You must read previous articles and
watch above chart carefully to understand this article completely.
Today’s outlook: -
Yesterday nifty came near to the
support of 5240 and low was just 5255 levels. I must say that support acted
more on intraday basis. I still feel that more falls has yet to come but there
is some interesting development on Elliott wave chart.
Wave ‘a’ has started from 5449 and
ended at 5255 (as of yesterday’s low), so the recovery from 5255 to 5343 is
giving wave ‘b’ but unfortunately it become intraday and majority of rise came
in last 25 minutes of trades. Most of the time this kind of formation results a
sharper follow up of main trend. You can observe same from the given charts
too.
So now the question is that where will
we get that confirmation and what can be the target? Even if it go in the ratio
of 1 to 1 compared to wave ‘a’ then also it will try to move towards 5149. On
higher side it will have fewer stiff resistances like 5330 < 5353 < 5374.
I am sensing that 5353 is a tougher figure and 5374 will remains untested.
Remember, I have already said that
rise above 5378 – 5400 will remain ‘unreliable’. One must note that yesterday’s
rise was dominated by short covering only. You cannot expect rise in the
absence of reforms.
GDP Data – Expect 5.30%. In the
worse case it can come as 4.90% also. It is very challenging time for economy. Market
may not enjoy for the hope rate cut if data comes poor as RBI has already said
that their priority is ‘inflation’. Rest god knows what market wants.
More over, India
Abhijit group – It is a company
whose prime product is ‘under garment’. I fail to understand what this company
is doing with coal blocks. Few names in coal block scam – TATASTEEL, ESSAR,
JINDAL POWER, RPOWER (as updated by media reports).
Wave development: -
On 30 August - Firstly, I have
quoted for resistance at 5449-5450. I have already said that this is ‘most
unreliable’ rise. You can ask for reason. Just a fair question, what was the
base of this rise? Just hope and blind hope. Now we in the final count down of
hopes for Indian, European and American market. I have said this in past and
repeating again that policy makers are playing with the fire of stock market.
They are just buying time from stock market. They will not act on their words.
Earlier in the week - Elliott waves
are turning very critical now. You can able to see that now every single wave
is contracting in nature. First rising wave started form 4531 has a life for 1100
points, and then next rising wave started from 4770 and has a life for 580
points. Next rising wave started from 5032 and has a life for 418 points
only.
Earlier in the month - I like to add
few more things for “reverse H&S”. Length of head = 5279 – 5032 = 247
points. Confirmation point will be one-third of head length i.e. 247/3 = (~)
83. It means 5279 + 83 = 5361. So we need to see the one-third confirmation
rule to bet for 5526. As it is visible on daily chart so we need to see this
close to close basis. (This is a “must know” concept).
Nifty has a low at 5032 on 27th
July 2012. As of now we can sense that there is a beginning of new wave which
probably is going to be a rising wave. Take a note that we have seen a
completion of up wave which has started from 4770. It is named as
1-2-3-4-5-a-b-c in above chart. On 3rd August 2012, we got a low
of 5164.65 which is exactly 38.20% against the rise from 5032 to 5246.
This is encouraging with few
challenges on higher side. Every wave trend has some relation with its previous
wave or waves in terms of ratio. I myself have said that this is going to be
most unreliable rise looking the reason of rise but when I have to work with
charts then I am forced to keep those away. I can tell you that charts are
still saying that I am not wrong in a big way. Magnitude of upcoming wave will
be lesser compared to past few waves.
Charts are saying that if we manage
to close above 5279 then we can conclude for the formation of ‘reverse head and
shoulder’ pattern. It will have n line @ 5279. You can say for the rise which
should be equal to 5279 – 5232 = 247 points. It can give me a target of 5526.
Well, it is looking easy but it will not be easy. We can say,
Beginning point of wave = 5032.40
Wave 1 = 5246.35
Wave 2 = 0.318 times of wave 1 = 0.318 times
of (5246.35-5032.40) = 5164.65
Those who are bullish in their
nature should keep their fingers cross for 5279+.
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Thanks & Regards,
Praveen Kumar
Mail id – Praveen@viecapital.com
Mobile number – 09893369889
