You must read previous articles and
watch above chart carefully to understand this article completely.
Today’s outlook: -
Stock market has waited for many
years for reforms and it came on Friday evening in much unexpected ways. Dr.
Manmohan Singh has taken a bigger risk of ‘political instability’ in a coalition
politics. No matter how big ‘oppositions’ and ‘coalition partners’ are opposing
but until they really brings ‘no confidence motion’, this government will have
no threat. Every move was calculated. Opposition of FDI and Diesel price hikes
are just looking as political drama. Till yesterday, people were presenting themselves
as they are going to withdraw support but suddenly all are changing their
words. These are politics of opportunity and no one can predict them.
On technical charts are we are going
to see third 60-70 points of gap up. With today’s gap up, it will be full
270-280 points of gap out of 400 points of rise. This is too much to say about
any single degree of safety. I can say that those policies related decision
will not change economy related data so soon. We are still living on the big
threat of higher inflation. Those decisions will take 6-8 months of time to show
its effects. This kind of rise can end up with ‘blow up top’. I can tell you
that ‘blow up top’ come with extreme optimism. We may have RBI credit policy
review today. It seems that some positive would be factored it with optimistic
rise.
So, after another gap up, no deal to
trade long. If you want to trade long then maintain some suitable stoploss to
maintain risk/reward ratio. I am expecting a test of 5640. Let us see if it
crosses.
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+.
