19 August 2014: Nifty Elliott wave analysis: Nifty is flexing its muscles for a move towards 8000 levels by this week itself. Now, 7840 will act as good trading support. Every pullback should be bought.

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

For 19 August 2014: -

On 18 August 2014, FII Bought INR 473.42 crs and DII Bought INR 490.04 crs

What a great day yesterday for Indian market. We saw small gap down and then a quick follow up buying by everyone. It has narrow down its premium to confuse bulls but bulls were on top of the confidence. I also added fresh Nifty long but I was little late. Still, our buy came on Nifty August future @ 7833, a good 40 points profit.  

I discussed about diamond formation on weekly chart and that pushes its effect by Monday itself. So, as long as it is above 7840, it will be under full grips of bulls. Bears have no possible edge at one go. Technical target looks to come at or above 7920 levels. This is retrenchment based target. It’s interesting to see that blue chip stocks are raising from the day of sell off in mid cap and small cap stocks.

For today’s session, if it opens with gap up then surely it will be more bullish as there must be many nervous short to cover. From now onwards 7840 to 7800 will offer good trading support in case of profit taking. This does not mean that I am betting for profit taking. I expect Nifty to go higher levels. It may hit levels like 7920-7950-8000 levels.

In spite of those entire rise, I warned traders from buying mid cap and small cap stocks. Those charts are very ugly and certainly inviting troubles. Just deal in front line or known mid cap stocks only.

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Strategy for Nifty August future – Nifty August Future should open higher near 7900 levels. I have a theory, when short covering is near, market tend to be more bullish after gap up and never filled those gaps easily. If this is going to be the case, then 8000 levels will come much sooner than expected. For today’s trade 7850 will act as support. Cross above 7920 will invite massive short covering or selling. That depends on condition.

S&P 500 (USA) – I said for 1975 yesterday and it came in just single day.  The way it has built the momentum it is looking like to hit 1990+ levels before the week ended. Now, technical support has shifted higher and it is well known which comes are 1956. As long as it is above 1956-1958 we can expect to break 1990+ levels. It is looking like to challenge 2000 marks also this time.