30 January 2013: Nifty Elliott wave analysis: Have we got 6111.80 as blow up top after RBI monetary policy review? Real confirmation will come only if it breaks 20 EMA, now @ 6016.

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

Today’s outlook: -

On 29 January 2013, FII bought INR 899.83 crs and DII sold INR 938.71 crs.

RBI monetary policy review was in line with market expectation. In fact it was little more as 25 bps CRR cut also came but market gave up and hit low at 6042 before closing at 6050. I was expecting this kind of reactions. I will still not say that bulls are out from play. I am repeating the importance of 20 EMA from past few trading sessions. Now it is running at 6016 levels so for today’s trading it will have important support at 20 EMA at 6016.

One should look at the above chart. Whenever market is slipping, volume increases. We have seen sharper fall in mid cap and small cap stocks. These things are not comforting near to the top to sustain. I strongly believe that there is something which is troubling bulls. We have passed 20 trading sessions after crossing 6000 marks for the first time at 2^nd January 2013.

We need to note that this fall or better say, pause is coming when global market is on rise. I am more concerned with the fall in mid cap and small cap indices and stocks. I have already mentioned about negative divergence on crucial technical indicators like MACD and RSI. It may play important role in coming month of trading.

I will consider that the levels of 6084 < 6101 < 6112 will play as crucial and stiff resistance on any rise. In the down side just few close below 6016 will spoil the rally and may spread hint for trend reversal. If intensified selling does not come this week then prepare for this to come next week. Yesterday, nifty slipped significantly from higher levels but close to close it was just marginal.

Strategy for Nifty January future: Have we formed “blow up top”? I will wait for at least three trading session to confirm that. As of now it is looking for fall but I am repeating again, “as long as 20 EMA saves, you can expect frequent odd bounce form nearer levels”. Technical charts are suggesting for support at 6010 levels. So, as long as 6010 hold we can have hope. This hope can play its role for three days just. Sooner or later fall will come. Let us see if it breaks 6010 or rebound again.

S&P 500 – It is crossing above 1504 levels. It is shocking rise to me now. I am sensing that perhaps I have shorted S&P little earlier. It is forming higher high closing from past 8-9 trading sessions except 1-2 days in between. It is running in heavily over bought zone and I need to wait for weakness. There is a threshold at 1490. It needs to breaks 1490 to present any great weakness as of now. I can say that most of the things are indicating for fall. Only time can judge when will fall come? Soon very soon.

Regards,

Praveen Kumar