20 February 2014: Nifty Elliott wave analysis: We may have a blow up top yesterday which same after breaking 6145 to misguide. Negative close can confirm the beginning of another correction.

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

For 20 February 2014: -

On 19 February 2014, FII Bought INR 468.47 crs and DII Sold INR 338.74 crs

It has finally crosses 6145 in final minutes of trades yesterday. You can refer to the chart, volume has dropped. We got four days of rise and today is fifth day. We may get a possible reversal now. I have already advised caution as S&P 500 was coming near 1850. US market fears that perhaps we may see the end of low-bank rate era. Now market will try to imagine life without stimulus and without low bank rate. We saw sell off in US market last night. I am expecting lots of readjustment in many emerging market currencies now.

Above news is surely bad news for emerging market like India although it may not have too bad meaning for USA itself. I have already named yesterday’s rise above 6145 as misguiding top. I have suspected for a bear down for today. Suddenly market got reasons too. It is looking like 6160 is going to be top for some time.

For today’s trade, one can use intraday pullback to short this market. Remember, firstly tapering and then fear of rate hike in US will hurt banking stocks most. There is no point to guess when US will hike bank rates. It is just enough that they will hike at some point sooner than what market was anticipating. It is not panic kind environment but surely a setback.  

Let us see how market will react today. The future course of action will depend on today’s closing levels.

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Strategy for Nifty February future – I believe that yesterday’s last minutes buying came as misguidance. Such blow up top used to come in past also. We are on resistance of 6160. It is looking like market has thrown weaker bears yesterday. It is looking like market will open below yesterday’s low of 6129. If it sustain below 6129 then we can expect 6100 to 6080 levels too. Yesterday’s high of 6168 will be key resistance. Do not opt fresh short if it able to save 6129 by any chance.

S&P 500 (USA) – So, how was that? We got a high at 1847+ yesterday and then a wash out fall to close at 1829. Congratulation to those who went short on S&P. Market fears that perhaps we may see the end of low-bank rate era. Now market will try to imagine life without stimulus and without low bank rate. Charts are suggesting that wave “C” has started now. If I am right then this wave will give bigger pain to bulls because it can drag market for 100 points fall. Keep stop loss at 1854 and hold all shorts.

Regards,             

Praveen Kumar