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…!!!
