26 May 2014: Nifty Elliott wave analysis: Rise is likely to continue as long as it holds above 7300 levels. Crucial bull’s threshold is at 7400. Be cautious at higher levels.

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

For 26 May 2014: -

On 23 May 2014, FII Bought INR 416.80 crs and DII Bought INR 135.50 crs

Once again small cap index gained over more than 2.50% and mid cap index gained over more than 2%. This is euphoric moves. Fact is that mid cap and small cap index moved in post poll result days. As long as buying continues in mid cap and small cap index, it is tougher to say for any possible profit taking. History suggests that last ride always goes on mid cap and small cap index lead by retail investors picking. This kind of buying generally comes to trap last bulls.

According to Elliott wave theory, we are in the process of formation of wave ‘B’. It could have given top of wave ‘B’ either at 7347 which failed or may give near to 7398 which is likely possibility. So minimum of 30 points more may come on Nifty. It is also a fact that face is still on for new all-time for Nifty as long as it is in progress of wave ‘B’. I must be clear that we need indication to find the end point of wave ‘B’. Suppose if it crosses 7400 marks then this wave ‘B’ will have different nature than what I am expecting. Hence, I am not in hurry to conclude. I had few shorts which I booked on Friday when Nifty was at 7325.  

I have reasons to wait before thinking to short. Normal logic is that market may enjoy a positive session as today is swearing in ceremony of our new Prime Minister Mr. Narendra Modi. I strongly advise caution at higher levels specially if it comes at 7398 levels.

For today’s trading technical support will be at 7325 and then at 7290 levels. On higher side, we may see only one stiff resistance which is at 7400 levels. If it manages to stay above 7400 then it get wild up side.

Please visit our ‘intraday updates’ to get further updates or to take good advantage join paid services.

Strategy for Nifty May future – I stopped out from Nifty future at 7350 only with small loss. I feel that it was good to be stopped out. Now, SGX Nifty is giving a hint for opening at 7425 levels. This is big and may go bigger. I prefer to ignore trading for today’s session and chances are high to be trapped. I can prefer to make stock specific deals only. So far, direction is up for Nifty.

S&P 500 (USA) – It is again back to 1900 levels. This is little uneasy right now but giving all possible sign of top formation. Still I suggest that one should stop out above 1903 and prefer to wait for weakness. We cannot expect any good extension above 1903 even after bullish mode. Based on chart, being bullish is also not making sense even after new all-time high. From past many months, S&P formed new all-time high but fail to give unidirectional move. Be on side line and wait for opportunity to short.