21 May 2014: Nifty Elliott wave analysis: I still feel that consolidation will continue for now. Technical support will be at 7240 and resistance will be at 7325. Be cautious from long position on newer momentum stocks.

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

For 21 May 2014: -

On 20 May 2014, FII Sold INR 104.53 crs and DII Sold INR 656.83 crs

I was expecting closing to go on dead flat note. It goes in same way but actions continue in PSU stocks. It is not easy to buy those stocks either. We saw some cooling off activity in blue chip Reliance. Over all, this is still a consolidating index with some hectic stock specific activity. It is important to note that volatility increases in both direction. Rise and fall used to come in rapid way. 

Technical charts are still repeating same thing. Nifty has stiff resistance at 7325 levels. We are not at the levels where bulls or bears can rule in any direction. As long as Nifty holds 7130 to 7080 it opens strong scope for newer all-time high in coming month. Confusion of long term direction and short term direction will make things odd.

For today’s trading support will be at 7240 levels. Once again expected range can be 7240 to 7325. I have no expectation for this range to break. Intraday traders should reduce their activity on index and try to focus on momentum stocks but even those are not easy to deal. I am issuing word of caution. We may prepare our self for odd moves.

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Strategy for Nifty May future – We may get another dead flat opening and there is no big expectation from intraday session too. Technical resistance will be at 7350 levels while support will be at 7260 levels. If it slips below 7260 then only bears will get some edge to trade. Will it come? Let us see.

S&P 500 (USA) – In my view, this is the desired crack which market was looking for this week. It closed with loss of 12 points and now the next crucial level to breach will be 1860. It may break 1860 either by today or by tomorrow. It is looking to satisfy ‘Sell in May and go away’. S&P is very likely to face resistance in the zone of 1880 to 1885 in every rise. I have a strong believe that this selling will take S&P towards 1810-1800 levels.