10 December 2012: Nifty Elliott wave analysis: It hit 5950 almost on higher side and broken 5890 also on lower side. Sustained trades below 5890 will give 5854 and then 5817. Resistance will be applied at 5950.

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

Today’s outlook: -

Was it another shock on Friday? Many were expecting that market will shoot up after voting result in Rajya Sabha. I need to say that I have already quoted for the fall. It is very clear that I avoided long trades on Friday although I have written in my pre-market write up.

FII bought Rs 648 crs and DII sold Rs 798 crs. It is very important to note that FII are perfectly hedged with some short position in derivative market. I cannot conclude anything great from this kind of data.

RSI is on the verge of making a sell signal. I am assuming that this sell signal will be created. Then it will take a pullback. Till now it is giving just one hint that we will have stiff technical resistance at 5950 marks. It was informed for Friday’s trading session too.

RSI and slow Stochastic are almost moving very parallel. One needs to note tat both indicators are running in over bought zone. Trade in the over bought zone is not a sell signal but we are not getting weakness in overbought zone. Those who are dealing with technical charts can prefer to plot band Bollinger. Band is showing the possible weakness.

Take a count from 5549 to 5950, it is almost 402 points. 23.60% will fall at 5854 levels which is a Fibonacci retrenchment. Regular retrenchment of 33.33% is suggesting for 5817 levels.

From now onwards, people will start taking about RBI’s upcoming monetary policy review. I need to be very clear that do not expect anything positive. RBI is expected to action latest by January. In my views, actions are expected in the month of March only. Well, these are something which is beyond any guess.

If industry legend like Ratan Tata is raising question mark over coordination amongst government authorities then it is the time to think. Take a note that is he trying to say that a country like Bangladesh is having better opportunities than India?

Although finally after 6-7 years government of India woke up and trying to move with some reforms. Still there is enough doubt about implantation. This is what corporate of India is thinking.

Conclusion Nifty: Nifty hit 5950 as a dot. I will prefer to trade on short side if Nifty able to sustain below 5890 levels. We can expect levels like 5854 and 5817 (already explained above). It will face resistance at 5950. We may have frequent resistance on every rise.

S&P 500 – For Friday, I said that a rise is coming but I am not confident. I should be confident. It came at 1418 levels. Now it will face resistance at 1424. Even if it rises then also we are going to see a possible pullback. For 2-3 days of views, start shorting S&P 500 on rise for a move towards 1400 to 1395. You should expect 1385 by this week only. Why 1385? It is 200 days moving average.  

Regards,

Praveen Kumar

10 December to 14 December 2012: Wave Analysis: Informed weekly resistance was at 5912. We just closed near to those. Expect pullback this week!!!

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

This week outlook: -

Last week was full of events for stock market. After lots of tussle FDI in retail came in existence and UPA government has passed its test in both houses. You cannot deny that we got some profit taking after FDI in retails passed in each houses. These are normal pullback which came at the completion of event. Now people might try to bet on up coming monetary policy review. On my Friday’s Nifty analysis I have mentioned a technical resistance at 5950 levels. It hit my resistance as a dot and slipped.

1. First question is that is FDI enough in the name of reform? There is a clear answer without any doubt and answer is ‘no’. These steps are having long term impact and it starts in a slow manner. Even if it comes then also you cannot expect any great result in 6 to 8 months of time. Are there any steps which can boost IIP data sooner?
2. Most important technical point is that we have seen a run of 400 points from 5548 to 5949 levels without having any great correction. Correction comes for healthy reasons. Till now, it is looking like market will give one correction and then it will move higher again.
3. Few important technical indicators like RSI and MACD are showing that if rise can be limited at current levels. It is giving a hint that we can see a pullback. There will be few important technical supports. One is 23.60% at 5854 and 33.33% will come at 5817 levels.
4. VIX – I tried to conclude for the pause near 5912 based on weekly VIX. We have seen the weekly closing just below those levels. VIX is already hinting for a pullback. I will name it as a pullback only, not a fall. There are indications for a rise later on. I will try to conclude the magnitude of next rising wave only after the completion of pull back.  

Conclusion Nifty – I have not traded actively on index in the last trading week. I have already suggested for a silent week. Now we are supposed to see a pullback towards one of the two levels. One support is at 5854 and other is at 5817 levels. I am considering 5770 as a rock bottom. I am too confident as of now that I will buy at low or not but I will definitely going to consider the case of buying. As we have seen close at 5907 so stiff technical resistance will be at 5950.

S&P 500 – I have quoted for the resistance at 1424 levels. It hit a high at 1423.70 but then turned silent for rest of the week. There is a strong possibility for a fall towards 1390 to 1385 levels. It can be named only as correction. Can it rebound from 1385? Let us see.

Regards,

Praveen Kumar