01 February 2013: Nifty Elliott wave analysis: I have already expressed my view or a move towards 20 EMA. We are now on the verge – “Make or Break”. Spending time below 6020 will trigger sell off. So, short term top forming or not?

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

Today’s outlook: -

On 31 January 2013, FII bought INR 958.93 crs and DII sold INR 863.60 crs.

Nifty hit 6000 marks on 2^nd January 2013 and till yesterday also it was just at 6034. I have already said that this is “the short term top formation”, while most were betting for further rally. Can I say that I am right when Nifty is only 70 odd points away from its 52 weeks high? No, I cannot claim that but I am sensing that we have already formed the top and based on that I took few short deals in the market. I would be happy in putting nail at 6111 as top.

From past many trading days I am saying about the support at 20 EMA. It is now at 6021. Nifty came very close to that yesterday but saved by some short covering on expiry days.

Focus on three things on my given chart –

First, RSI – you cannot conclude that it is even stable. It is giving a hint that it can drift any time lower to pressurize indices.

Secondly, 20 EMA – It is acting as strong support from past more than two months. Now it is at 6020. If it starts closing below 20 EMA then it can exhibit potential to end the rally.

Thirdly trend line – look at short term support line. It has violated yesterday. Take a note that trend line study is the basic of technical analysis and you cannot ignore that.

All these are suggesting that Nifty can head towards 5940 levels. It may take some pause near 5980 levels but those may not be stable support. You can sense pressure all across the globe from first week of February. I will not be surprise if Nifty remains dead for one more day.    

Strategy for Nifty February future: I am again repeating that it may not be easy for Nifty February future to cross above 6111 marks. It has closed lower yesterday. Technical charts are suggesting that if it breaks 6050 then you can get a slide towards 6010 to 6000 marks. On higher side 6094 and 6111 will act as stiff technical resistance. Keep one thing in mind – Nifty February future will also try to give up some premium.

S&P 500 – Till now S&P 500 is trading below 1500 marks. It has strong trading support at 1490. I feel that bears will start commanding position if it start trading below 1490 levels. On higher side 1507 must be untouchable. I am expecting technical correction from little longer time but it is keeping me under water yet. I strongly believe that trades in the range of 1475 to 1500 will be opportunity to short. This week, it is on pause and for the next week – it will be get-set-go for fall. Contraction in GDP and US indices are still stable?       

Regards,

Praveen Kumar

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