You must read previous articles and
watch above chart carefully to understand this article completely.
Today’s outlook: -
Nifty has sustained below 5240
levels with great comfort and closed well lower. Technical charts are preparing
for a dip towards 5190 first. Break below 5190 will give us levels of 5149
minimum. There are just few bluechip stocks like HUL which is saving market.
There are fresh talks of
disinvestment which might try to give a push to PSU stocks but over all market
direction remains dull to negative. On other hand, market is eyeing for cues
from ECB meeting. It might try to give something positive but then also we
cannot expect trading direction to be changed.
We have seen continuous weakness in
metal stocks. This is itself reflecting the weakness of overall trading
direction. It seems that ‘series of scams’ can give its impact to stock market
very sooner. After from all these development, Elliott wave charts are hinting
for some series weakness in this month series. It is interesting to see the
development of wave ‘c’ in current fall. If I take it as 1 to 1 fall compared
to wave ‘a’ then also I am getting levels of 5149 to be tested in few days.
We may see maximum of 5280 in any
rebound but that cannot change the nature of current wave trend. I am already
advising sell on metal and PSU banks from past many weeks. I am still unable to
find any single sign of recovery.
Will European market give up with
optimism now? We will get the answer tonight. How long Mario Draghi can keep on
talking? Time to act.
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
