20 January 2014: Nifty Elliott wave analysis: If NIFTY settles below 6240-6230 levels then it can go to hit 50 DMA @ 6193 and worse case test of 6140 too by this week itself.

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

For 20 January 2014: -

On 17 January 2014, FII Bought INR 75.27 crs and DII Bought INR 141.65 crs

I have already quoted that once mid cap and small cap indices starts underperforming Nifty we will see weakness. Even on Friday, we saw small cap indices falling over 2%. It seems that investors and traders are off loading their riskier portfolio. I think that market is doing right and moving on suggested road map.

I was not convinced with Bank Nifty and it has also slipped more than Nifty. Key support for BANK NIFTY is at 10800-10780 levels which is just 120 points away. A break down situation is very likely on banking stocks. This week may not be bad for the world but it can turn disaster for Indian banking stocks.  

For today’s trading, support is expected at 6250-6240 levels first. If it breaks then we can see more profit taking and a move towards 50 DMA which is at 6193 right now. I can sense that fall may not stop even at 50 DMA. We may see a final touch towards 6140 levels too.

If Nifty starts settling below 6240-6230 levels then we have lesser chance for rebound either for this week. I strongly advise a strong word of caution. Whatever price we are seeing on technology stocks are also too scary as those are way higher.  

Strategy for Nifty January future – SGX NIFTY is hinting that we will see opening below Friday’s low of 6247. If this happens then market may not have any good chance to rebound sooner. We should see it moving lower towards 6200-6190 levels. Domination may come from weakness in banking stocks. I am already short from higher levels and I will prefer to hold my shorts as long as weakness sustain this market.

S&P 500 (USA) – from last more than a year US market turn on Moving averages support, not on technical indicators. We have seen too many negative divergences on MACD and RSI but all failed to make impact. It is true that someday it will hurt US market badly but those days are away as long as it is above 50 DMA. For S&P 500, 50 DMA is at 1807. In my view, buy is permissible above 1854 or from near to 1820 with stop loss at 1807 or below. I can still sense a newer life high this week but I am not opting long.    

Regards,

Praveen Kumar