04 September 2013: Nifty Elliott wave analysis: Only meaningful support is at 5250. Panic is the part of weak sentiment. On higher side, even trades above 5400 may fail to restore confidence.

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

For 04 September 2013: -

On 03 September 2013, FII Sold INR 716.16 crs and DII Bought INR 596.43 crs

I was expecting fifth day reversal but not as brutal as it came. It seems that market was waiting for some negative to react. S&P threaten for downgrading India but it is not coming sooner. It is showing the weak confidence of buyer that Nifty slipped nearly 4% so easily.

It is not a good set up on technical charts. We can expect technical support near 5250 again. Worse is that index failed to reflect true pictures. Banking and financial stocks are still weak while metal and auto stocks may show relative strength. It must be noted that metal and technology stocks has shown much better performance than index.

As long as Nifty is below 50 DMA, we cannot be confident for the end of pain. 50 DMA came at 5706 now. Above all, it is not easy to break ‘death crossover’. So far, there is no sign of strength but this fall will arrest near 5250 only. On higher side, confidence may generate only above 5400. It cannot be easy to predict ‘panic bottom’.

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Strategy for Nifty September future – SGX Nifty is trading with gain of 18 points but that does not mean anything after such a brutal sell off. Note that only meaningful technical support can be only at 5250 which are still 80-90 points away. I am assuming that Nifty September future is trying to make ‘invesrse H&S’ pattern on hourly chart. Based on this development I was expecting fifth day of correction but it came beyond my expected limits.

S&P 500 – As indicated, it came above 1650 levels but never closer towards1660. Then, we saw a dip. 1% gap up was bulls trap. A break below 1624 will lead technical indicators towards 1600 levels. Usually September month has bad history for US market. Let us consider 1624 as make or break levels. Near to 1624 levels, I suggest for waiting for decisive break below 1624. Then, one can add shorts.

I still believe that US will not attack Seria. It does not matter how much threat is being issued by President.     

Regards,

Praveen Kumar