Nifty Weekly Technical Update

Weekly technical Analysis for week ended 10th April 2010.
Nifty opened on a strong note moved higher and made a new 52 week high and touched 5399 a touch below 5400 and then corrected and moved below 5300 on Thursday and then recovered on Friday and closed finally at 5361. This is the first time after May 2008 that nifty has closed above 5300, thus clearly indicating that bulls are having strength. The first time closing above 5300 after nearly 21 months cannot be taken lightly. Even the volumes during the week were on higher side that that of the previous week. All this is pointing that bulls are firmly in control of the market and they are trying hard to take it higher. The only concern now is that nifty is now coming near the crucial long term resistance levels and we have to see whether nifty is able to take away these resistance levels. so keep a close watch on those levels. I have been mentioning the nifty has completed 13 months of continues rise and we might see market correcting from the current levels, it may be noted that it is not the necessary that the market should correct but historically in the current bull market from 2003 onwards only once market has continually for more that 13 months i.e. 21 months and remaining times it has corrected markets have corrected on completion of 8 or 13 months we have to see whether market corrects or it continues to move up we have to see.

Market Cycles:
This week I am furnishing another analysis which is known as time series analysis on the markets. This is known as market cycles. It is based on the premise that markets move in cycles and time periods and when ever there is chance on the time periods or rise or fall then there are probable change in the trend. It is clearly shown in the chart below; the chart furnished here is that of the nifty weekly chart. The left had side shows the bear phase for 2008 upto march 2009 and right hand side shows the bulls phase from March 2009 to date. The details of the same are explained below: It can be seen from the chart below that in the period from January 2008 nifty has been falling for around 10 to 11 weeks and the rises( corrections) were in the region of 5 weeks. It can be seen from the chart that nifty has been following this trend from January 2008 to October 2008. But the first reversal indication or the trend reversal can in January 2009 where in nifty has continually risen for 10 weeks. Please note till this time nifty was raising for only 5 weeks but in period after October low nifty has continually risen for 10 week, this is more than double the time taken for corrections till that time. So this is a clear indication that bulls have able to take the market up for 10 weeks and this the first sign of reversal of the trend. This generally should be confirmed by markets not moving below the lows or October 2008 and this is confirmed by market falling for 9 weeks and not making a new low. Till this time markets have been falling around 10 weeks and every time they were making a new low when ever they have falling for 10 weeks but this is the first time that markets have not made a new low when they have fallen for around 10 weeks so this the clear sign of weakness of the bears or strength of the bulls and this is the confirmation which is wanted by the market participants and you can see the results markets have been raising from that time onwards. So now if you want to see the indication or confirmation of the strength or other wise of the market now we have to see the time series analysis of the market for the current rise.
It can be seen from the chart above that right hand side shows the current bull run. It clearly shows the time periods for which it has risen and also for which it has corrected. It can be clearly seen from the above chart that too on the right hand side the market has risen for period of 14 weeks up to may 2009 and then for 13 weeks thereafter for 10 weeks and now it is completed 9 weeks. We have to seen whether the decreasing trend would be continued or would be broken. But the average period of rise is around 12 weeks from March 2009. So we might see the market moving towards completion of the average period or not. The corrections as can be seen from the above chart are in the range of 5 weeks and 3 week. First fall was for 5 weeks and for the next two times it has corrected for 3 weeks. So the average comes to around 3.5 weeks. One of the noticing feature of the current time period analysis is that in the first rise for 14 weeks nifty has been able to move substantially and for the next time for 13 weeks also nifty has been able to move above the may high substantially as the high of june was around 4700 and the next rise for 13 weeks it made a high of 5180, but the next rise of 10 weeks nifty even though made a high of around 5300 but it was not substantially high a difference of 100 points only. And if you consider the next rise which has now completed 9 weeks from low of 4675 has also not made substantially above the 5300 levels now also it has just moved around 100 points above the previous high of around 5300. Another point to be noted is that the last two rise of 10 and current 9 weeks the rise has take substantially higher time that the fall. The falls were for 3 weeks and the full retracement has take double the time, thus giving a clearly an indication that bulls are not as strong as they appear to be.
So it can be seen from the markets move in cycles and the time periods are also maintained. It appears to be surprising but it is the way the market behaves. It is astonishing that the time periods are adhered to in such a consistent manner. So whenever the market rises or falls these time periods are to be studied in detail. Whenever there is chance in behavior of the market and also there is change in time cycles then it clearly indicates that we might be nearing the turn of the market, it might be from bull to bear or bear to bull.
So now we have to see, whether the cycles are adhered to or not. Till the time periods are adhered to there is no problem to the ongoing trend and when they are not adhered to then it is a indication that the trend might be reversing. So now we have to seen for reversal the time periods for identification any reversal of the trend. Till now the time periods are being adhered to and once the down time period increases then it is a clear indication that the trend might have reversed that has also to be confirmed by lower top formation. So till the time periods are adhered to there should not be any problem for the current up move. So you can trade or invest accordingly.
Positives for Nifty:
· Market is above 200 day EMA.
· Market is above 15 day and 100 day EMA.
· Daily and weekly MACD is in buy mode.
· DMI is given buy signal but DMI has started to move up giving an indication that the bulls might be gaining upper hand.
Negatives for nifty:
· Weekly TRIX are still in sell mode.

Elliotte wave analysis:

There is nothing new to the mentioned than that is mentioned in my earlier update. In my earlier update I have indicated that the nifty might move towards 5420 or 5515 and nifty has just moved near the first target of 5420, it made a high of 5399 and now we have to see whether these would be attained or not.

Directional Momentum index – (DMI)
Currently the +D1 is above –D1 DMI is slightly moving up indicating the strength of the bulls. But the +D1 is moving down indicating that the bulls might be losing momentum which is being indicated –D1 raising. So we have to see whether bears would be successful in taking market down.

M.Sri Mahidar
Sunday 11th April 2010, Time 14.41 IST
Trend is friend