You must read previous articles and
watch above chart carefully to understand this article completely.
Today’s outlook: -
I have expressed my concern for the
test of 5240 well in advance. I still like to mention that the way targets are
coming on charts, those are having lesser conviction. Well, but those are
coming. There are two things l likes to mention. First is, out come of Jackson
hole meet is ‘nothing’, same old comments. These policy makers are only ‘buying
time’. I have already expressed my views
that there will be ‘no output’ of such events although market wants to be
optimistic. Market may not think is my way. This kind of policy of ‘buying
time’ can turnout to be the first sign of policy collapse of crisis time.
Secondly, I heard about postponement
of GAAR for three years. I know that market might try to rejoice today morning.
Is it not like ‘taking one step’ forward and pulling ‘three steps’ back by
government. This is the sign of weakness and confusing in policy making. Yes,
it is a hallmark of current government. It is global dieses now a day.
Now, let us come back to the
technical charts. It is very important to focus on 5240 support levels. I can
say that if trades sustain below 5240 then we can expect a fall towards 5149
levels. This fall will come. It does not matter how long can we recover before
that. Resistances will remains at 5330- 5354 levels.
I like to mention domestic cues
also. There are talks in India that government may cancel higher number of coal
block allocations. I have already warned too many times and I like to repeat
again that our need is ‘to increase the pace of production’ of coal with
immediate effect. Fundament data is suggesting that we are heading towards the
phase of ‘power crisis’. This policy, that policy, delayed policy or quick
policy, these will just become excuses but situation is surely not normal now.
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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Praveen Kumar
Mail id – Praveen@viecapital.com
Mobile number – 09893369889
