is 1265 dollars. The recent top has been $ 1264. If that is taken out, the next step would be 8 times of base level and then 10 and 11 times.

Another logic of calculating price increase or decrease is based upon Fibonacci nos. Fib nos are 1,1,2,3,5,8,13,21..... So, whenever a price corrects or appreciates, generally it follows this rule. As for the the 5 times theory, it also coincides with a Fib no, which makes it even more stronger.

Enjoy trading and learning.....

1. Fibonacci Trading: How to Master the Time and Price Advantage
2. MONEY & RELATION TO PRICES (Gold, money, inflation & deflation)
3. Trend Forecasting with Intermarket Analysis: Predicting Global Markets with Technical Analysis (Trade Secrets (Marketplace Books))

Expect the market to come around 5050

In my last article, I was expecting around 4870 but the markets denied that and returned from 4940 after making a double bottom there.

Now, we have moved 350 points from there. If we take it from the recent lows of 4786, then its a whopping 511 points rally to 5297 made today. In percentage terms, thats exactly 11% rise from the lows of the fall.

Amazing it is.....Just calculate now.....When the markets corrected from 5398, it made a low of 4786 which a fall of 612 points....Thats again exactly 11% fall from the highs....This means that bulls and bears are still equally footed in this fight.....

Now, there was defintely some negligence from my side as well....There was bullish target A5-S' of the wave(A1-A2-A3-A4-A5) which defined a target of 5300 (S'), as charted out below but I didnot give a buy call....

Now observe the point S'. This point and point S on the left hand side make the 2 shoulders of of the Head at H. S and S' lie on the same horizontal line (deep red line). Also S' is the target point of the bullish as mentioned above. Further during the upmove from A5-S', the price pattern has created a wave in the form of B1-A5-B3-B4-S'. The diagonal of this comes to B4'. Also one see that the current price is at the top end of the parallel bar formed A5-B4-B4" and B1-B3-S' which is also hiiting the 2-sigma upper deviation in 20 period Bollinger Band.

Taking all things into consideration, I personally feel that Nifty has made an intermediate top around 5300 and maybe poised for a correction till 5050-5080 at least, which is the lower end the parallel bar. Infact, my expectations of the June expiry is around that.

Happy Trading !!!

Recommended books for reading

1. Technical Analysis Explained : The Successful Investor's Guide to Spotting Investment Trends and Turning Points

2. Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance)
3. Elliott Wave Principle: Key To Market Behavior

Bearish wave on 30 min chart for possible target around 4870-4840

My last post here on 31st May had given 5060 as the master figure on Nifty Futures. We saw a sharp downfall of 150 points on a single day after that. But then I could not update here but had written something in our Orkut Community "India Stock Market - NSE BSE" on 1st June immediately after the fall.....The following were the lines....

"Now after the completion, the fall should come to 4920-4880, which is the downtrend upper line of the previous fall....From there NF might move all the way to 5080-5100 (with IFs and BUTs depending on certain other factors).....And then again the fall should come, may be, by next week...."
For reference, Orkut members can verify it here....

http://www.orkut.co.in/Main#CommMsgs?cmm=163277&tid=5230942082622470082&na=4&nst=7172&nid=163277-5230942082622470082-5477773844513333807
The actual lows were 4933 and the highs made last Friday was 5134.9....

Well, past is past....The same question once again? Now what? US has collapsed Friday night. Europe problem is again surfacing. Hungary voicing concerns with multiple opinions.....

Now, as written (one may carefully note the words I mentioned). On 1st June, when I wrote the words, I didnot know that US would collapse on Friday night but had written the words that Nifty would again fall from next week. As it stands now, we are going to see a gap down opening tomorrow morning....The question is how far?

Technically speaking there are 2 immediate parameters to look into.....

1. A big gap left at 5020 on EOD charts. Surely that should be filled up first.

2. If one observes the 30min chart, which I strongly recommended in the last few posts, there is a very strong bearish wave in formation. The wave had completed the 5th point and had closed inline with points 1-3-5. Therefore the 6th bearish leg or the 1-4 diagonal meets at around 4840-4880 zone. Also note the encircled point which I marked on chart. The region shows the throw out which induces people to get into a false belief of breakout, thereby squeezing the shorts in panic. The top point actually could not close above the resistance line and finished just below it. The possible movement path has been sketched for your perusal.

Apart from the above, I am not commenting on anything right now as everything I had written earlier for big trends are still on. I will keep updating as and when each level comes as many of readers have requested for a more frequent updates.

Happy reading and have a wonderful trading week ahead....

Regards.....

[My sincere thanks to all my clients for having shown tremendous patience and trust on me and my team. We will defintely try our best to serve you.

Also my thanks to Mr. Motilal Oswal for personally flying down to Kolkata today to grace the Annual Regional Meet event. My thanks to Mr. Jitendra Panda and Mr. Lokesh Nathani for giving your valuable guidance.]

Please correct the date of previous posting

There might be some errors in the blogger system....The below article "5060...The master figure" was posted yesterday, ie. 31st May, 2010 at 11.05 pm. Please note the timing as it is wrongly put up by the system....

Thanx and regards.....

5060 .... The master figure....

Firstly, thanx to all my readers for the massive increase in traffic hitting our blog....

As I write today, there is a question in everybody's mind....

Have we turned around? Would we see Nifty making new highs....

Well, the answer is a tough one right at this moment. The 30min chart had a bullish wave from 4786 till 5060.....Thats completed.....Now what? Maybe a little wait and see....

The daily stochastics moved to overbought zone in 4 days....The weekly just turned positive...So in a way, there's some positive news......But....I am still cautious.....Why?

Well, SST (Saptarshi Swing Trade) is still in a bearish zone.....and the SELL sign is still ON...

When, I am in a doubt.....I prefer to believe in SST.....And also that the 30 min wave is over....Maybe a the EOD wave is still on for 5200 or we are hitting the top end of the parallel downchannel at 34 ema resistance ????......

Lets wait for a trend reversal first.....