13 May 2013: Nifty Elliott wave analysis: Keep an eye on CPI data. It came for ‘make or break’ on long term chart now. Either a massive shoot up or it will lose momentum now.

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

For 13 May 2013: -

On 09 May 2013, FII bought INR 662.88 crs and DII sold INR 476.69 crs.

Money flow is stable but not very strong to justify this kind of 600 points run up on Nifty. FII has invested lots of money to keep index up if we look the yearly money flow. Momentum is driving this market. Yen is trading at 4.5 years low which has pushed Japanese market higher even this morning.

Well, in Indian market, this is the first time that I have seen Nifty and VIX both rising together. Theoretically, it should have reverse direction. This is not the only concerning factor. Even momentum indicator like RSI is running with negative divergence and it is big on hourly chart.

There are few thresholds that are coming on Nifty chart on daily basis due to higher wedge formation. For today it is at 6070 levels. So, 6070 will act as strong trading support. Break of this will cause some fall. Now, the way our market is rising, it is looking like it will never fall.

Earlier I said that 6024-6020 has created base but this base is in favour of bulls so far. Now 6080-6070 is looking like another base. On higher side it should take a pause at 6120 or at 6150. Any further cross can push the market to a newer high. Question is, can it happen without any price correction?

The way USA market is running, technical charts are muted for bears. Believe me, this is very peculiar rally which at least I have never seen. Suddenly, world has turned sweeter than sweet for investment. Some Asian market is going under correction? Will India join hand?

We have CPI data coming today which is expected to come at 9.70% means first time below 10% after a long time. Market likes to see WPI data also which is too coming this week.

Strategy for Nifty May future – It is completely beyond control based on technical indicators. On speculative basis, I can say that we are moving towards resistance but equally, it can turn to breakout. Trading support will come at 6080 to 6070 levels. If it breaks and sustain below 6070 then it can see some bigger profit taking but it is still too far. As long as it is forming high low, it may not change the trend. Better to be on wait and watch mode.

S&P 500 – I still believe that a top should come at anywhere between 1635 to 1640 range for this week. It is still scary. Some technical formation is giving 1660 also but that kind of indication is expected near such levels. Till now, it has moved by nearly 4% from its previous all-time high. I cannot say market turning weaker as long as indices are closing near to high point of the day and this is basic. No global market is running based on fundamentals. All has seen run up based on central banks action. Whatever I say, fact is that my correction call has failed so far for the month of May. Will it ever fall?

Regards,

Praveen Kumar