12 December 2012: Nifty Elliott wave analysis: Nifty reacted violently at 5965 which was very near to band Bollinger resistance. I am still suggesting that pullback is very likely and deserve irrespective of intraday volatility.

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

Today’s outlook: -

Nifty hit a high at 5965 and then a very sharp fall. It was a reaction at band Bollinger resistance marks. Technical indicators are already indicating for softness and pullback after 400 points of run up. Take a note that this selling came without any negative news flow. FII bought INR 1309.88 crs and DII sold INR 1028.34 crs yesterday in cash market. I cannot conclude anything from this data as derivative data is indicating something else.

Technician need to note that RSI, Slow Stochastic and Band Bollinger are showing weakness. MACD is also indicating that we may get a sell signal very soon. When so many technical indicators are giving sell so sooner or later, it will see a fall which will be named as pullback.

I have already quoted that 10 minutes trades below 5888 will give a desired break down. I feel that we got fulfillment of that condition. I am considering for a pullback now. I do not want to conclude any target although I am expecting 5854 and 5817 as the expected levels.

Yesterday, one announcement came from government of India. It was stated that they will hike the cap on subsidized LPG cylinders to 9 from 6. I am happy as a common man but it is presenting a different picture for economy. This may raise a ‘question mark’ on the process of reforms. I am already not very happy with the way winter session of parliament is progressing. Our elite 545 is now fighting over ‘reservation in promotion’ bill and many other non-issues for economy.

Look at yesterday’s selling in a different view also. Is it indicating that ‘investor’s apatite’ has seen some fulfillment? I am feeling that it may be the chance. Most of the time, if fall comes without reasons then above conclude always give picture for forecasting.

Stocks like Reliance, Tata Motors, Infosys are giving sell signals so how long can index sustain at higher levels. We need to note that Nifty Midcap 50 and CNX Midcap slipped over 1% yesterday. This kind of development always comes near to short term top. Shall we bet 6000 now?

Conclusion Nifty: I need to adjust some levels but views need to be same. I will consider 5930 < 5950 and 5967 as crucial resistances. Every 20 points rise will face stiff resistance. I am assuming for towards 5854 and then 5817 levels. It will be a better idea to keep selling on rise. It is very logical to expect price correction after 400 points of rise.

S&P 500 – It has surpassed the resistance of 1424 levels but I am still feeling that rise above 1424 is not going to sustain. True technical is suggesting that it will see pause at 1445 levels. Fall should be coming but till now it is not giving great sell. Any drift below 1424 will drive towards 1385 on S&P 500 marks.

Regards,

Praveen Kumar

11 December 2012: Nifty Elliott wave analysis: Multiple test-and-bounce from 5890 support. Profit taking can be expected only if it breaks and sustain below 5890 for 10 minutes. Resistance will be at 5950.

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

Today’s outlook: -

It is somewhat trying to make a top but it cannot be confirmed unless we start trading below 5890 levels. To be on the cautious side, we can take a dot support at 5880. Trading pattern is still not giving confident sign of profit taking. Technical indicators like RSI and MACD is suggesting we are on over bought zone. Market stopped reacting for the intensity of buying in over bought zone but equally sell signals has yet to come.

It is showing that we are now in dull days of trades. We may remains in a small range. Experimenting nifty in such range cannot be fruitful. We will have higher resistance at 5950 marks only. Band Bollinger is suggesting for profit taking but I am strongly suggesting that one can take confirmation only if it starts trading below 5890 for sustaining basis. One must note that I am giving this support from Friday onwards. It took support in those ranges for twice in two days.

Break below 5890-5880 will give 5854 (23.60%) and then at 5817 (33.33%). In my view, one should not try to speculate for the break of 5890-5880. It is better to wait for that break to come in reality.

Few important global indices are turning uncertain. There are threat that ghost of euro zone will be back on any day as Italy seems to be in trouble.

There is no solution on US fiscal cliff. I strongly believe that solution will be come. Only question is when. Indian market is eyeing on its own reform process. Is it really coming? Market is waiting for banking reform bill to be presented on parliament in up coming few days. In another development we may hear voice over ‘reservation in promotion’ bill.   

Conclusion Nifty: Nifty hit 5950 as a dot. I will prefer to trade on short side if Nifty able to sustain below 5890-5880 levels. We can expect levels like 5854 and 5817 (already explained yesterday). It will face resistance at 5950. We may have frequent resistance on every rise. I am keeping study unchanged.

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. It was silent Monday for US market.

Regards,

Praveen Kumar