Nifty weekly technical update for 26th sep 2009

Nifty Weekly Technical Update for week ended September 26th, 2009.
During this week nifty has closed on positive note on Monday only and went on to make a 5036 and on that day closed above 5000 and there after corrected and closed below 5000 at 4958. During the entire week nifty was showing signs of weakness and also appears to be indecisive. The formation of doji on weekly charts is clearly indicating indecisiveness in the market. One of the positive things of the fall is that the fall during the week was on very low volumes compared to last week. This is clearly giving an indication that there is no panic selling in the fall. Nifty is still above the 15 day low EMA which is at 4840 so till nifty is above 4840 there will be not danger to the bull run and also the last few months trend line also. During the last six months nifty has gone below the 15 day low EMA decisively only once and has taken very good support nearly two times. Considering this 4840 becomes a crucial level for bears. Any movement below that will give strength to the bears. One of the other positive things is that DMI which gives the strength of the current trend has moved above 25 and is now stationed at around 29 indicating that bulls are having strength and clearly giving an indication that we should not make an attempt to short but we should see for an opportunity to go long on every fall. But once 4840 is taken out the strategy should be reversed.
It may be noted that any breach of 4800 decisively should be taken as an opportunity to come into cash at-least 50% of the portfolio. And any breach of 4693 we should come into 100% cash.
Positives for the market
• Nifty is still above the 15 day low EMA
• DMI is moving up and the trend in favor of bulls.
• The trend line of the rise is still intact.
Negative for market.
• -ve divergances still exists in oscillators – ROC, RSI, Elder bull ray
• Volumes are not still increasing.

Elliotte wave analysis:
As per Fibonacci markets are rising from March 2009 onwards and have completed 6 months are now we have entered seventh month and we have made new high in 7th month indicating that we might see the market raising for the next Fibonacci number which happens to be 8 so we might see the market rising upto eight months from march 13 so we has all the fair chances of seeing markets raising at least upto November 2009. if Fibonacci has to be proved correct then we have all the fair chances of nifty rising till November. I have seen from last five to six years that Fibonacci has proved correct majority of the times and as far as I can remember there are only one to two failures in last six years. So odds are in favor of current trend upto at least November. So it appears that this diwali would be a good one for the investors.

Another point which I am driving from last one or two weeks is that nifty has moved above the 61.8% resistance level of the entire fall from January 2008. The wave started at 6357 January 2008 high and the wave ended in March 2009 at a low of 2539(even though the low was 2225 in October) the end of the wave structure is important. So the total fall was 3818 points. So the 61.8% of the same come to around 2360 points. So the 61.8% resistance comes at 4899 and it has been broken decisively and nifty has closed above it for more than two weeks indicating that we might has broke a significant levels a and not it should become a very good support level. During the current week also nifty has take support at 4900 indicating that 4900 can be a good support level for the nifty. As nifty has moved above the 61.8% resistance level, the corrective ziz-zag pattern which we have been assuming for last six months seems to have been negated. And now there are two patterns which can be assumed they are flat and also might be a triangle. For the time being I am assuming it to be a flat and the triangle would be discussed only when we can interpret the same. In flat we have three waves and it appears that we are still in the wave-A of the higher wave and it appears that in the “A” wave we are in wave-c which is depicted in the following chart.

One of the things which I can interpret at this point of time is that nifty is correcting its entire rise from 2003 to January 2008 and the pattern which is forming appears to be a flat at this point of time. And wave “A” of second higher degree is from 6357 to 2539 and now we appear to be in wave-B of the flat and in the wave –B we appear to be in wave –C after completion of the same we might see wave-C on higher degree and in that the fall after the end of wave-C of lower structure we has all the chances of seeing very violent fall which can be more violent that that which is witnessed during the last year. The wave structure from January 2008 high is given below.
If my assumption of flat is right then we are in the wave-C (lower structure) of wave-C (higher structure). The wave – B( of flat) appears to be forming a zigzag which is indicated in chart -1 above.Now we come to assumption of what should be the probable length and target for nifty. Wave-a of the wave –B wave from 2539 to 4693 a rise of about 2154 points and which lasted exactly 3 months which happens to be a Fibonacci and the wave-b wave in form of triangle and which again lasted 3 months which is again a Fibonacci. The what would can be the length of wave-c? wave –c should at-least move above the high of wave-A. High of wave-a is 4693 and nifty has moved above it. So the next target appears to be near 23% of wave-A i.e. it can rise 495 points from the break of the triangle which is around 4700 so the target comes to 5195 if 5195 is taken out the next target comes to 5520. So still the above said targets are to be achieved. One point to be noted that once the high of wave-A which is at 4693 is taken out then we can safely assume that wave-B has completed and we would start a new down wave which has chances of taking the market to easily around 3000 levels. But if it is not taken out then we have all the chances of seeing 5195 and 5520 I have no doubt in mind. So in this scenario keep a very very close watch on 4693 at-least for next one to two weeks.

Directional Momentum Index:

DMI is has moved from around 23 to 29 after giving a positing buy indication i.e. movement of +D1 over –D1. The rise of DMI after positive break our is a clear indication that bulls have gained upper hand in the market and they might try all means to decimate bears. It has moved above 20, 25 and now nearing 30 which is clearly giving an indication that we have all fair chances of nifty moving up. Only one concern is that +D1 line is moving down.
Pivot point analysis:
One of the positive things of movement of the nifty for the last two weeks is that nifty has moved above the previous years pivot of 4856 which give a very high target for the nifty but donot be carried away by the same as we might not reach the target. So for the coming week the probable range can be 4896 to 5098.

Turtle Trading:
Turtle Trading - 20 day Phenomenon (gave buy indication at 4743)
Current trend – buy
Go long above – in buy mode
Square off - 4786
Go short below: 4577
ATR at 83

M.Sri Mahidar
Sunday 27th September 2009 Time 8:33:30 PM IST.
Trend is friend

Nifty Weekly Technical Update for week ended September 12th, 2009.
Nifty surprised every body on Monday as it opened with gap up and continued to move up whole week. The movement of nifty on Monday was nothing but surprise as it broke past the 4700 barrier and continues to move above and was successful in close above 4800 levels. This is clearly giving an indication that bulls have gained upper hand. One point which is worrisome even now is that the break out day on Monday the volumes were not high and on subsequent day the volumes were high. This giving a clear indicating that the break out lacks strength. But what ever may be the case our motto is “Trend is Friend” just stick to the trend till it reverses. In the current scenario 4700 becomes an important support level and we can be long till the 4700 is violated. It appears that nifty has broken out of a triangle formation over a period of last three months and has just broken out of it. But the break above is not on very heavy volumes giving an indication that nifty will be struggling to move up unless the volumes increase substantially on every raise.

One point which we might note is that nifty has been rising from 13th of March and we have completed six months. And nifty has made a new high in the 6th month; clearly giving an indication that nifty might be rising till its next Fibonacci number i.e. 8 so nifty has very high probability of raising till it completes 8 months from march. If this theory has to prove right we might see nifty raising till 13th of November 2009. So we should see nifty inching up till that time. I have been following this technique for last five years and it has proved itself right in majority of the times.

Another point which we have to note is that DMI which shows the strength of bulls or bears has moved up from around 11 levels to 17 levels after giving a cross over in favor of bulls. So it clearly giving an indication that bulls are gaining upper hand and further upsides are not ruled out. So bears be careful.

One of the very very important event which has to be watched in the coming week is whether nifty would be able to break above the important Fibonacci resistance level. Move above the 61.8% resistance level of the entire fall from 6357. The wave started at 6357 January 2008 high and the wave ended in March 2009 at a low of 2539(even though the low was 2225 in October) the end of the wave structure is important. So the total fall was 3818 points. So the 61.8% of the same come to around 2360 points. So the resistance level comes to 2360 points from low of 2539 so the target should be 4899. So nifty has all the fair chances of finding a formidable resistance at 4899. Nifty has made a high of 4889 and then reversed. So till now nifty has not moved above the important resistance level it nearly reached but not breached the level. So till this level is breached nothing can be said. If 4899 is broken then we has all fair chances of seeing 5200 and then 5500.

As can be seen from the above chart nifty has broken out of a triangle formed over a period of three months giving an indicating that market has broken out of a consolidation pattern and we might now see a trending market. So the current scenario is to go long on every fall till the low of Triangle is violated. One warning which I wish to say is that if the middle line of the triangle is violated in any fall then this is the first warning sign and if the lower boundary of the triangle is violated then we should come into cash no matter what the reason is. The low of the triangle is at 4600. So not 4600 become “lakshman rekha” for bulls. So till 4600 is violated bulls can have a field day.

One point to be noted is that the oscillators like RSI, Money Flow Index, Elder bulls ray, ROC are still showing –ve divergence which still give an indication that the under tone is still weak but the market is moving up so 4600 stop loss should be strightly implemented. If 4600 is violated we has to come to cash.

Directional Momentum Index:

DMI is has moved from 11.08 to 17.11 after giving a positing buy indication i.e. movement of +D1 over –D1. The rise of DMI after positive break our is a clear indication that bulls have gained upper hand in the market and they might try all means to decimate bears. It moved above 15 is a first indication of strength of bulls and movement above 20 will confirm the same.
Pivot point trading.
One important thing which has happened during the week is that nifty has moved above the previous years pivot at 4856 giving an indicating that nifty has made a significant break through during the week. Even though nifty has moved above 4856 it failed to close above it. Any weekly close above if would be very good news for the ears of the bulls as it paves way for very good higher levels. for the coming week nifties range would be 4707 and 4920.

Turtle Trading:
Turtle Trading - 20 day Phenomenon (gave buy indication at 4743)
Current trend – buy
Go long above - 4889
Square off - 4577
Go short below: 4353
ATR at 95

M.Sri Mahidar
Sunday 12th September 2009 Time 8:29:30 PM IST.
Trend is friend

Nifty Weekly Technical Update for week ended September 6th, 2009.
As has been with nifty for the last few weeks it is struggling to go past 4700. Last week close was strong at 4730 and from Monday onwards nifty opened up but started to fall moved below 4700 and moved just below 4600 and then bounced back to close at 4680 so again near 4700. Now we have to see how nifty behaves at 4700 whether it reverses of just blasts off from the current levels. The odds are in favor of the bears now. Unless and other wise nifty closes above 4730 strongly that too with heavy volumes the up trend is weak and will not last. Nifty has taken support exactly at 15 day EMA and then bounced back to the hands of bulls. So as the nifty is above 15 day EMA the strategy is to go long at every fall. And if it moves below 15 day EMA the strategy is to reverse the same. But my view is the 15 day EMA low is at 4555 so wait for the market to close below this level then only see for shorting opportunity as in last six months nifty has once gone below the 15 day EMA low that too after budget. So now our critical feature is that we should closely watch the 15 day EMA low and look for shoring opportunity only and only on close or breach of the same. The directional momentum index is just moving down and is at level of 11 indicating that the market or the trend lacks strength. Keep a close watch on DMI as the up ward movement whenever it happens will signal the strength of the trend. I will be posting it, when ever the sudden change in the same happens. As the market is not trending it is better to book profit when ever a rise or fall of 100 to 200 points occurs. Another point which may be noted and which has been pictorially shown by charts last weeks is the there is –ve divergence between the oscillators like RSI, TRIX and MACD indicating clearly that the under tone appears to be weak.

One of the huge power full indicators is Money Flow Index (MFI) which clearly shows whether money is coming into the market/stock or going out of the market/stock. For the last few months on weekly charts the MFI is continually moving down where as nifty is making a new high (can be clearly shown in the chart below). This divergence clearly shows that the money is going out of the market at every raise which is a very weak signal and good new for the bear’s years. Unless and other wise the MFI moves up we have all the chances of market tanking in a big way. Every body in TV channels papers etc are taking about huge liquidity and also that money is flowing into the market by it the MFI is showing the reverse. It is clearly telling that money is going out of the market rather that coming in. the Divergence between the two is very huge signifying that we might see some healthy correction in near future.

One of the powerful indicators which shows the strength of the bulls is the Elder bull ray which shows whether the bulls are gaining strength with every raise of loosing strength. There is –ve divergence between that and nifty in the weekly charts which is also showing that the market is weak and might break at any time.

We have to wait breaking of the six months trend line which appears to be at 4550 once it is broken then we can be assured that down ward movement has begun before that we should just watch and see. So keep a close watch at 4500 as any break of the same will signal an end of the up move.

Directional Momentum Index:

DMI is has moved from 13.62 to 11.08 has just given a buy signal i.e. -D has moved above +D. The downward movement of DMI is a clear indication of lack of direction. Wait for the DMI to move above at-least 15 and above 20 will give confirmation of trending indication. Wait for DMI to move by four ticks/points and see in which direction the break out has happened and open positions in that direction.So keep a close watch on DMI as it is expected to give a clear indication of direction in coming weeks. On weekly chart the DMI is in buy mode and is moving down indicating the bulls are loosing ground. Even though +D line is above –D line the distance between the same is narrowing indicating that bulls are losing ground.

Pivot Point Trading Strategy:

For the coming week the pivot is at 4664 any break of the same will pave way for 4592 and 4505. So for the coming week the nifty range should be any where between 4505 and 4751. The monthly Pivot is at 4586 any breach of the same will clearly indicate weakness and will pave way for 4430.

Turtle Trading:
Turtle Trading - 20 day Phenomenon
Current trend – buy (but my view is to go neutral)
Go long above - 4744
Square off - 4353
Go short below: 4353
ATR at 123

M.Sri Mahidar
Sunday 6th September 2009 Time 8:39:31 PM IST.
Trend is friend.