08 May 2014: Nifty Elliott wave analysis: 6650-6640 is a support and market is almost testing here. Recovery should come in this zone and it must go above 20 DMA, i.e. 6740-6750. If not then it will be alarming before election outcome !!!

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

For 08 May 2014: -

On 07 May 2014, FII Bought INR 119.11 crs and DII Sold INR 258.88 crs

Nifty hit and closed on dot near 6650 levels. We are now eight sessions away from its all-time high. Worse part is that out of these eight days Nifty has spent below 20 DAM for five days in a row. In normal circumstances this is a bearish set up. Just because this is near to election out days I am naming it only as cautious sell off.

I can tell you that it has happened in the year May 2009 also. It had consolidated and given all sense for shorting but finally a massive gap up came. Equally, in that time it has never broken 20 DMA. This is making me little worried. Nifty must stand above 20 DMA to conclude for any rise on May 16^th. To get any rise on 16^th May it must build a primary bullish trend.

I am still giving edge to bulls. Technical charts are suggesting for just two important supports, one is at 6650 and another at 6580. The best way to build an up day is, ‘take a gap up and close at high point’ and if that high point goes above 20 DMA then who can stop bulls. I can say just one thing for sure, “If Nifty fails to move above 20 DMA then there will be nothing positive on 16^th May. It does not matter what the outcome of election is.” This must be a desperate situation for bulls. Today or tomorrow must be the last day for bulls to show power. If not then, there cannot be anything to trade positive.

Technical charts are still suggesting for crucial support at 6650 to 6640 levels. On higher side, it needs to sustain above 6740 to 6750 to register further gain which is way far now. In the downside, break below 6640 will give us levels like 6580.

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Strategy for Nifty May future – We may see some optimistic opening as it was depressed close yesterday. It may open near to 6700 levels. After that, it can able to move higher only if it can show some life above 6710 levels. This is decisive levels. If bulls do not come at these levels then it shows that bulls has lesser conviction. Let us see what is coming.

S&P 500 (USA) – I said yesterday that either, it will save 1864 and move higher today or it will top out and sell off begin. Now, both have happened on same trading session. It has broken 50 DMA also and then moved higher to closer stronger. I still believe that before “May sell off” one life time high should come. What was impressive in yesterday’s recovery is that it has closed well above 1872-1874 levels. Now, we have full possibility of one day of big rise and this may be today. I do not prefer to short S&P in this kind of set up which looks so tempting. Just think, how many people would have added short when it was below 50 DMA yesterday.