31 January 2013: Nifty Elliott wave analysis: A pause of this kind on index is a lead signal of weakness. I am still suggesting watching out for support @ 20 EMA, which is at 6020 now. We are at very last leg above 6000.

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

Today’s outlook: -

On 30 January 2013, FII bought INR 906.36 crs and DII sold INR 1095.82 crs.

It was a dull trade yesterday and I am sure that you cannot name it as strength. Technical charts are still suggesting for a possible dip. We have derivative expiry today. We need to remember that mid cap and small cap indices has seen bigger cut from higher levels. Will traders choose to unwind their long position? If this happen then we can think about the bigger fall.

I am again suggesting focusing on the support of 20 EMA which has extended further higher to 6020 levels. Now if nifty breaks and trade below 6020 then we can see very sharp reaction. I have already said that our market is running with negative divergence on MACD and RSI. We have not seen any dip but it has limited the all possible gains above 6000 marks. Do you know that on 2^nd January 2013, we crossed 6000 marks first time in recent years? We are just 55 points higher than those 6000 marks.

I have said earlier also that I do not know what will come to stop this rally. Italian market slipped over 3% last night. It is looking like something is beginning. Even US GDP has also seen its first contraction since 2009.

How charts have worked for whole month? It gave me sell signal and given more than enough time to move out of long. Then it has given all possible levels to create short positions too.

Now it is market turn to satisfy technical conclusion. So, what is coming? A dip or more than a dip? Derivative expiry will play its role. I am still repeating that as long as 20 EMA hold this market can issue odd rebound.  

Strategy for Nifty February future: It has a high at 6111 yesterday and then a small dip. In fact it was just moving in only 20 points of range. Technical charts are suggesting that if it fails to cross 6111 then it may see a dip. Cross over of 6111 will make the market rising but it may remain dull. Suppose if it breaks 6080 then you can expect some tradable dip towards 6040 levels too. If I trade I will trade on short side. I will avoid long trade opportunity.

S&P 500 – It has seen its first cut from higher levels but it is still above 1500 marks. I have said that break of 1490 will give me fall. I am little sure that we got the opening to feel comfort on shorting biggest index of the world now. You will experience the impact on all global market. It will have technical resistance at 1508 itself. I have already quoted earlier that we will see remarkable cut which can begin anywhere between 1475 to 1500. Let us see.     

Regards,

Praveen Kumar