10 March 2014: Nifty Elliott wave analysis: First day after a new life-time high. Pullback can get support at 6490 and 6420. Top will not be safe and selling will begin in the second half of week. Till then, it will invite bulls.

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For 10 March 2014: -

On 07 March 2014, FII Bought INR 2577.44 crs and DII Sold INR 669.58 crs

A new all-time hit came on Nifty and Sensex. Once it has crossed it kept moving higher. Nifty gave a high at 6537.80. It seems that we are in pre – election rally. It may be a different question if it is good to buy or not. Charts has developed two another important supports, one is at 6420 and other at 6360 levels. This cannot be ignored now.  

I was excepting some target on the cross of 6420 but those came in just few hours. It moved like there will be no tomorrow. FIIs have bought on very heavily on Friday. This generally comes near top. Still, I am not in hurry to conclude for top. Basic of technical analysis suggests that a trend once established has higher chance to continue. So, if follow up buying comes then pullback may not be big. We should get many answers this week.  

Indian ADRs were not very strong on Friday night at US market. I am definitely not going to buy these high in India market. Every stock is not stronger or higher. It is just giving opportunity to trade stock specific run up.

What can we call a possible top? Well, if a gap down comes and does not fill then it can be first hint of possible short term top. I am still saying short term top only as Nifty may try to move higher after pull back as of now. As long as it is above 6420-6360, it is likely to move but right now it is heavily over bought.

My charts are saying that we can see brutal sell off on Nikkei and it may grind lower. I can see a possible dip of 500 points or more in short term.

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Strategy for Nifty March future – It should give some gap down after moving 300 points in three days. It is making it heavily over bought now. If it fails to cross above 6565 then expect a pullback towards 6490-6450 levels. It may be process of days. Higher levels may be just euphoria for Indian market. If it is pre-election rally then it is coming much quicker and earlier. SGX Nifty is hinting for opening near 6510, this gives me a sense of possible bear’s gap down. Is it so easy after hitting a convincing new life time high? Let us see.

S&P 500 (USA) – It has another life time high at 1883.57. So far, high comes in the zone of 188X. It has moved well above previous resistance of 1850 and it makes me to believe that as long as it is above 1850 we cannot get easy correction. Charts are suggesting that as long as it holds 1850 it can move higher but at some time it has to stop. At some point it has to go against bulls. I prefer to be on side line as I fear for a brutal top. Pictures are clearer on DJIA. Will it surpass 16600 levels so easily? Take a note that small cap rally always comes in the last leg of rally and US market is going through same phase.