06 May 2014: Nifty Elliott wave analysis: I repeat again, we still have valid support at 6650 levels and resistance at 6750. Market need to break any of these levels to establish a trading direction.

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

For 06 May 2014: -

On 05 May 2014, FII Bought INR 279.86 crs and DII Sold INR 224.52 crs

It was said that rise will sustain if it manages to spend time above 6740-6750. It hit a top at 6741 and then gave up. I have not preferred shorting as I still believe that ‘optimism’ can drive market any moment now. Based on technical chart, we cannot short near to 6650 support with decisive break. It is consolidating and leaving enough confusion for bulls and bears both.

Near to the election result day, market is just turning cautious depending on its speculation. Derivative position building is showing that market is expecting a wild swing in this month of trade. I believe that range can be 6400 to 7300 levels. Market participants should be cautious and are cautious for this kind of range. Retail investors and traders should not try to cash in for 16^th May. One should prefer to be light.

Technical charts are still suggesting for crucial support at 6660 to 6650 levels. On higher side, it needs to sustain above 6740 to 6750 to register further gain. We have seven trading sessions more before Election result.

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Strategy for Nifty May future – SGX Nifty is hinting for a higher start near 6750. I still prefer to buy dip as optimism may hit before election result and try to generate a new primary bullish trend. I am still advising caution at higher levels for intraday as caution and profit taking will try to bring it lower. For today and tomorrow, the fight between caution and optimism will continue. Do not opt to trade if it turn cautious near 6720-6730 levels.

S&P 500 (USA) – It took a bounce of 18 points from its intraday low and finally closed near top of the day. What is more important is that it has managed a green closing. This is impressive. As I said earlier also that I am expecting a new all-time high sooner. This is most crucial trading week. As long as it is saving 50 DMA on closing basis it will keep potential to hit higher above 1900 marks. I still say, stay long or add long with limited stop loss below 50 DMA.