14 January 2014: Nifty Elliott wave analysis: US market got biggest drop of 3 months. If Nifty fail to fill the gap and stay below 6250 then do not trade any long. Mid cap & small cap under performance has just begun.

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

For 14 January 2014: -

On 13 January 2014, FII Bought INR 413.85 crs and DII Sold INR 317.52 crs

Nifty closed on highest point of past seven trading sessions. Money flow is not justifying yesterday’s rally specially when mid cap and small cap failed to close even in positive. Later tonight, U.S. stocks fell sharply, with the Dow Jones Industrial Average slammed by a triple-digit drop following comments from Atlanta Federal Reserve President Dennis Lockhart that the U.S. central bank should push ahead with its efforts to wind down monetary stimulus.

On Friday, market has closed on weak note that gave bull’s gap up on Monday. Now when it has closed stronger on Monday it is about to give bear gap down today. This is just not making sense for those who love to forward trades or holding trades for few days.

Pure technical analysis suggests that if it fails to fill up the bear gap down then only option left. It will again try to test 6140 levels in the days to come. These are tougher days to trade. We can hope that market should try to react positively after yesterday’s CPI data which came at 9.87%.

Technical resistance will be at 6290-6300 levels. If market has to react positive from low then also it need to hold 6220 levels. Be prepare to see some effect of political jitters too.

Strategy for Nifty January future – We saw gap up on Monday and then rise. Now we are going to see gap down. This is meaningless trend right now. We can see opening near 6250 levels. If it trades below 6275 after poor start for hours then fall is very likely. If recovery wants to come then it must and must save 6230 levels. Is it going to save 6230? I have strong doubt.

S&P 500 (USA) – S&P 500 has broken the support of 1824 and closed even below 1820. This is suggesting that it has slipped after almost forming double top which is lower. We saw a high at 1843 and then a fall. Technical suggests that this weakness can continue. It is looking like to break the levels of 1800 levels. One should not be in hurry. Let us see the levels of 1824 as resistance first. If it fails then only it is a short. One thing is looking sure that it can turn sell of rise market any moment.

Regards,

Praveen Kumar