19 December 2014: Nifty Elliott wave analysis: Cross above 8215 should give an extended target at 8295. I am in search of long opportunity based on short covering.

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

For 19 December 2014: -

On 18 December 2014, FII Sold INR 874.89 crs and DII Bought INR 648.17 crs

Bank Nifty has performed better than Nifty in recovery and this pattern should continue on the hope of policy easing and many economy related factors. No emerging market index has recovered like blue chip index of USA. Indian index were no exception. This kind of relative under performance by emerging world will continue on the weaker currency against US dollar. Those emerging market whose currency fail to recover will not see any great recovery. We need to read Indian rupee in relative term. Think – Crude is near at $55/bbl and then also Indian rupee almost hit 64 against USD.

When I am reading wave charts, I need to ignore above fact. Somehow, wave charts are saying that Indian market may have potential to deny above fundamental levels. Hence, I will not be easily short on rise. Equally, I am advising readers to be careful.    

Based on Elliott wave theory, first target on recovery is at 8215 and next target is at 8295 levels. Right now, it is not the time to point out for the top of recovery wave ‘b’. I am not in hurry unless a strong sell emerges. We need to remember than we saw a 900 point of rise without correction followed by sharp correction of 650 points afterward. Above is not a true nature of stock price in natural term. Prepare to see something newer on chart. I want to be on long side.   

For today’s trading session, we can again expect positive opening after massive rise in US market. If it stands above 8200-8220 then we can see quick fire rise. It may be a short covering rise.  Technical support stands at 8100 levels only. Today is the last trading day of the week. It is difficult to conclude how market will react after second gap up in a row.

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Strategy for Nifty December future – I was expecting a move above 8200 by yesterday itself but it will come by today. I may not opt to trade if opening quotes itself goes above 8220-8220 levels. We need to search for new intraday buy signal. Logically, 8260 is also not impossible. I will search for the opportunity on long side based on short covering.  

S&P 500 (USA) – We saw another fantastic rally in US market last night. Within three days, S&P moved from 1972 to now at 2062. Now it is less than 20 points away from its life time high. Hope, no readers are on short side. December month turn back to it’s own form. A correction came and now it is on rise. We need to take cue from momentum. I believe for some choppy session ahead and then a move towards 2100. If I am right for choppy sessions ahead then 2050-2035 will not break on down side again.