28 May 2014: Nifty Elliott wave analysis: We have derivative expiry tomorrow. Indices and stocks futures may give up its premium today. Be cautious from buying. We may again see dip from any intraday high point.

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

For 28 May 2014: -

On 27 May 2014, FII Sold INR 202.61 crs and DII Sold INR 95.63 crs

It was expected choppy trading session yesterday. I feel that profit taking is not over yet. We have intermediate support at 7269 levels. As long as it holds 7269 we can see some pause in the market this is low point of Monday’s trading when we got sharp selloff in intraday session.

According to Elliott wave theory on hourly chart, Nifty is in trending wave ‘C’ which is a part of corrective full wave. So we are in wave ‘C’ from 7504 and we have already travelled a distance of nearly 200 points. Logically end point of wave ‘A’ need to be broken. End point of wave ‘A’ is at 7130. This is prime reason that I try to be reserve from buying on rise although stock specific moves are coming to catch for good.

When it comes to buy I found that market message is buying for mid cap and small cap stocks. I always ignore this message of market. Rally in stocks having value less than INR 30 are for retailers temptation. This is the reason that many stocks too sharp jump in past few days which fall in this criteria. If one is buying this kind of stocks then one must open his eyes for 24 hours. Exit before those start falling.

For today’s trading technical support will be at 7280 and then at 7260 levels. If it starts trading below 7325 then we can expect the re-test of yesterday’s low near 7260. On higher side, it will face resistance at 7400+ levels. I just believe on thing – sell the rise and sell the weakness.

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Strategy for Nifty June future – It has key support at 7280 levels which is still 50 points away. On higher side, Nifty June future will face resistance at 7360-7380 levels. I will be comfortable in shorting below 7280. Till that time, it will be speculative short call on rise. Note that we have derivative expiry tomorrow hence be cautious.

S&P 500 (USA) – It took expected turn and closed on high point of the day. Closing at high point of the day is always bullish especially when it closes with new all-time high.  Long back, I was expecting this to give us an all-time high in the zone of 19XX. It took long consolidation to enter in this range but rises now goes beyond limit of comforts. As long as it is above 1900 there cannot be sense of profit taking either. I still say, be on side line and wait for good opportunity. Do not be traditionally bullish.