04 April 2014: Nifty Elliott wave analysis: It has two strong supports; one is at 6675 and next is at 6640 levels. On higher side resistance will come at 6675 levels. Will we get follow up of yesterday’s profit taking?

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

For 04 April 2014: -

On 03 April 2014, FII Bought INR 717.39 crs and DII Sold INR 716.57 crs

Finally we saw a small negative close on eleventh day. This is definitely not looking weak but definitely on stiff resistance. I had an anticipation that top may emerge near 6767-6775 levels and we saw high as 6776.75. I am still not claiming that it is top yet. We need to see two more days to see any good confirmation. One thing is very clear that buying at these levels may not be safe.

We saw some selling yesterday and if we get some follow up today then only we can try to conclude something on indices. If indices are moving like mid cap stocks then confirmation will also be like same. This is a dangerous situation. This kind of winning streak always has ugly end. Every long position must be protected with suitable stop loss and traders should avoid overnight position.

I have already mentioned yesterday that as long as it is above 6675 we can see rebound from lower levels. We saw same thing in past 45 minutes yesterday. So with today’s opening keep your eye on 6675 support levels.

How ridiculous is this that we have all-time high with VIX running above 22. For today’s trading we will again see support at 6675. If it breaks 6675 then we will get a real big litmus test at 6640 levels. I still feel that this trend will intact as long as it is staying above 6640.

We need to be clear that this rally is running from 5933 and so far it hit 844 points. Even if we see 250-300 points fall then also it will be named as ‘technical correction’ only. So it can eat portfolio in technical correction also. I feel that nifty can face stiff resistance at 6775 + Levels.

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Strategy for Nifty April future – After long time SGX Nifty is showing negative tick in morning hours. There is no great encouragement for trade on Nifty. As long as it is above 6700 it can see able to see bounce anytime. It will have stiff resistance at higher side. So, one may prefer to short rise only. I still suggest ignoring trading on indices as stocks has much better opportunity. We exploited shorting SBIN, TATAMOTORS and TATA STEEL yesterday. We may see weakness in banking stocks today. Keep index as reference point and trade short on weak stocks.

S&P 500 (USA) – S&P 500 is making a Tom Demark sell signal on daily chart - not saying it’s a top , but just something to keep in mind. It hit another new life-time high and then slipped but still not concerning. I still hope for the cross 1900 marks but I prefer to be cautious as Dow Jones has not crossed 16600 levels yet. We need to have bold confirmation for further rise to buy. This is surely a technical confirmation but not bold enough yet.  It is looking like to extend gain above 1900. I am not participating in trade yet.