05 February 2013: Nifty Elliott wave analysis: So finally my most anticipated and well forecasted global fall is beginning. Do not try to catch the falling knife. Nifty should firstly hit near 5940 marks then 5900.

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

For 05 February 2013: -

On 04 February 2013, FII bought INR 856.94 crs and DII sold INR 592.33 crs.

I have quoted many times in the month of January that market will not see anything great above 6000 and forming top. Look at now, it has consolidated and now we are getting bad news flow to get the fall. It was VIX, MACD and RSI which was giving the indication of fall. It has tested big patience but giving fruits. “Negative divergence” always plays its role, sooner or later.

VIX gains above 4% yesterday and giving signs of further fall. It was quoted that VIX will change its direction without braking 12. It hit a low at 12.57 and rebounded. Now it is above 14.

Indian market is already correcting from past five trading sessions but look at what is happening at Dow Jones. It was informed yesterday for selling to begin from Monday and we got it. I got some reasons for fall and heard about political instability in euro zone. These might be reasons but it was indicated on technical charts. You can expect bleeding Italy, Spain and Germany in coming few days/weeks.

I am strongly suggesting that one should not try to be bullish in the month of February. It is equally true that we will get some strong rebounds from technical supports time to time but those might be opportunity to trade short only.

I am sensing that we are getting pre-budget sell off. I have already said that break of 20 EMA is very crucial and may act as trend reversal. There are some question marks on Indian politics too. SP chief has forecasted about election in the second half of the year. How much you believe Indian politician? I am leaving this on reader.

Strategy for Nifty February future – I talked about the resistance of 6042 to 6050. We have seen a high at 6038 then it slipped towards 5980. We have disappointing global cues. You can expect 25-30 points of gap down. By any chance if it breaks 5960 then we see this market heading towards 5900 marks. Remember you cannot conclude the magnitude of fall in case of political instability. Watch out for the development on political front. I am not sensing any possibility of rebound. If it has to rebound then it has to save 5960-5950 levels. Will it save?

S&P 500 – It has following a perfect time study. We got correction from first week of February. If I am right then S&P 500 got its desired opening to invite correction. I have already said about the possibility of 1495-1490. Now just wait for the break of 1490, we will see 3 - 4% in just few days. I am again saying, “Worse month may come immediate after best month”. So many challenges will come even for European indices.  

Regards,

Praveen Kumar