10 December to 14 December 2012: Wave Analysis: Informed weekly resistance was at 5912. We just closed near to those. Expect pullback this week!!!

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

This week outlook: -

Last week was full of events for stock market. After lots of tussle FDI in retail came in existence and UPA government has passed its test in both houses. You cannot deny that we got some profit taking after FDI in retails passed in each houses. These are normal pullback which came at the completion of event. Now people might try to bet on up coming monetary policy review. On my Friday’s Nifty analysis I have mentioned a technical resistance at 5950 levels. It hit my resistance as a dot and slipped.

1. First question is that is FDI enough in the name of reform? There is a clear answer without any doubt and answer is ‘no’. These steps are having long term impact and it starts in a slow manner. Even if it comes then also you cannot expect any great result in 6 to 8 months of time. Are there any steps which can boost IIP data sooner?
2. Most important technical point is that we have seen a run of 400 points from 5548 to 5949 levels without having any great correction. Correction comes for healthy reasons. Till now, it is looking like market will give one correction and then it will move higher again.
3. Few important technical indicators like RSI and MACD are showing that if rise can be limited at current levels. It is giving a hint that we can see a pullback. There will be few important technical supports. One is 23.60% at 5854 and 33.33% will come at 5817 levels.
4. VIX – I tried to conclude for the pause near 5912 based on weekly VIX. We have seen the weekly closing just below those levels. VIX is already hinting for a pullback. I will name it as a pullback only, not a fall. There are indications for a rise later on. I will try to conclude the magnitude of next rising wave only after the completion of pull back.  

Conclusion Nifty – I have not traded actively on index in the last trading week. I have already suggested for a silent week. Now we are supposed to see a pullback towards one of the two levels. One support is at 5854 and other is at 5817 levels. I am considering 5770 as a rock bottom. I am too confident as of now that I will buy at low or not but I will definitely going to consider the case of buying. As we have seen close at 5907 so stiff technical resistance will be at 5950.

S&P 500 – I have quoted for the resistance at 1424 levels. It hit a high at 1423.70 but then turned silent for rest of the week. There is a strong possibility for a fall towards 1390 to 1385 levels. It can be named only as correction. Can it rebound from 1385? Let us see.

Regards,

Praveen Kumar