The nifty opened on a week note then moved down and from Wednesday onwards it started to move up and nearly touched 4500 from where it reversed and ultimately closed at 4448. It may be noted that nifty is continuously rising for last 12 weeks and the coming week is the 13th week and 13 happens to be a Fibonacci giving an indication that we there is high probability of correction being set in. In the coming week nifty might try to move up and there after has chances of correcting. But till the support line drawn from the bottom of the raise is broken the trend is intact. The support line is at 4000 so till nifty is above 4000 there is no problem for nifty as the trend is intact. It may be noted that there is huge divergence in Elder bull ray indicating that bulls are loosing ground and bears are slowly creeping into the market. There is also divergence in the RSI which is indicating that the market is loosing ground or undertone is not strong as it was at the start of the raise. It may also be noted that TRIX is also at very very high level higher that that where it is in December 2007 indicating the correction might be coming in sooner or later. It may also be noted that indices are at the September 2008 highs which it failed to break last week and also this week so very strong move above 4600 is required for nifty to indicate strength but the oscillators are indicating that nifty is showing signs of weakness. So it better to protect your longs. Even DMI has reached a very high level of 47 the maximum reached by DMI during the last bull market is 51 indicting the end for the current rise is near. So all these things are pointing towards imminent correction at-least for the short term.
As per Elliott wave analysis it appears that we might be in the fifth wave of the raise i.e E wave and any fifth wave failure would indicate that nifty has chances of moving towards the 3700 levels. Fifth wave occurs when the wave E fails to move above the high of ‘C” wave i.e above 4509 and to the upper resistance trend line. Any failure of nifty to move near the Resistance line drawn joining all the tops indicates the we might see a deeper correction that witness during the last three months. It may also be noted that nifty has also completed three months of raise and three happens to be Fibonacci and we can expect some correction in the fourth month. If during the month of June 09 also the market moves up then we have chances of market moving up during the month of july also.
Larger picture of nifty:
It may be noted that nifty has corrected from 6357 to 2539( where the wave ended even though the low was 2222) a fall of 3818 points and the raise has moved above the 50% level and moved below that 50% level is at 4448 it just moved above it and is below it so it will offer a formidable resistance now. The 61.8% level is at 4898 which will be very very difficult to break and market might take time to break above it. Any break of the same has chances of seeing nifty a new high. If the correction on larger picture is not over and we are forming a zig-zag we might see market moving up above the 61.8% level in time to come. It may go near it and correct towards 3000 levels. This now not body will believe now but if correction is not over (which according to me is not over now) we have all the chances of seeing nifty near 3000.
Directional Momentum index
As indicated in my last weeks update bulls have taken firm grip on the market. DMI has moved from 46 to 47 levels indicating that bulls are still in control of the market. As the DMI is above 40 we can see a huge volatility in the market with upward bias in the market. It may also be noted that DMI is at very high point. The High point reached by DMI during the entire bull market is 52. When ever it moved to 45-49 levels it has reversed the trend correction was witnessed. So it is pointing towards a correction and wait and watch for nifty to give an indication.
Turtle Trading: - 20 days phenomenon;
Current Indication – buy Generated at 2850
Longs may be closed on movement below – 4167
Shorts may be initiated on close below 3479
ATR is at 110.
Individual Stocks
Easun Royal- Rs.82/-
This is one of the fundamentally strong company which has give a buy signal technically and also as per flow technique and has confirmed the same with forming higher top indicating that the stock is gaining momentum. The very very high volumes are also indicating the there is ample scope of upward movement. It appears that the stock has chances of moving atleast 50% from the current levels. Stop Loss: Rs.70/- you should not hold if it breaches Rs.60/-
OCL Limited- Rs.92/-
This is one of the fundamentally strong cement company which has given an indication that it will move up from current levels and it appears that it is on its way to 150 in shorter period of time. The volumes are also increasing indicating that the stock has potential upside movement from the current levels. Technically it is a safe bet at these levels. Stop Loss: Rs.70/-
Tanla Solutions Rs.79/-
This stock appears to be one of the technically sound stocks which is moving up on very very high volumes. The extraordinary high volumes when the stock has just started to move up is pointing towards some substantial movement in the stock in days and months to come. Fundamentally the performance of the company is not very good by is into profits. But the volumes are indicating towards some good times both stock performance and also on fundamental side. Stop Loss: Rs.50/-
M.Sri Mahidar
Sunday 31st May 2009 8.30 PM IST
Trend is friend
No comments:
Post a Comment