28 January 2013: Nifty Elliott wave analysis: 20 EMA has saved and we got a typical bounce. It is looking like to re test 6101. Cross over will result a move towards 6126. Technical trading support will be at 6042.

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

Today’s outlook: -

On 24 January 2013, FII bought INR 586.87 crs and DII sold INR 331.92 crs.

It was stronger push by banking stocks which has pulled the market higher on Friday. We have saved 20 EMA again in the dip. We have RBI monetary policy review tomorrow and we have derivative expiry for January month series this week. So this week is going to be vital and critical for market.

Market is trying to be stable above 6000 but we have seen under performance in mid cap and small cap index in last few days. It is looking like to deny ‘negative divergence of MACD’ for few more days. I am giving all importance to 20 EMA support. We can say that market is saving till now and may try to extent little more in this week of trades if RBI gives the expected rate cut.

I need to draw your attention towards rising VIX. It is now moving near 14 now after making a low near 12.50. It was also confirmed by selling stocks like HUL and Tatamotors. I still believe that we are near top but I am unable to say any particular level as top. Indications are coming that we may see some extension of rise this week.

I have quoted this earlier also that at these kinds of levels it will be only banking sector which will dominate.  We have RBI policy tomorrow and most banks are looking for gain. I am expecting 25 bps repo rate cut tomorrow which market is already pricing in. Nifty may try to make newer 52 weeks high in that process. Cross of 6101 will give us 6126 and then may be even at 6150 levels. As long as 20 EMA saves, we cannot say for reversal of wave.

Strategy for Nifty January future: I have spotted 6111 for January month but now it is looking to make a test towards 6111 levels. Cross over of 6111 will give a move towards 6130 and then 6160 also. We will have important trading support at 6050. You can expect first half range from 6050 to 6100+ (6111) for the first half. Remember it is important to save 6050. I cannot say anything for second half. Yes, we may see sharp and very sharp swings. Suppose if it start trading below 6050 (for 5 minutes) or failure above 6111 at higher levels will result weakness.

S&P 500 – 1504, remains a challenge for S&P 500 as of now. It is very surprising that VIX is lowest of 5 years. When everyone says buy as everything is fine then time comes for caution. Remember that most top forms in this kind of environment only. I am waiting for correction to begin. I am spotting – S&P 500 will make a top this week itself. Short – Short and Short.  

Regards,

Praveen Kumar

25 January 2013: Nifty Elliott wave analysis: Eye opener fall begins on mid cap indices as expected. By any chance, if Nifty goes below 5995 then expect massive selling (likely) !!!

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

Today’s outlook: -

On 24 January 2013, FII bought INR 1026.32 crs and DII sold INR 752.26 crs.

Are you still focusing on the figure that FII are buying? If yes, then feel that pain of fall in stocks like HDIL, IVRCL INFRA and even HUL and TATAMOTORS. After crossing 6000 marks, we spend 17 trading sessions but we are still at 6000. I have already indicated for “the topping” formation in this zone.

It is market dynamics that give us price correction and it was bound to come. I have already said that MACD and RSI are giving ‘negative divergence’ which cannot be ignored to a bigger time period. I will still say, save your self from burning mid cap stocks. Promoter’s game is not over yet and asks SEBI why this happening is in a periodic manner.

It is technical which are giving indications in advance and it is up to you if you re accepting or you are rejecting because of temporary failures. I was expecting that first top should come from US market but it is looking like Indian market might have formed first top.

If you are a trader then also you need to give the test of patience. Even shorting in this market may not reward you in small time frame. First weakness has emerged on metal stocks from higher levels. if you look at the money flow pattern then you can able to see that HUL and TATA MOTORS were FII favourite and both got multiple up gradation. Now both slipped drastically. I am leaving conclusion on you to understand. Who was right?

Strategy for Nifty January future: I have spotted 6111 for January month future and it has failed to give us a fall which is almost 100 points now. Even yesterday it was written for 6010 to 6000. It hit 6010 before moving higher. We have seen second half fall. For today, keep an eye on 6000 marks. Trade below 6000 for 5-10 minutes will give 5950. On higher side 6080 will be tougher resistance too cross.  

S&P 500 – 1504, a high on S&P 500 came yesterday to hit highest levels since September 2007. I kept on saying buy from 1345 and even at 1400. I turn bearish saying that rise till 1500 is possible but those are shorts only. Remember the fear gauge VIX is at all time low. This index must see correction. First sing of weakness will come below 1475 which is now too far.  

Regards,

Praveen Kumar

24 January 2013: Nifty Elliott wave analysis: Nifty has rebounded sharply yesterday from 6020 but it may again feel pressure at higher levels. Advance – Decline ratio and mid cap performances are poorer. .

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

Today’s outlook: -

On 23 January 2013, FII bought INR 802.62 crs and DII sold INR 852.33 crs.

We have seen sharp recovery yesterday from lower levels of 6020. It was not very expected levels but reasons were equally odd. It is fashionable to give support to the market by big talk. I have no reason to believe that we will get anything lower on fiscal deficit, no matter who advocated.

From past three days, my idea is that we should have stiff resistance at 6100 and then market should retrace towards 20 EMA. It has slipped from 6100 and as of yesterday’s close 20 EMA is at 5996 levels. I am still feeling that we will see stiff resistance at 6100 marks on any rise.

Before making a top market tends to give some indications in advance. We have relatively lower performance by mid cap and small cap indices. These indices are performing poorer compared to blue chip indices. Another worry point is that advance-decline ratio is constantly poor from past many trading sessions.   

I have already discussed the negative divergence by MACD and RSI on daily charts. This could result some sharp impulse at higher levels. Yesterday’s rebound from lower was also another example. This is still not comforting. We need to remember that RSI and MACD are hinting that rise will be limited above 6000 marks and it is true till now. In spite of tremendous money flow by FII, our market is at least not rising.   

I am repeating that RBI may not go for 50 bps repo rate cut looking on inflationary environment. This can be disappointment for market but market is not discounting this yet.

Strategy for Nifty January future: We can expect a pause on rise at 6082. Cross over of 6082 might result the attempt towards 6111 levels but it may fail again. It is looking like we may see fall from higher levels. In the down side, I am already quoting for support at 20 EMA. This is showing that Nifty future need to come near to 6000 to 6010 marks. We need to remember that as long as we are saving 20 EMA, it may rebound like yesterday.

S&P 500 – Day by day it is inching closer to 1500 marks. After market hours APPLE disappointment is coming. US market is turning dull but not ready to give us. It seems that it can fall only from nearer 1500 marks. This is also coming. I retain my views that anything above 1475 is for short for a bigger fall. I am assuming that reasons will emerge later on.

Regards,

Praveen Kumar

23 January 2013: Nifty Elliott wave analysis: Nifty hits its critical resistance at 6100 and then slipped. We have further extension in 20 EMA support @ 5990. We may go close to 5990 sooner.

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

Today’s outlook: -

On 22 January 2013, FII bought INR 1046.40 crs and DII sold INR 855.35 crs.

Looking above figures, one can say that FII are still finding Indian market attractive. There is no denial that nifty is hitting crucial resistances on daily basis. Yesterday it hit resistance at 6100 marks. We have seen reactions at higher levels and Nifty came lower to hit 6040.

Crossover of 6068 had generated target of 6100 but I was not very confident for crossing 6100. A fall from 6100 might be the first indication of some fall. My focus will be at 20 EMA. I am mentioning and plotting 20 EMA on my charts from past many days. As of yesterday’s closing, 20 EMA is at 5990 levels. Current up wave can reverse only if we see two closes below 20 EMA.  

I have no idea at all about the reason for price correction. Charts are suggesting that we might be forming top. We cannot conclude anything from just one day of intraday fall. Question is that we will we get follow up in selling? If yes, then it may try to come near to 5990.

Based on wave theory, we are on fifth wave progression. Now, there is a big problem in this fifth wave. It is running with negative divergence on crucial technical indicators like MACD and RSI. This weakness of technical indicators is giving all signs of uncomfortable moves.

There were some reports that unemployment rate will be highest in the year 2013. We have some selling in global market when we were trading but those have recovered to a good extent in night hours.

One more thing, RBI may not go for 50 bps repo rate cut looking on inflationary environment. This can be disappointment for market but market is not discounting this yet.

Strategy for Nifty January future: I said yesterday that you can expect the test of 6060 unless we stand tall above 6111. It hit a high at 6109 and then we all know what has happened. For today’s session also technical levels of resistance will emerge only at 6111. It need to be a wild day and perhaps majority of reactions will come in second half. Technical charts are giving me the indications for the test of 6000 marks. Premium fluctuation will be troubling.

S&P 500 – It has some high at 2007. VIX is running below those 2007 levels. When investors turn so fearless, I start fearing. Definitely I am not trying to be over confident as there are genuine sign for fall. It is now at 1492. It has extended above 1475 but may fail before 1500.

Regards,

Praveen Kumar