12 December 2012: Nifty Elliott wave analysis: Nifty reacted violently at 5965 which was very near to band Bollinger resistance. I am still suggesting that pullback is very likely and deserve irrespective of intraday volatility.

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

Today’s outlook: -

Nifty hit a high at 5965 and then a very sharp fall. It was a reaction at band Bollinger resistance marks. Technical indicators are already indicating for softness and pullback after 400 points of run up. Take a note that this selling came without any negative news flow. FII bought INR 1309.88 crs and DII sold INR 1028.34 crs yesterday in cash market. I cannot conclude anything from this data as derivative data is indicating something else.

Technician need to note that RSI, Slow Stochastic and Band Bollinger are showing weakness. MACD is also indicating that we may get a sell signal very soon. When so many technical indicators are giving sell so sooner or later, it will see a fall which will be named as pullback.

I have already quoted that 10 minutes trades below 5888 will give a desired break down. I feel that we got fulfillment of that condition. I am considering for a pullback now. I do not want to conclude any target although I am expecting 5854 and 5817 as the expected levels.

Yesterday, one announcement came from government of India. It was stated that they will hike the cap on subsidized LPG cylinders to 9 from 6. I am happy as a common man but it is presenting a different picture for economy. This may raise a ‘question mark’ on the process of reforms. I am already not very happy with the way winter session of parliament is progressing. Our elite 545 is now fighting over ‘reservation in promotion’ bill and many other non-issues for economy.

Look at yesterday’s selling in a different view also. Is it indicating that ‘investor’s apatite’ has seen some fulfillment? I am feeling that it may be the chance. Most of the time, if fall comes without reasons then above conclude always give picture for forecasting.

Stocks like Reliance, Tata Motors, Infosys are giving sell signals so how long can index sustain at higher levels. We need to note that Nifty Midcap 50 and CNX Midcap slipped over 1% yesterday. This kind of development always comes near to short term top. Shall we bet 6000 now?

Conclusion Nifty: I need to adjust some levels but views need to be same. I will consider 5930 < 5950 and 5967 as crucial resistances. Every 20 points rise will face stiff resistance. I am assuming for towards 5854 and then 5817 levels. It will be a better idea to keep selling on rise. It is very logical to expect price correction after 400 points of rise.

S&P 500 – It has surpassed the resistance of 1424 levels but I am still feeling that rise above 1424 is not going to sustain. True technical is suggesting that it will see pause at 1445 levels. Fall should be coming but till now it is not giving great sell. Any drift below 1424 will drive towards 1385 on S&P 500 marks.

Regards,

Praveen Kumar