20 November 2012: Nifty Elliott wave analysis: Nifty has tested 5550 and seen sign of resilience. Recovery will be very mild but do not short at lower levels. Maximum expected rebound till 5630-5650.

You must read previous articles and watch above chart carefully to understand this article completely.

Today’s outlook: -

I was thinking yesterday about market reaction when US market were giving signs of recovery. Recovery came as expected in US market as well as European market. When those markets were slipping we refuse to move down. Now those are recovering, can we expect rise? Technical charts are saying that those cannot be easy deal.

Few days back I pressed panic button for US market but refused to do so for Indian market. We must note that we are still in a range although that band (High - low) is shifting lower. This kind of pattern gives rare opportunity to trade indices if you are not good enough in picking top and bottom.

Yesterday, we got one such low of 5549-5550 which can result some rebound of 50-60 points of nifty. Are we going to get that? May be yes, but I am ready to short this market at higher levels too. We already covered our short which was executed on Friday and took long yesterday at lower levels.

What brings the fall?

Mamata banegree’s threat for ‘no confidence’ motion may be the reason. There are few technical problems. Firstly, FDI in retail was ‘executive decision’(I have already raised question mark on this step, it can never be executive decision, it has mass effect decision), so does not require parliamentary approval. Although, it is not compulsory but it is not in practice. Secondly, to bring ‘no confidence’ motion party must have support from 50 or higher number of MPs. As long as Mamta fail to gather 50, there is no such possibility. Well, it is politics, so nothing is sure. Watch out for that. Lots of political drama ahead before winter session of parliament.

Conclusion for NIFTY India: - I am feeling that 5620-5630 will not act as stiff resistance. We may see some higher opening but those may not sustain through out the day. Sooner or later, we will see the levels of 5500 at least. Break below 5549 will be trigger for 5500.

S&P 500 – I was expecting recovery in US market recovery and it finally came.

Regards,

Praveen Kumar