01 August 2014: Nifty Elliott wave analysis: US market sell off came with confirmation of short term top on many global indices. NIFTY – immediate support at 7660. If breaks then Friday may end at 7600 too.

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

For 01 August 2014: -

On 31 July 2014, FII Sold INR 1654.86 crs and DII Bought INR 1420.36 crs

So, it was a wild expiry yesterday. I was expecting this since morning as it never even able to cross Wednesday’s high point. Practically Nifty has never even above 7800. It saw massive selling in post 2 pm trades. It should not be a shock. FIIs were selling in cash market. We had many negative divergences with weak global cues. Mid cap and small cap indices were under performing.

Now, with this morning I am seeing that Dow Jones Industrial Average were down over 310 point. This may make an impact of at least 50 points gap down if not bigger than those. So, it is the time again to talk about the technical support of 7660. If it breaks and sustain even below 7660 then it will be a high stress time for bulls. Elliott wave chart has failed to define a top few days back but practically market never moved in term of direction. It has just violated technical figures only and cycle remains same. Perhaps, this is the reason that we are not selling decisive up side even after new all-time high.  

If you do not have shorts from yesterday then do not add short at low. Wait for pull back. I had shorts which I like to hold. I have already given my view for top and stated that July top may remain top for some time.

For today’s session, we may get gap down and immediate support will be at 7660. It can either bounce from 7660 or break 7660 to hit 7600 also. This Friday may have much pain for bulls if it breaks and close below 7660. I still say, short pullback. We may see end of Bull Run in short term. Now, do not even think to buy falling knife on mid cap and small cap stocks.

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Strategy for Nifty August future – Nifty August future will take a gap down. Dip is acceptable as long as it is coming near 7700 levels (which will also give me nearly 100 points of gain on my short). If it breaks 7700 and sustain then I will again plan to hold for something more if not then I will plan to book for once. Below 7700, another massive crash will come. Short pullback.

S&P 500 (USA) – I was definitely expecting this from past many days. My waiting turned irritated and it finally came yesterday night. It closed with a fall of almost 40 points and coming to technical support at 1930 ranges. I have shorts from 1980 ranges which is too old to say that I am enjoying short. Now, if it breaks 1925 then prepare for a move towards 1900 levels. I feel that I have a confirmation for short term top and this may be medium term top too. Use pullback to short only and do not add fresh short at these low.