22 August 2014: Nifty Elliott wave analysis: A pullback remains in waiting. 7920 will again act as stiff trading resistance. Pull back will get confirmation below 7850 which is still little too far. 11th trading day from 7540 !!!

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

For 22 August 2014: -

On 21 August 2014, FII Bought INR 412.77 crs and DII Bought INR 63.74 crs

It is a dot top at 7920 and then a sell off for 65 points of Nifty. Note that 20 DMA is at 7752 which is 140 points away and 50 DMA is at 7662 which is 230 points away so we have limited number of support in the downside. This is challenging if we see even small weakness. I have already explained about formation of Wolfe wave.

It is the extension of 1-3-5 or a-c-e as supply line. Bulls get tired on supply line and they may just fail to give a break on higher side or push on higher side. It will just cross and then dip. I am expecting that if it breaks 7850 for once without violating top of 7922 then we may see some brutal selling. So far, I am naming those as pullback.

Today is last trading day of the week. I am expecting a pullback as of now. Remember that we have seen one of the sharpest 7 days rise in the market so far. Reaction coming at higher levels must be an obvious phenomenon. Market got supported with rise in Pharma, Auto and private banks. Below 7850 on Nifty, we may see some good confirmation of pullback. So far, this is just speculative in nature.

S&P 500 (US) added a few more set of Tom Demark ‘sell’ signal near 1985-1990 ranges. This shows that at least for short term, rally is on halt.

For today’s session, we will see a higher opening and then I will plan to test for short based on Wolfe wave formation on Indian market. Have a look at daily levels. Nifty hit lower low for three trading days in a row but still trading up. I favour to add short on S&P 500 now based on Tom Demark sell signal. Only problem is that it is also coming at new all-time high like Nifty.

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Strategy for Nifty August future – Nifty August Future should again open for comparable 7900 levels. It has spent three days on 7900 levels. A pull back at least is in waiting but it has not come yet. I still believe that 7940 will act as stiff trading resistance. We may have good trading support at 7860 which is little far from here. If it breaks 7860 then only we can expect some meaningful pullback today.

S&P 500 (USA) – It is now above 1992 and closed on new all-time high. This is straight 90 points jump in just eleven trading sessions. This is too much for now. Although it is a breakout but it is heavily over bought on charts now. It deserves a pullback and it should come any moment now. It is equally true that final top will be in the range 2050 and that move should start after a correction. Right now, S&P may plan to test psychological 2000 marks. A correction is in waiting…!!!