You must read previous articles and
watch above chart carefully to understand this article completely.
Today’s outlook: -
It was expected to test 5640 and it
has done. A big ticket reforms gave only 32 points of rise on Nifty as market
it already sensing that it is only initial few steps. It is also true that
these reforms have lots of political agitation. For today, we have to watch on
political front where Mamta Banergee will declare her actions. I doubt if she
can able to take any action which can be a threat for political stability.
Well, those are really unpredictable.
Technical charts are suggesting that
we have entered in the zone of long term resistances. One can conclude that
cross over of these levels will give us another massive move on higher side. Is
it really coming? Global development or domestic data, none is confirming for
higher stock price. Our market looks expensive.
There are some doubts and concerns
coming again in US market as well as European market. There are some
discussions on QE 3. UD fed believes that higher stock price can generate jobs
which might not be a good concept to believe. When Dow Jones was at 13500 last
time, jobless claims were 4.70%, now when Dow Jones is again at 13500, jobless
claim is 8.10%.
I am not saying that market will
react immediately from current levels but I am strongly saying that rise will
not sustain for long. Equally, there is no big point to buy stocks for short to
medium term. I like to see the improvement in economy data. It may take long
time.
For NIFTY, break below 5584 will be
first sign of profit taking. It can turn weak if it breaks 5526 levels.
Suppose, if Nifty sustain below 5526 then we can expect fall towards 5449
levels.
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
