26 September 2012: Nifty Elliott wave analysis: Break below 5650 will give a fall on Nifty towards 5620 first and then it may see panic low towards 5600 levels. Stiff technical resistance will be at 5720 levels.

You must read previous articles and watch above chart carefully to understand this article completely.

Today’s outlook: -

I said, “First bad news will be the end of good news”. It is to be applied to Indian market as well as global market. We have seen fresh growth concern in European market. I have already said earlier also that ‘unlimited bond buying program’ does not have any great meaning. Now Spain is in trouble. We must note that most of European and American markets are not moving as people were expecting it to move after break out.

Nifty has also formed a blow out top at 5720 and now it has some intraday to short term decisive point at 5650. Suppose, if it breaks 5650 then we can expect a dip towards 5620 and then 5600 also. Nifty has two crucial resistances, one is at 5707 (1.618 times of wave A, explained in earlier article) and next is at 5720. Most important thing is that we need to see break below 5650.

Next thing that market may like to focus is coming from political front. Although it seems that there is great threat for government but tussle has seen between Congress and NCP. Reason of tussle is so unhealthy. I learned that there was another scam called ‘irrigation scam’ in Maharashtra. Government spend 72 k crs and able to push ‘irrigation land’ by 0.1%. It is a shame. I do not know the political stunts but I can see those in their own data. Is this why government wants FDI. Do you think that money will come? Do note that this scam broke from a place where 54000 farmers have committed in past 10 years. In this kind of scenario, you can not expect foreign money to come.

Suppose, if we fail to get FDI then what can you say about reforms? A cosmetic reform? First, government must try to improve the environment for investment. Else, no one can save us from a possible down grade. Our GDP may slip below 5% marks very soon. 

Wave development: -

On 20 September - There is another factor which I cannot ignore with Elliott wave marking. It is a shooting inflation. Suppose if we break 5449 trigger point with some ‘concerning data’ from inflation front then also we will see opening for down wave. We need to prepare for those. Watch out for support at 5525 and then at 5449. 

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 27^th 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 3^rd 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.