Dear readers, first I will present my theory as to why I gave an urgent 'sell call' in the morning. I hope that has benefitted most of you but still I will present the reasons for giving the same call...
The reasons are many and the fall was due to the combination of all factors.
1. Over the past couple of days, Nifty was showing signs of heavy overhead pressures while moving above 4650 and was making a rounded top on daily charts.
2. 4650-4700 were the areas from where Nifty fell last year during Aug-Oct 2008.
3. There was also a 61.8% Fib retracement of the period between Jan 2008 highs (6331) and Oct 2008 lows (2228) at exactly 4773, which was very nearby. Nifty futures made highs of 4730 on 3rd August 2009 and today. (See chart 1).
The reasons are many and the fall was due to the combination of all factors.
1. Over the past couple of days, Nifty was showing signs of heavy overhead pressures while moving above 4650 and was making a rounded top on daily charts.
2. 4650-4700 were the areas from where Nifty fell last year during Aug-Oct 2008.
3. There was also a 61.8% Fib retracement of the period between Jan 2008 highs (6331) and Oct 2008 lows (2228) at exactly 4773, which was very nearby. Nifty futures made highs of 4730 on 3rd August 2009 and today. (See chart 1).
http://i441.photobucket.com/albums/qq134/Saptarshi_m/Fib618.jpg
Now the above mentioned points were not the real reasons for the fall....The actual reasons were the bearish wave formations...See below...
4. A clear rising wedge formed in EOD charts, thereby creating a wave with a bearish target of 4394-4380 (1st month futures). See the chart with points A-B-C-D-E and its brown diagonal target.....(See chart 2).
Now the above mentioned points were not the real reasons for the fall....The actual reasons were the bearish wave formations...See below...
4. A clear rising wedge formed in EOD charts, thereby creating a wave with a bearish target of 4394-4380 (1st month futures). See the chart with points A-B-C-D-E and its brown diagonal target.....(See chart 2).
http://i441.photobucket.com/albums/qq134/Saptarshi_m/NiftyEODWave.jpg
5. Refer to 5-min intraday chart, (see chart 3), again a rising wedge was formed during the course of the day, which gave a "clear sell signal" at 4720 for a target 4630 (already met).
5. Refer to 5-min intraday chart, (see chart 3), again a rising wedge was formed during the course of the day, which gave a "clear sell signal" at 4720 for a target 4630 (already met).
http://i441.photobucket.com/albums/qq134/Saptarshi_m/Nifty5min.jpg
6. Also the 15-min charts (see chart 4) created the bearish wave yesterday for a target of 4565 today (also met today)...
6. Also the 15-min charts (see chart 4) created the bearish wave yesterday for a target of 4565 today (also met today)...
http://i441.photobucket.com/albums/qq134/Saptarshi_m/Nifty15min.jpg
7. Further S&P 500 has a strong short term resistance at 1005-1009 and it is very difficult to break it easily on the upside in a single shot...(See chart 5).
7. Further S&P 500 has a strong short term resistance at 1005-1009 and it is very difficult to break it easily on the upside in a single shot...(See chart 5).
http://i441.photobucket.com/albums/qq134/Saptarshi_m/SP500.jpg
8. And after all these on charts, there was a 10-point premium in Nifty futures yesterday, which clearly indicated that smart money had sold in the futures market. A huge premium is a bad sign in the market. Always remember that high prices are always sold into and discounted prices are bought at.....
Now coming to next possible move....
The mid term to long term charts are still very very strong. Huge accumulations are seen in indices across the world, be it Nifty, Sensex or S&P 500, etc.....We are just in the process of a short term correction amidst the intact uptrend. This correction happened because of the technical factors only and also to relieve Nifty from the heavily overbought positions.
In all probability, we are going to see a very short term correction in Nifty till 4480 - 4450 (target 1) and maybe till 4416-4380 (target 2 and final target) before resuming the current upmove very fast. S&P in all probability, will consolidate between 980 and 1000, till Nifty completes the correction. All this fuss is just to drive weak hand out of the market. Further, as I had told many before, I repeat that options buyers will probably not make enough money because smart money do not allow weak hands to make easy money. One should always be cautious before taking huge positions in OTM call options.
Happy trading and enjoy it.....
8. And after all these on charts, there was a 10-point premium in Nifty futures yesterday, which clearly indicated that smart money had sold in the futures market. A huge premium is a bad sign in the market. Always remember that high prices are always sold into and discounted prices are bought at.....
Now coming to next possible move....
The mid term to long term charts are still very very strong. Huge accumulations are seen in indices across the world, be it Nifty, Sensex or S&P 500, etc.....We are just in the process of a short term correction amidst the intact uptrend. This correction happened because of the technical factors only and also to relieve Nifty from the heavily overbought positions.
In all probability, we are going to see a very short term correction in Nifty till 4480 - 4450 (target 1) and maybe till 4416-4380 (target 2 and final target) before resuming the current upmove very fast. S&P in all probability, will consolidate between 980 and 1000, till Nifty completes the correction. All this fuss is just to drive weak hand out of the market. Further, as I had told many before, I repeat that options buyers will probably not make enough money because smart money do not allow weak hands to make easy money. One should always be cautious before taking huge positions in OTM call options.
Happy trading and enjoy it.....
1 comment:
Hi,
Today I have first time saw your comments. Highly impressed, looks you do your homework perfectly. The way you have explained entire things was highly appreciable. In sum, impact was great. keep it up!
I have no doubt that you will see great success in you professional life.
Wish you all the best!
Regards,
Sailendra Sharmaa
Post a Comment