03 December 2012: Nifty Elliott wave analysis: Wave moved by 330 points higher but now we are now moving towards resistance levels. It is not looking like to break strong support of 5770. I will buy in dip.

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

Today’s outlook: -

Let us accept one fact that whenever Nifty has formed top it was backed by some positive trigger. Technical charts are still not giving signs of weakness yet. It is still forming higher high. Most important is that from past three trading days it is closing on almost intraday high.

Today is going to be another important day. We have traveled for eight trading sessions after hitting 5548. This rise is too sharp after recent two months of consolidation. We have seen massive buying by FII. Fortunately dead lock has also ended in Indian parliament. So far, it looks so rosy.

Market need to take few cues now before voting on FDI in parliament. Market is betting for the continuation of reform process. Technical charts are suggesting that we are almost coming towards resistance levels.

You can check the given chart; I have restructured the wave formation as we are moving higher above 5815 levels. We need to note that ‘expecting correction’ is speculative in nature, not based on technical. Traders must note this fact that I am assuming something in advance which is not reflecting on charts yet. It does not mean that I am not completely going anti-technical move. With such sharp rise, few momentum indicators have entered in overbought zone.

This rise is still expected to continue as prime momentum indicator MACD is just giving a buy signal but we all know that this indicator can take time to come in effect. Nifty has moved by more than 200 points after giving a buy signal.

Can we see the impact of global market on Indian market? May be not, as it is still going to take domestic cues. Still it can see partial impact. Market is too encouraged to see further rise but those may not be very impressive.

I want to see pullback to buy again. It has risk of triggering stop loss if I add fresh long from 5880.  

Conclusion for Nifty – Even on Friday it has moved from 5815 to 5880 levels. So, we have seen three big days. Market will go under phase of consolidation. I am saying to short immediately but be cautious at higher levels. It will have maximum permission correction till 5770. It is just based on technical I just give up my long trades which I took near 5550. Now I am planning to buy dip only.

S&P 500 – I have already forecasted for consolidation and choppy moves for US market. Those zones of consolidation will continue in the zone of 1405 to 1424. I can sense a target of 1445 after the end of this consolidation. I do not think that I need to change my views on S&P 500. We have seen another silent day on Friday.

Regards,

Praveen Kumar

03 December to 07 December 2012: Wave Analysis: Nifty shoots up more than what I was expecting in last week. Expect silence now with resistance at 5912. I will prefer to buy in correction only.

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

This week outlook: -

I was definitely sensing 5720 for last week but I have elevated my targets depending on conditions which were mentioned in my daily article. We have seen a rise of almost 330 points from its recent bottom of 5548.

I took many long deals when we were trading near 5550. Now, I give up my partial long deals. Most of you must be thinking if correction is coming. Well, there is nothing on the technical charts which can suggest correction. Take a note that we closed almost at the high point of the day even on Friday. It was third day of bigger rise in a row.

I can say one thing that we are definitely at least near to resistance. We have all time high at 6338 and a low at 4530. We have 23.60% retrenchment from 6338 which is ending at 5912 levels. Now we are almost near to those levels. Market is on very high note of bullishness. This is backed by implementation of reforms.

1. Now market is going to see the voting of parliament on FDI in retail. Most of us are accepting that UPA government is going to win the voting. I always believe that there is a big difference between ‘winning’ and ‘possibility of winning’.
2. I have not given any good importance to 5.30% GDP data yet as parliamentary development was overlapping that negative news flow. I can ignore 5.30% GDP at NIFTY @ 5700 but I cannot ignore that at 5900. I like to say that market must be expecting some real hardcore concrete step to check the fall in GDP. Market will react on any such positive development.
3. There are few talks for the rate cut. People will have a view that now RBI will accept the fact that government is moving ahead with reform process. There are big group of people who believes for rate cut to make sentiment more investment friendly. I little disagree with market views. I feel that when government is concerned towards growth so RBI will feel free to focus on ‘inflation’.
4. US Fiscal cliff – Problems of fiscal cliff is a flip-lop new flow. Some time it is looking like problem is about to be solved by just in next few days. Then, suddenly, we came to know that we are far away from solution. I am 100% confident that problem will be solved so question is when? This can make market little uneasy.
5. VIX – Take a clear cut note that rising VIX is an indication of fall. Weekly VIX chart is making me troubling. I am scared that it can be advance sign of topping up. Although, I am not going to act on this fact immediately. Certainly, I will be cautious for this week ahead of events.

Conclusion Nifty – I have traded long for two week but now I am not ready to take a risk of trading long after sharp rise and events in parliament. Weekly, charts are hinting for resistance at 5912 levels. I will prefer to buy in dip if it comes with one-third magnitude of rise. It means, I want to buy in the dip of 80 to 110 points of Nifty. Is it coming? I do not know but I will wait for dip to buy. Here is an another fact, cross of 5912 will give us 6000 marks. Technical support for correction will be at 5770.  

S&P 500 – In my daily updates I have already said that it will go under consolidation. It will not cross 1418 to 1424 resistance. I am expecting this consolidation to continue for this week also. Cross over of 1424 will give us 1445. There is a caution; it should not close below 1405 anyday. If that happens then we have to take fresh look.  

FDI in retail – Voting will take place this week. Be ready for surprises. BSP has not yet declared its move. Technical charts are saying that we may see a dip irrespective of outcome of voting on FDI in retail.

Regards,

Praveen Kumar