26 August 2014: Nifty Elliott wave analysis: Have we seen final short term top at 7969? We need to see follow up selling before any confirmation. Crucial support is still 7850. If it breaks then we will see alarming dip/fall.

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

For 26 August 2014: -

On 25 August 2014, FII Bought INR 127.33 crs and DII Bought INR 45.71 crs

We got a high of 7969 on Nifty but highlight was not high for yesterday. Attention was given to the possible cancellation of coal block which were allotted after 1993. This force me to give full attention to the day’s low which came with impulsive selling. In current situation impulsive selling give us an idea of possible nervousness of bad news. Rising wedge on hourly chart was giving this hint. It helps me yesterday to make quick exit before fall turned nasty.

I was hoping for a possible move towards 8000 before falling but it missed by wide 80 points. Well, I still say that Wolfe wave will be in full effect below 7850 and it has no effect above 7940. If we are on fifth Elliott wave on daily chart then this kind of odd bounce and impulsive falls are bounce to come and it’s a fair characteristic.

It is also noticeable that we are in derivative expiry week with a Holiday on Friday. This is adding further fuel to volatility. From my experience I can tell you that rally with new all-time high should not go without metal stocks. If this happens then it hints us that top is nears. Have an example – Tata Steel is down by 11% from its high.

For today’s trading 7890 is a crucial trading support before 7850. If it breaks and sustain below 7890 then we can expect some swift selling towards 7850 levels. On higher side 7940 and 7970 will act as resistance. Let us talk about the development which can affect market moves, first is development on SC verdict coal block allocation and second is tension over Indo-Pak border. Let me make it clear, trades based on chart only. Do not take fall as guarantee. We will see guaranteed fall only below 7850.

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.

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Strategy for Nifty August future – Nifty August Future should open on flat note. Technical charts are giving immediate support at 7900 levels. If it breaks 7900 then only can expect some selling which can have meaning. Technical resistance point will be at 7945 and 7980 for today’s trading. Break below 7900 will make it impressive before expiry. I will plan to add intraday short only if it sustains below 7900 levels.

S&P 500 (USA) – S&P finally got its desired level of 2000 marks yesterday. It hit a high at 2002.20 to trap extra excited bulls. I prefer short here in this zone. In my view short term top has done and we may see a reactive dip afterward. So, rest of the week should go in favour of bears. 2002 will act as stiff technical resistance. Perhaps this is simplest form of conclusion after analysis. Just short!!!