nifty weekly update for week ended 25th July

Nifty Weekly Update for week ended July 25th, 2009.
Nifty opened on a strong note moved up on Monday and on the next two days it corrected but not below the opening of the week and on the last two days of the week it moved up and closed at nearly highest point of the week. Nifty has been raising continually for the last 20 months and by the coming week we will be completing 21 weeks and 21 happens to be a Fibonacci and we have fair chances of correcting eight at the end of the week or from the week following the current week. So it may be kept in mind while trading or investing that we are completing 21 weeks and we have all the fair chances of correcting. It may also be noted that nifty is also completing 5 months of raise and as you know that 5 is also a Fibonacci so we are coming to the end of 21 weeks and also 5 months and as both are Fibonacci we should be very watchful about the turns in the market as the markets turn when ever the Fibonacci period nears or completes. I don’t know why but it happens I have been seeing this for the last five years invariably the markets turns at these time periods. It may also be noted that market should not necessarily correct at this Fibonacci combination but there are very fair chances if it does not correct at this Fibonacci then we might see market moving up till the next Fibonacci i.e. 8 months and 34 weeks. So better watch out as in ten days we are going to know what is going to happen to the market.
Nifty is above the 15 day EMA which is at 4355 currently, so till above that it is better we go long on every fall if it is taken over then the strategy is reversed.
One point to be particularly noted that nifty is finding it difficult to break and close above the 4600 barrier for the last nine weeks and it appears that it may not in is not in a hurry to break above it. Any close of nifty above 4600 has all chances of opening up significant upsides. If nifty closes above 4600 then we can safely go long with stop loss at 4600 decisively.

Elliotte wave analysis:

With regard to time frames it has been clearly indicated above in the introduction section. And with regard to formation of flat I have clearly indicated in my last weeks update that nifty will surely go past 3400 and if 3400 is taken out then we have all fair chances of moving towards 4541 and if 4541 is taken out 4695 is achievable. And it has exactly happened the same. We are in just completing the “b” wave of the “B” wave and we are in just forming the “c” wave of “B” wave and after completing of the “B” wave the market has all fair chances of unfolding the wave “C” which has all the fair chances of moving towards sub 4000 levels. And if 4695 is taken out then there will be higher targets which will be discussed only when it is broken. Generally in a flat the wave “C” will be very violent and we have chances of having significant cut in the market. If there wave “C” failure i.e if wave “C” fails to go below the 61.8% level of wave ‘B” then it opens significant upsides for the market. so in the coming two to three weeks we might get a good indication of the direction of the market. but currently the bias is down wards.

Directional Momentum Index:

DMI has moved from around 18.54 levels to current 18.90 indicating that even though the market is moving up it is not trending and lacks strength indicated by downward movement of DMI. +D1 is at 30 and –D1 is at 20 indicating that bulls are having upper hand and indicating lack of strength as DMI is below 20 and is moving down. It can be seen that market has moved up from around 3918 to nearly 4600 so a raise of 700 points but the DMI has moved down from 21.50 to around 18.9 levels. It is just flat indicating that the current up move lacks strength and might not sustain. Another point is that there is a clear divergence between nifty and DMI, which is not a good news for the bulls. So till DMI is not trending it’s difficult to sustain at higher levels.
Turtle Trading - 20 day Phenomenon
Current trend – 4480 (Generated at 4480 on Monday)
Go long above - NA
Square off - 3919.
ATR at 134
How ATR is to be used? – if you have take a long positions you have to add another position at 2 ATR with a stop loss at the 2ATR – ATR for all the open positions/ acquisitions.
My advice in current situation is that square off when ever it fall below the 15 day EMA which is at 4355.

Pivot Point Trading Strategy:

Last week I have indicated that if 4376 is taken out we have chances of taking out 4537 and it has exactly happened like that. And for the current week it appears that weekly pivot is placed at 4508 and if it is taken out on down side then we have chances of moving towards 4437 and then towards 4307. and on upper side we have chances of seeing 4638. Considering this the range for the next week is between 4638 and 4307.

M.Sri Mahidar
Sunday 26th July 2009 Time 8:11:41 PM IST.
Trend is friend.

Nifty Weekly Update for week ended July 18th, 2009.
The performance of the nifty during the week was nothing but spectacular. It moved up more that what was expected and as usual surprised every body. Nifty opened on a weak note moved further down towards 3900 made a low of 3918 and there after made a spectacular recovery and closed at a nearly weekly high at 4374. Nifty virtually recovered the last week entire loss giving an indication that bulls has made a smart fight back after loosing to bears a week previous. One point to be noted that during the week at 4196 nifty moved above the 15 day EMA indicating that bulls have gained upper hand and the current option is to go long on every fall till nifty moved below 4219.
Last week it has been indicated that nifty has started to form lower high and lower low after nearly three to four months indicating that weakness has set in and market has to go above the latest low to indicate some strength. The latest high is at 4479 nifty has to move above this point comfortably and close above it to indicate strength and also negate the theory of lower high with higher high and strength for bulls. So keep our fingers crossed.

It may be noted that I have gone through the technicals of major stocks which constitute nifty and even though the stocks have rise during the week the rise is not giving any comfort. The individual stocks are not indicating that much as has been indicated by nifty. This is one of the very rare things where in the stocks are showing –ve divergence to that of nifty which is not a good indication and is clearly giving an indication we may be in for a surprise. Some how it is not giving comfort to me. So my theory is that when in doubt stay out even though we have to go with the trend.

H&S pattern whether negated?
Another point to be noted that I have indicated that we have confirmed heads and shoulders and we might head down wards but the heads and shoulders confirmation has not achieved the minimum objective target which is around 550 points from neck line which is at around 4150-4200 so the minimum objective comes to around 3600-3650 so till not it has not been achieved. Whether is will be achieved or not we have to wait and see. Currently nifty has successfully moved above the neck line during the current week and is staying above it. If the minimum objective has been achieved then we can be sure that the pattern implications are over but currently this is not the case. So when will the H&S pattern implications negated? Generally the H&S pattern implications are negated when the high lf the right shoulder is taken out. So in the current case it is the 4479 which has to be successfully conquered to negate the H&S pattern implication. Generally the failure of H&S patterns are very rare and cannot be ruled out. We have to wait and see whether the rarity will happen or not. One of the important note which has to be looked into is that as per technical analysis even if the H&S pattern is negated it clearly gives an indication that the end in near the corner.
Elliotte Wave Analysis:
Now we will see what is elliotte is pointing towards? We have entered into 5th month of the rise from 13th March and also completed 19 weeks of rise (not a continues rise). 5 is a fibonacci and new Fibonacci on weekly basis is 21 so as per weekly basis we have two weeks left and we are into fibonacci month of 5 so both have to be closely watched. So trade or invest accordingly.
As per elliotte wave it appears that we have completed wave A and we are into formation of wave B which appears to be forming a flat. Flat consists of three waves 1,2&3 and it appears that we might have completed wave 1 and might be forming wave 2 after which wave 3 should commence. So what should be the length of wave 2. Generally it would be more that the 61.8% of the wave-1 which comes to a minimum target of 3400 for nifty and we are just near this if flat is forming then I have not doubt that nifty will move past 3400 atleast for short time. If 3400 is taken out the target comes to 4541. As per theory all the three wave would be of equal size but it does not happen. If 4541 is taken out then we have all chances of seeing 4697. So wait and watch.

Directional Momentum Index: DMI has moved from around 19 levels to current 18.54 indicating that even though the market is moving up it is not trending and lacks strength indicated by downward movement of DMI. +D1 is at 28 and –D1 is at 23 indicating that bulls are having upper hand and indicating lack of strength as DMI is below 20 and is moving down.

Turtle Trading - 20 day Phenomenon
Current trend – Down 9 (Generated at 4143 on Monday)
Go long above - 4480
Square off - 4480.
ATR at 134
How ATR is to be used? – if you have take a long positions you have to add another position at 2 ATR with a stop loss at the 2ATR – ATR for all the open positions/ acquisitions.

Pivot Point Trading

As per pivot the current week resistance is at 4376 and if take out we have chances of seeing 4608 and on weekly basis the resistance is at 4537 if nifty fails to move near this then it has all the chances of reverting towards weekly pivot of 4227.
M.Sri Mahidar
Sunday 19th July 2009 Time 8.19 PM IST.
Trend is friend.

Nifty Update fow week ended 11th July 2009

Nifty Weekly Update for week ended July 11th, 2009.
As indicated nifty has started the down move on the budget day. This was written on the wall as all the technical indicators were indicating that the end is near and the budget was the only reason where in the bears has come into the market in a big way. It appears that the bears may dominate the market for one to two months during that time the nifty is going to test its pre-election result levels and it appears that nifty might be on its way to around 3500 levels. During this week nifty has decisively broken the 15 day EMA after nearly three months ( note three is a Fibonacci) and is just moving down from there clearly indicating that the trend is down and now in the current scenario we should be seeing for shorting opportunity, i.e short on every raise. The 15 day EMA is at around 4200 levels. Till 4200 is taken out its short on every raise. Last week in have indicating clearly that any move below 4355 should be taken as an opportunity to short and any one who has shorted on the same would have made a killing in the market. It may also be noted that RSI has gone below the 50 levels also for the first time after three months and also nifty has moved below 50 day EMA clearly indicating that bears have taken upper hand and further down sides are not ruled out. Next support for nifty is around 100 day EMA which is at around 3850 levels.

It can be clearly seen from the chart above that from middle of march onwards the market is making Higher Highs(HH) and Higher Lows(HL) and two week before it made Lower High( LH) and last week it made Lower Low(LL). The formation of lower high two weeks before was the first indication that the bulls are becoming weak and the formation of Lower low during the week has confirmed the same. So till higher low is made the market is going to do down. So watch out for the higher low formation in the charts to see first signs of reversal.
Technically as has been indicated nifty has successfully broken below the neck line of the Heads and shoulders pattern indicating clearly that nifty might have formed a intermediate top at-least for the time being and we would be seeing the larger correction than that seen in the last three months. Nifty might be correcting the rise from 2539 to 4693. Considering this the minimum correction would be around 820 points from 4693 the target comes to 3872 and if it is broken the next target would be 3616 and if it is broken then we have target of 3361. so do closely watch for those levels.

Last week nifty has broken the neck line as has been indicated in the above chart. This is only the first break and the peculiar feature of the H&S pattern is that after the break of the neck line it moved down then moves up towards or near the neck line and then fall like nine pins. The second fall will be more viscous than the first one. So currently we have chances of seeing nifty moving towards 4150-4200 levels where in the neck line is there and then will fall on heavy volumes. This is being confirmed by the volumes. The fall during the last week on the day of break was on higher volumes and there after low volumes now nifty has all chances of moving towards 4200 and then will fall on very very heavy volumes.
Directional Momentum Index:

DMI has moved from around 19 levels to current 20.50 indicating that there is trend reversal and also the up move above 20 is followed by the –ve movement i.e movement of –D1 line above the +D1 levels confirming the bear move. The movement of DMI above 20 after bearish movement of D1 lines indicating that the down move is gaining momentum and we have all the chances of seeing the market moving further down.

Turtle Trading - 20 day Phenomenon
Current trend – Down 9 (Generated at 4143 on Monday)
Go long above - 4601
Square off - 4480.
Add further on move below 3976
ATR at 136
How ATR is to be used? – On every fall of nifty by 136 points further positions should be added.

M.Sri Mahidar
Sunday 12th July 2009.
Trend is friend.

Weekly update for week ended 4th July 2009

Nifty during the week appears to be stuck between a close band 200 points 4249 to 4439. it appears that the market is moving in anticipation of budget. It appears that no body wants to take any side of the market which is clearly visible on very low volumes on the fridays last two hours rise. The less volumes are indicating towards lack of strength in the market and pointing towards probable down ward movement in the markets. Techncially also there are divergences in the osciallators indicating towards probable trend reversal in the comming days or weeks. The market is indicating probable trend reversal and has not reversed till now. The market appears to be undecisive now and we might see a decisive trend emerging in very near future. One point to be noted is that nifty has moved above the 15 day EMA after nearly two weeks indicating that the markets(bulls) are gaining strength and now the options is to go long on every fall. 15 day EMA is at 4355 and any move below that will trigger in a trend reversal towards down side and any move below 4355 we change or strategy towards shoring at every raise.

As far as techncially as concerned there are two alternatives developing.

Option-I
Heads and houlders pattern:

It can be seen from the chart that nifty appears to be clearly forming neards and shoulders pattern and Lest Shoulder(LS) and Head(H) appears to have compleated and we are in process of compleation of Right Shoulder(RS). Any break of the neck line which is at 4150 will indicate the the compleation of H&S pattern and also trend revesal and completion of the current up move and we might see the indices move towards the 3600-3700 levels. The minimum target in this case should be around 3750 levels. But any move above the high of the head will voilate this pattern .So any move above the 4649 will negate this theory and then we might be headed further upsides which is indicated in the option - II below.

Option -II

Continuation of the trend. As can be seen from the chart it apperas that the market has compleated the wave-A and has just compleated perfect flat with three waves a,b and c which is indicated by a circle in the above chart. Any break of the above trend line drawn from the march lows would indicated a probable compleate of the up move and also will negate this view. IF this pattern holds good and nifty move up to make a new high then we have all the fair chances of seeing a very very swift movement in the nifty in the comming days as if flat is compleated and the up move has just started then the up move should be very swift it should take the market patrticipants by surprise. so it appears that we can go long will stop loss at the trend line which is at around 4300 levels or at best stay away from the market till nifty makes a new high or goes below 4150.

Considering this it appears that nifty is at cross roads and will make a decisive move in comming days so till such time be cautious or stay away from the market.

Directional Momentum Index: DMI has moved down from around 55 levels to current 19 indicating that there is no trend or trend reversal is near. The +D1 i at 22 and -D1 is at 21 indicating close battel between bulls and bears and now bulls have a slight upper hand. The DMI is below the both indicating any movement on either side will be short lived or that we have chances of developing a trend in the comming days or week.

Turtle Trading - 20 day Phenominon
Current trend - Neutral
Go long above - 4693
Go short below - 4143.
any move below 4143 will confirm the Completion of H&S pattern.

M.Sri Mahidar
sunday 5th July 2007.
Trend is friend.