Monday, May 31, 2010
Weekly technical Analysis for week ended 28th May 2010
Nifty opened on a weak note during the week further moved down to make a low of 4787 and thereafter recovered for the last three days and successfully moved and closed above 5000. The close above 5000 indicates good strength for the bulls. One of the points to be noted is that the rise of the market on the last two days was on high volumes during the last week. One of the points to be noted is that the last week was a derivatives settlement week and the movement of the market in the settlement week is very difficult to predict. But the movement on Friday after the derivatives settlement week was very jittery. So the coming week would be the interesting week as it would show the movement of the market with new series. Technically till the market stays above 5000 the bulls would feel comfortable. But nifty has to close above 5200 on EOD basis for the trend to turn up till then the trend would be down. So 5200 would be the crucial levels to be watched for by the bulls. One big positive thing about the market is that it is still above 200 day EMA which is clearly indicating that long term bulls are still in the market. Another thing in favor of the bears is that nifty is still below the 100 day and 50 day MA. So till market moves above it the bears would be having upper hand. For the last few days the market is oscillating between 100 day EMA and the 200 day EMA. The 100 day EMA is at 5085 so that would offer some good resistance in its up move. Currently nifty is just near the 100 day EMA whether it would go past it successfully or not we have to see in the coming week. If nifty fails to go past either 100 day or 50 day EMA then we should brace ourselves for nifty to move below 200 day EMA. But one of the points to be noted is that till nifty is above 4675 the trend is up for medium term. 4675 is the crucial level to be watched for the coming month.
Nifty opened on a weak note during the week further moved down to make a low of 4787 and thereafter recovered for the last three days and successfully moved and closed above 5000. The close above 5000 indicates good strength for the bulls. One of the points to be noted is that the rise of the market on the last two days was on high volumes during the last week. One of the points to be noted is that the last week was a derivatives settlement week and the movement of the market in the settlement week is very difficult to predict. But the movement on Friday after the derivatives settlement week was very jittery. So the coming week would be the interesting week as it would show the movement of the market with new series. Technically till the market stays above 5000 the bulls would feel comfortable. But nifty has to close above 5200 on EOD basis for the trend to turn up till then the trend would be down. So 5200 would be the crucial levels to be watched for by the bulls. One big positive thing about the market is that it is still above 200 day EMA which is clearly indicating that long term bulls are still in the market. Another thing in favor of the bears is that nifty is still below the 100 day and 50 day MA. So till market moves above it the bears would be having upper hand. For the last few days the market is oscillating between 100 day EMA and the 200 day EMA. The 100 day EMA is at 5085 so that would offer some good resistance in its up move. Currently nifty is just near the 100 day EMA whether it would go past it successfully or not we have to see in the coming week. If nifty fails to go past either 100 day or 50 day EMA then we should brace ourselves for nifty to move below 200 day EMA. But one of the points to be noted is that till nifty is above 4675 the trend is up for medium term. 4675 is the crucial level to be watched for the coming month.
It can be seen from the above chart that nifty has found support at the trend line drawn from November lows. Till not it has found support at that trend line and there after moved towards 5300 will it move there now also wait and see. Till the trend line holds there should be no problem for bulls the trend line appears to be at around 5850 levels so that would be the levels to be closely watched if this trend line is taken over then we might see a vertical fall in nifty. So this is the trend line which is to be closely watched in the coming week and months.
Time series analysis: I have been mentioning from the last few weeks in my time series analysis that nifty has been raising for 14 weeks to 10 weeks and has been falling for 5 weeks or 3 weeks. And I have also indicated that any change in time periods would be the first confirmation of the reversal of the trend. This has happened for the first time in March 09 and trend has reversed from bear to bull phase. And the fall of this time has been for 7 weeks which is the largest of any fall in the current up move which is giving a clear indication that the trend might have reversed and we might be heading for further down sides. It has been observed in the previous cases of trend reversal or the time period reversal the markets have risen or fallen for 14 weeks in the first period of time reversal. In January 2008 when market has reversed market has fallen for 14 weeks and in March 2009 when market reversed it has risen for 14 weeks in the first time of reversal. After March 2009 market has for the first time has observed time reversal so whether we would fall for 14 continues weeks this time also we have to wait and watch.
Positives for Nifty:
· Market is above 200 day EMA.
· Daily MACD has just given a buy signal
· +DMI has started to move up and –DMI has started to move down.
Negatives for nifty:
· Nifty is below 15 day,50 day and 100 day EMA.
· 15 day EMA has moved below 50 day EMA and also 100 day EMA
· Daily and Weekly TRIX are still in sell mode.
· Weekly MACD has given sell signal immediately after giving a buy signal indicating extreme weakness in the market.
· DMI has moved above 20 presently at 32 indicating strength of bears.
Point and figure charting (P&F):
(P&F) charting is one of the powerful charting, which takes into account only the price. For it price is the king. It doesn’t take into account volumes or any technical oscillators. It takes into account only the high and low prices and ignores open and close. It considers that opening and closing prices can be influenced and not he high and low. The reversal indications by P&F is very power full as for it the trend line is drawn at an angle of 45 degrees angle from either top or bottom. In other forms of technical analysis trend lines are drawn joining highs or lows. As the trend line is drawn at 45 degrees the break
Of the same is a very powerful reversal indicator and generally cannot be ignored. Whenever the trend line drawn at a angle of 45 degree is violated the trend shifts from bull to bear and vice versa. It can be seen from the above that the sloping trend line in pink color is drawn from top of January 2008 was not violated till April 2009 and in April 2009 price has moved above it signaling the trend reversal from bull to bears. A trend line drawn from the low of march 2009 is drawn at 45 degrees blue line is not violated till not and the trend was up. But in may 2009 it has been violated means that price has moved below the trend line which is the first signal that trend might has reversed from bull to bear. These two trend reversals are shown by arrows in the above chart. The break of the blue trend line is a clear indication that trend might have reversed and cannot be taken lightly. But one positive things for bulls is that nifty has moved above the blue trend line on Friday which has given some respite for the bulls. It may be noted that any move below 5000 would violated the blue line so as per P&F charting 5000 is the crucial level. If it is broken then we might see a good and healthy fall.
Elliott wave: Elliott wave analysis of the current movement is given in the chart below. there is two probable alternatives which are shown in the chart below. In the alternative –I nifty would not move above 5160 and in alternative-II we may be seeing nifty raising up to 5092 or 5164. If nifty moves to these levels it would provide a very good opportunity to go short with straight stop loss above these levels. if nifty fails to move past 5160 we have all the chances of nifty moving below it low of 4787 and the movement would be very very swift. So better watch out if nifty moves above 5100 and subsequently moves below it.
Directional Momentum index – (DMI)
+D1 has moved above –D1 and has reached 37 and also DMI has started to move up and it has moved above 20 during the week indicating that bears have taken control of the market and further down sides are not ruled out. Currently DMI is placed at 32 and is moving down any further move might take market further down.
M.Sri Mahidar
Sunday 23rd May 2010, Time 18.44 IST
Trend is friend
Thursday, May 27, 2010
It can be seen from the above chart that nifty after breaking the trend line from june 09 onwards in january 2010 it has once again tested the trend line indicated by top arrow and then corrected voilently. Currently also in this fall nifty has broken the trend line drawn from june 09 onwards and not moving up, it appears that it might again go and test the trend line or it would just move above it and then collapse. This would form a perfect technical pattern. if nifty moves above the trend line and then again move below it would form a perfect opportunity to short with stop loss at the recent high, in which case it would provide a minimum loss and maximum profit opportunity. so keep close watch on nifty once it nears the trend line.M.Sri Mahidar
Trend is Friend.
Tuesday, May 25, 2010
Monday, May 24, 2010
Weekly technical Analysis for week ended 22nd May 2010
The movement of nifty during the weeks was one of the eventful week, not because it has moved as has been envisaged but due it has been dominated by the external news around the world. Nifty opened on a weak note and continued to be weak throughout the week. And it has closed the week with a loss. During the week the technically the charts have been damaged to a great extent. The damage has been on a greater extent on the markets technically. Last week nifty has moved below 50 day EMA and it has found it as resistance at that level and in the beginning of the week it has successfully moved below the 100 day EMA and has struggled to move above at-least for the next two days and then collapsed to the 200 day EMA in the last two days of the week, on Friday at the opening it moved below the 200 day EMA and by the end of the day it was able to move and close above the 200 day EMA. The movement of a nifty below 200 day EMA and closing above it does indicate that bears were able to take the indices below the 200 day EMA and bulls were successful in keeping the markets above that crucial level. Till the market maintains above the 200 day EMA the long term investors would be there in the market any move below it would be disaster for the markets as heavy selling would be coming into the market. So in the coming weeks 200 day EMA should be keenly watched as it would give the clear indication for the market at-least for the coming weeks. On the daily charts nifty has formed a hammer indicating that nifty bulls might be having upper hand at-least for the short term.
The movement of nifty during the weeks was one of the eventful week, not because it has moved as has been envisaged but due it has been dominated by the external news around the world. Nifty opened on a weak note and continued to be weak throughout the week. And it has closed the week with a loss. During the week the technically the charts have been damaged to a great extent. The damage has been on a greater extent on the markets technically. Last week nifty has moved below 50 day EMA and it has found it as resistance at that level and in the beginning of the week it has successfully moved below the 100 day EMA and has struggled to move above at-least for the next two days and then collapsed to the 200 day EMA in the last two days of the week, on Friday at the opening it moved below the 200 day EMA and by the end of the day it was able to move and close above the 200 day EMA. The movement of a nifty below 200 day EMA and closing above it does indicate that bears were able to take the indices below the 200 day EMA and bulls were successful in keeping the markets above that crucial level. Till the market maintains above the 200 day EMA the long term investors would be there in the market any move below it would be disaster for the markets as heavy selling would be coming into the market. So in the coming weeks 200 day EMA should be keenly watched as it would give the clear indication for the market at-least for the coming weeks. On the daily charts nifty has formed a hammer indicating that nifty bulls might be having upper hand at-least for the short term.
One of the important point to be noted is that nifty has for the first time after one year moved below the 200 day EMA even though it moved above it, the movement below this is a significant event as bears were successful in taking it at least below it. if it happens for the second term the this would be disaster for the bulls as bears would gain complete upper hand in the market.
It can be seen from the above chart that nifty has broken below the trend line from the last one year which is gives an indication that markets is at the weakest point in last one year. It has broken below the trend line followed by movement below the 200 day EMA which is clearly indicating that weakness is coming into the market. It can also be seen from the chart that nifty has taken support at the trend line drawn from low of November and it has taken support at that trend line at-least twice including current. In my view as nifty has broken the trend line of larger time frame the shorter term trend line is a matter of time before it is taken out. As nifty has taken support at the 200 day EMA and also trend line from November 2009 we might see some bounce from these levels towards 5100 levels and then might start its downward journey during which time it might break the 200 day EMA and also the trend line decisively. So watch out for the short term bounce from the current levels. It may be noted is that till nifty closes above the 5200 levels the trend is down. So any close above this levels would take nifty to up turn.
I have been mentioning from the last few weeks in my time series analysis that nifty has been raising for 14 weeks to 10 weeks and has been falling for 5 weeks or 3 weeks. And I have also indicated that any change in time periods would be the first confirmation of the reversal of the trend. This has happened for the first time in march 09 and trend has reversed from bear to bull phase. And the fall of this time has been for 6 weeks which is the largest of any fall in the current up move which is giving a clear indication that the trend might have reversed and we might be heading for further down sides. So if time series analysis of the past are to be followed then I have no doubt that nifty might be falling the at-least for another 4 to 5 weeks. So as far as time series is considered we should be prepared for a bear hug.
Positives for Nifty:
· Market is above 200 day EMA.
Negatives for nifty:
· Nifty is below 15 day,50 day and 100 day EMA.
· 15 day EMA has moved below 50 day EMA and also 100 day EMA
· Daily MACD has given a sell signal.
· Daily and Weekly TRIX are still in sell mode.
· Weekly MACD has given sell signal immediately after giving a buy signal indicating extreme weakness in the market.
· DMI has moved above 20 presently at 30 indicating strength of bears.
Elliott wave:- In my weekly technical analysis as on 27th March 2010 I have indicated that as per Elliott in case of first wave extention it would be difficult for the market to move past 5420 and till not market has not moved above 5420 it virtually made a high of 5399 but did not go past 5420 thus confirming that pattern and also target. This is also giving an indication that we might have topped out. The targets as per Elliott would depend on the pattern which it is expected to form. I would be furnishing the same after I have completed the same till those times enjoy the ride, probably bear ride. The probable structure is given in the below chart. It may be noted that any move and close above 5200 would negate the present structure.
Directional Momentum index – (DMI)
+D1 has moved above –D1 and has reached 37 and also DMI has started to move up and it has moved above 20 during the week indicating that bears have taken control of the market and further down sides are not ruled out. Currently DMI is placed at 30 and is moving up any further move might take market further down.
M.Sri Mahidar
Sunday 23rd May 2010, Time 18.44 IST
Trend is friend
Wednesday, May 19, 2010
Monday, May 17, 2010
Weekly technical Analysis for week ended 15th May 2010
Nifty showed mixed strength this week, on Monday it rose very viscously and till the end of the weak it failed to move above this level and on Friday during the later part it has collapsed. Nifty is finding good amount of resistance at 5200. So it appears that it is the crucial for nifty for any further upside movement. One of the puzzling features of current weeks movement is that the volumes have been decreasing on each day. It appears that nifty has good support level at 5000 at-least for the short term. Any break below 5000 has all chances of taking nifty towards 4700 levels. During the entire week nifty has been moving between 100 day EMA and 50 day EMA. It has attempted to move above 50 day EMA at-least twice during the week( indicated by two arrows in the charts below) and failed in its two attempts indicating weakness. So now 50 day EMA appears to be crucial levels to be broken for it to show strength. It may also be noted is that 15 day EMA has also moved below 50 day EMA indicating that weakness might have returned to the market. On Friday it has moved below 100 day EMA also indicating further weakness. Whenever one moving average is which is acting as support is taken out that acts as resistance and market or stocks moves towards next EMA. In the present case nifty has moved below 15 day, 50 day and 100 day EMA so we have chances of it moving towards 200 day EMA which happens to be at around 4900 levels. Whether nifty would move towards 200 day EMA or not we have to wait and watch. Over the last one year 100 day EMA was acting as a good support level and nifty has rebounded on taking support at that level and this is the first time in the last one year that it has moved below 50 day EMA then it moved above it and once again moved blow it on Friday all during one week. The movement above it and also movement below it within one weak signifies that bulls has not been in a position to maintain market above that level.
On weekly chart nifty has formed inverted hammer indicating the strength of the bears. I have been indicating from the last few weeks that we have completed 13 months and we are into 15th month and till now nifty has not made any new high so signaling weakness. One of the noticing features of the current movement is that nifty has making lower lows and lower highs for that last one month. Any movement of nifty below 4984 to keep the trend continuing. If nifty fails to move below 4984 then it indicates that bears have failed to take the market down and then we might see swift movement. On larger time frame nifty has to move below 4675 to confirm the weakness.
As per time series analysis, I have been indicating earlier when ever market has corrected it has been correcting anywhere between 3 to five weeks and I have also indicated that any violation of the same would indicate either strength or weakness it seems you are “puzzled” ok now I would elaborate. If nifty fall for more that 5 weeks then it would indicate weakness as bears have been successful to keep the market low. And if it falls for less than three weeks this would indicate strength of bulls. In the present case we have completed 5 weeks of fall by the end of this week, if the fall continues for this week also then it is the violation of the time series analysis and which shows that market has fallen for six weeks indicating that bears have gained upper hand and they were successful in keeping market down. In that case we might see faster retracement also. We may also see tables reversing i.e 10 weeks fall and also 5 weeks rise which was the case in the case of previous bear market. So wait and see
Nifty showed mixed strength this week, on Monday it rose very viscously and till the end of the weak it failed to move above this level and on Friday during the later part it has collapsed. Nifty is finding good amount of resistance at 5200. So it appears that it is the crucial for nifty for any further upside movement. One of the puzzling features of current weeks movement is that the volumes have been decreasing on each day. It appears that nifty has good support level at 5000 at-least for the short term. Any break below 5000 has all chances of taking nifty towards 4700 levels. During the entire week nifty has been moving between 100 day EMA and 50 day EMA. It has attempted to move above 50 day EMA at-least twice during the week( indicated by two arrows in the charts below) and failed in its two attempts indicating weakness. So now 50 day EMA appears to be crucial levels to be broken for it to show strength. It may also be noted is that 15 day EMA has also moved below 50 day EMA indicating that weakness might have returned to the market. On Friday it has moved below 100 day EMA also indicating further weakness. Whenever one moving average is which is acting as support is taken out that acts as resistance and market or stocks moves towards next EMA. In the present case nifty has moved below 15 day, 50 day and 100 day EMA so we have chances of it moving towards 200 day EMA which happens to be at around 4900 levels. Whether nifty would move towards 200 day EMA or not we have to wait and watch. Over the last one year 100 day EMA was acting as a good support level and nifty has rebounded on taking support at that level and this is the first time in the last one year that it has moved below 50 day EMA then it moved above it and once again moved blow it on Friday all during one week. The movement above it and also movement below it within one weak signifies that bulls has not been in a position to maintain market above that level.
On weekly chart nifty has formed inverted hammer indicating the strength of the bears. I have been indicating from the last few weeks that we have completed 13 months and we are into 15th month and till now nifty has not made any new high so signaling weakness. One of the noticing features of the current movement is that nifty has making lower lows and lower highs for that last one month. Any movement of nifty below 4984 to keep the trend continuing. If nifty fails to move below 4984 then it indicates that bears have failed to take the market down and then we might see swift movement. On larger time frame nifty has to move below 4675 to confirm the weakness.
As per time series analysis, I have been indicating earlier when ever market has corrected it has been correcting anywhere between 3 to five weeks and I have also indicated that any violation of the same would indicate either strength or weakness it seems you are “puzzled” ok now I would elaborate. If nifty fall for more that 5 weeks then it would indicate weakness as bears have been successful to keep the market low. And if it falls for less than three weeks this would indicate strength of bulls. In the present case we have completed 5 weeks of fall by the end of this week, if the fall continues for this week also then it is the violation of the time series analysis and which shows that market has fallen for six weeks indicating that bears have gained upper hand and they were successful in keeping market down. In that case we might see faster retracement also. We may also see tables reversing i.e 10 weeks fall and also 5 weeks rise which was the case in the case of previous bear market. So wait and see
what is in store for market.
Positives for Nifty:
· Market is above 200 day EMA.
Negatives for nifty:
· Nifty is below 15 day,50 day and 100 day EMA.
· 15 day EMA has moved below 50 day EMA.
· Daily MACD has given a sell signal.
· Daily and Weekly TRIX are still in sell mode.
· Weekly MACD has given sell signal immediately after giving a buy signal indicating extreme weakness in the market.
· DMI has moved above 20 presently at 24 indicating strength of bears.
Elliott wave:-
In my weekly technical analysis as on 27th March 2010 I have indicated that as per Elliott in case of first wave extention it would be difficult for the market to move past 5420 and till not market has not moved above 5420 it virtually made a high of 5399 but did not go past 5420 thus confirming that pattern and also target. This is also giving an indication that we might have topped out. The targets as per Elliott would depend on the pattern which it is expected to form. I would be furnishing the same after I have completed the same till those times enjoy the ride, probably bear ride. The probable structure is given in the below chart. It may be noted that any move and close above 5250 would negate the present structure.
· Market is above 200 day EMA.
Negatives for nifty:
· Nifty is below 15 day,50 day and 100 day EMA.
· 15 day EMA has moved below 50 day EMA.
· Daily MACD has given a sell signal.
· Daily and Weekly TRIX are still in sell mode.
· Weekly MACD has given sell signal immediately after giving a buy signal indicating extreme weakness in the market.
· DMI has moved above 20 presently at 24 indicating strength of bears.
Elliott wave:-
In my weekly technical analysis as on 27th March 2010 I have indicated that as per Elliott in case of first wave extention it would be difficult for the market to move past 5420 and till not market has not moved above 5420 it virtually made a high of 5399 but did not go past 5420 thus confirming that pattern and also target. This is also giving an indication that we might have topped out. The targets as per Elliott would depend on the pattern which it is expected to form. I would be furnishing the same after I have completed the same till those times enjoy the ride, probably bear ride. The probable structure is given in the below chart. It may be noted that any move and close above 5250 would negate the present structure.
Directional Momentum index – (DMI)
+D1 has moved above –D1 and has reached 37 and also DMI has started to move up and it has moved above 20 during the week indicating that bears have taken control of the market and further down sides are not ruled out. currently DMI is placed at 26 and is moving up any further move might take market further down.
M.Sri Mahidar
Sunday 16th May 2010, Time 18.11 IST
Trend is friend
Thursday, May 13, 2010
Monday, May 10, 2010
Nifty has risen spectacularly, taking every body by surprise. The rise today is maily attributable to bail out of Greece. One point to be noted is that the spectacular rise of nifty was on far less volumes(indicated by blue arrow) than that associated wiht the entire fall. Thus giving an indication that the up move lacs strength. If the up move was associated with volumes the we can bet on further sharp up move. But if the market is raising its raising no questions asked as market is always right. Nifty has to move above the sloping trend line drawn from the top then only we can assume that the up move has strength. if not then the dotted line might be the path of nifty.
Weekly technical Analysis for week ended 8th May 2010
As has been expected, nifty has opened on a weak note and continued to slide whole during the week and has virtually closed at the low of the weak. It appears that the bears are gaining upper hand in the market. The markets have corrected after completion of 13 month, and we are in the 14th month and about to complete the 14th month. So have we started the down turn which at-least I have been waiting for at-least to prove Fibonacci correct. We have to wait for the market to further confirm the same. One of the noticing features of the fall during this week is associated with heavy volumes. The volumes are greater than that of the rises indicating that bulls are having strength and also the some heavy selling is going in the market on each fall which is not a good indication and this gives an indication that we can expect further down sides in coming weeks or months. All the major technical indicators are pointing towards further down sides in the markets. As per me it appears to be either outside the market or on short side but technical are pointing towards not be long. One of the noticing feature of the market during the week is that nifty has moved below 15 day,34 day, 50 day and 100 day MA and also 15 day EMA has moved below 34 day EMA, indicating that bears are having upper hand and are trying to take the market further downsides. This is the first time from March 2009 that Market has moved below these MA in one week only, clearly indicating that bulls are not giving any support at these EMAs. Generally indices or prices is above MAs these offer support and this was observed in previous occasions also but this time it was different and MAs did not offer any support especially 50 day and 100 day EMA which clearly signifies bears have gained upper hand and bulls efforts are going in vain. So all these are pointing towards further down sides are not ruled out. we have to not see the weather nifty would make lower low or not. Any movement of nifty below 4675 would indicate formation of lower low and then the market would tank further down sides. You might be thinking that I am a primarily a bear as I appear to be bearish for the last three months even though market was moving up. I was just giving what the technical’s were saying. For the last three months the market was indicating weakness but bulls were successful in taking market up but the weakness was visible in decrease in volumes on the rise which clearly gives a signal that no one is betting on the market is going up. I have been indicating from the last few months that the falls appears to be severe that the rise. The fall was taking three to five weeks and it was taking 10 to 11 weeks to erase all the losses clearly giving an indicating that bulls were taking enormous effort to take the market, but bears were successful in taking market at each stage. This phenomenon has been ignored by everyone as it seems that they we prepared to take bet on one side only and not reverse.Even though investment analysts we betting on market moving up they were doing the reverse in the market which was clearly visible. I appears that retail investors might has caught un aware this time also.
As market has broken below 100 day EMA, 200 day EMA would generally offer support, and market has in the last fall in Jan 2010 taken support at that level. We have to see whether 200 day EMA would offer support or not. 200 day EMA is at 4875, so this is the levels which has to be closely watched. Any move of the market below this levels would result in heavy selling as long term investors would abandon the market.
As has been expected, nifty has opened on a weak note and continued to slide whole during the week and has virtually closed at the low of the weak. It appears that the bears are gaining upper hand in the market. The markets have corrected after completion of 13 month, and we are in the 14th month and about to complete the 14th month. So have we started the down turn which at-least I have been waiting for at-least to prove Fibonacci correct. We have to wait for the market to further confirm the same. One of the noticing features of the fall during this week is associated with heavy volumes. The volumes are greater than that of the rises indicating that bulls are having strength and also the some heavy selling is going in the market on each fall which is not a good indication and this gives an indication that we can expect further down sides in coming weeks or months. All the major technical indicators are pointing towards further down sides in the markets. As per me it appears to be either outside the market or on short side but technical are pointing towards not be long. One of the noticing feature of the market during the week is that nifty has moved below 15 day,34 day, 50 day and 100 day MA and also 15 day EMA has moved below 34 day EMA, indicating that bears are having upper hand and are trying to take the market further downsides. This is the first time from March 2009 that Market has moved below these MA in one week only, clearly indicating that bulls are not giving any support at these EMAs. Generally indices or prices is above MAs these offer support and this was observed in previous occasions also but this time it was different and MAs did not offer any support especially 50 day and 100 day EMA which clearly signifies bears have gained upper hand and bulls efforts are going in vain. So all these are pointing towards further down sides are not ruled out. we have to not see the weather nifty would make lower low or not. Any movement of nifty below 4675 would indicate formation of lower low and then the market would tank further down sides. You might be thinking that I am a primarily a bear as I appear to be bearish for the last three months even though market was moving up. I was just giving what the technical’s were saying. For the last three months the market was indicating weakness but bulls were successful in taking market up but the weakness was visible in decrease in volumes on the rise which clearly gives a signal that no one is betting on the market is going up. I have been indicating from the last few months that the falls appears to be severe that the rise. The fall was taking three to five weeks and it was taking 10 to 11 weeks to erase all the losses clearly giving an indicating that bulls were taking enormous effort to take the market, but bears were successful in taking market at each stage. This phenomenon has been ignored by everyone as it seems that they we prepared to take bet on one side only and not reverse.Even though investment analysts we betting on market moving up they were doing the reverse in the market which was clearly visible. I appears that retail investors might has caught un aware this time also.
As market has broken below 100 day EMA, 200 day EMA would generally offer support, and market has in the last fall in Jan 2010 taken support at that level. We have to see whether 200 day EMA would offer support or not. 200 day EMA is at 4875, so this is the levels which has to be closely watched. Any move of the market below this levels would result in heavy selling as long term investors would abandon the market.
Positives for Nifty:
· Market is above 200 day EMA.
Negatives for nifty:
· Nifty is below 15 day,50 day and 100 day EMA.
· Daily MACD has given a sell signal.
· Weekly TRIX are still in sell mode.
· Weekly MACD has given sell signal immediately after giving a buy signal indicating extreme weakness in the market.
· DMI has moved above 20 presently at 26 indicating strength of bears.
It can be seen from the above chart that nifty has broken the trend line from June 2009 in January 2010 and thereafter it has risen and touched the sloping trend line which offered as resistance, and market has just touched the trend line and there after started to fall indicated by a arrow in the chart. This is the perfect technical reversal which cannot be ignored just like that. The period of trend line which is around 8-9 months cannot be ignored as it is pointing towards further down sides. So wait for the market to give a buy signal till then just enjoy the ride. Its wrong to catch a falling knife.
THREE FAN PRINCIPLE:
Three fan principle which I have discussed in my earlier weekly update as on 3rd April 2010. At that time I have said that till nifty stays above the third trend line there is not problem for bulls. And this week it has broken below the third fan and the break down was on huge volumes as indicated by arrow. This gives a very clear indication that we might have made a Short Term (medium term) top. Are u surprised with this yes your have read right we might have formed a top which might not be broken so easily. As has been indicated by me earlier, this is one of the powerful trend reversal patterns. If it happens in a down trend it will signal the start of the bull market and when it happens during the end of the bull market it signals the start of the bear market. This time it has happened when the market was raising, indicating that we might has just completed our up move and we might have just started a dowered move. It means that bull run might have completed and we might have just started bear run which might run for weeks or months. If this pattern is correct we might not see the high of this year being taken out.
Now comes the question, how many months this fall if started would last or what would be the target. there are three types of targets which can be arrived at. One is as per Elliott wave, one as per historical corrections and other as per the three fan principle. The target as per Elliott wave principle depends as per the pattern which it would be forming which I would discuss in the Elliott wave explanation below. If we see the historical major corrections, market when ever has made a major top they have corrected anywhere between upto or between 50-61.8% of rise. In the present case nifty has risen from 2539 to 5400 so a rise of around 2860 points so we might see a correction of around 1430 or 1767 points so the targets come to around 3969 or 3631. These targets as of now appear to be impossible but if the correction has started then I have no doubt of nifty meeting either of these targets.
Now we come to the targets as per the three fan principle, as I have said it is one of the power full trend reversal indicators and the targets are also very bearish and these as of now appear to be impossible and everybody would not believe. So you might be thinking of what the target is, the principle of three fan principle states that the price should reach at-least the starting point of the three fan pattern. In the present case the starting point of the three fan patter is around 2539, considering this we should reach the target of 2539. Can’t you believe it, even I cannot believe it but the principle states that only even, I wish it should not reach there even if it reaches we would have very good opportunity to buy stock we should not say buy they would be available at steal.
You might be wondering, whether the target as per the three fan principle is achievable or not. I have in my limited experience has seen that whenever the three fan principle pattern is confirmed in the price they have met the target. I have seen this pattern in a bear market so that targets have met. The first time it happened in 2003 when nifty was around 1200 it broke the three fan principle and it went on to make a new high during that year. You might be having doubt as to whether in when it turns to bear market the targets are achieved or not. For that I come to the example, if you are following vivek patils weekly technical analysis there if anybody has seen the Dows chart of 1987 it clearly shows the formation of the three fan principle and on confirmation of the same dow has met the target as indicated as per the principle. I cannot reproduce the chart from there as its in viveks technical analysis. This also confirms that we has chances of achieving the targets.
But first we will see whether we 3900 is achieved or not then we would see the final target.
Elliott wave:-
In my weekly technical analysis as on 27th March 2010 I have indicated that as per Elliott in case of first wave extention it would be difficult for the market to move past 5420 and till not market has not moved above 5420 it virtually made a high of 5399 but did not go past 5420 thus confirming that pattern and also target. this is also giving an indication that we might have topped out. The targets as per Elliott would depend on the pattern which it is expected to form. I would be furnishing the same after I have completed the same till that time enjoy the ride, probably bear ride.
Directional Momentum index – (DMI)
+D1 has moved above –D1 and has reached 37 and also DMI has started to move up and it has moved above 20 during the week indicating that bears have taken control of the market and further down sides are not ruled out. currently DMI is placed at 26 and is moving up any further move might take market further down.
M.Sri Mahidar
Sunday 9th May 2010, Time 18.48 IST
Trend is friend
Thursday, May 6, 2010
Technical analysis of USD/INR:
It appears from the chart below the INR has bottomed out at around 44.25 levels and we might see it moving up from the current levels. It appears from the chart that we might have completed a 5 wave elliotte wave pattern at 44.25 and we might see it moving towards at-least 47-48 levels. The shape of the structure is also clearly fitting into the place which is further confirming the completion of the structure. It the structure is complete we should swiftly move above the high of wave-4 which happens to be around 46.80. first indication would come on movement above 45.50 and confirmed by movement above 46.80. so be prepared for weakening of the INR.
It appears from the chart below the INR has bottomed out at around 44.25 levels and we might see it moving up from the current levels. It appears from the chart that we might have completed a 5 wave elliotte wave pattern at 44.25 and we might see it moving towards at-least 47-48 levels. The shape of the structure is also clearly fitting into the place which is further confirming the completion of the structure. It the structure is complete we should swiftly move above the high of wave-4 which happens to be around 46.80. first indication would come on movement above 45.50 and confirmed by movement above 46.80. so be prepared for weakening of the INR.
The wave structure is given below:
There is another interesting development taking place in USD/INR which is surely giving a target around 48 for INR. It is know as Wolfe wave which has generally success rate of around 85%. The Wolfe wave pattern is given below. it is perfectly fitting into all the pre-requisites of Wolfe wave. Here also the target is coming to around 48-48.50 so in all probability we might see doller strengthening.
M.Sri Mahidar
Trend is friend
Wednesday, May 5, 2010
Tuesday, May 4, 2010
it can be seen from the above chart that nifty has corrected after forming a lower low in shorter term and the confirmation has come by making a lower low i.e. closing below 5160. Technically it appears that we migh see further down sides. first support is at 5122 which happens to be 38.10% retracement, if it is taken out then we have next support at 5031 and 4951. In the current pattern it has been seen that when ever retracement has happened they were in the region of 61.8% to around 80%. so the targets comes to 4951 to 4821 so we have to prepare for this targets to be acheived.
Monday, May 3, 2010
Weekly technical Analysis for week ended 1st May 2010
Nifty opened on a strong note and thereafter for the next two days became weak and recovered on the last two weeks and closed at 5268. On weekly charts nifty has closed on a negative note i.e black candle thus showing that the weekly close in below the weekly open. This is giving an indication that the bears were active on the week even though the market was moving up. On weekly charts nifty has formed a star indicating there is indecisiveness in the market. During the last two weeks nifty has formed virtually formed a star i.e. the candle was very very small indicating that for the last two weeks there is tough fight going on between the bulls and bears and which wins the battle there would be huge movement in that direction. The technical indicators are pointing towards the down ward break out of the market but till now the market is not confirming the same. Till the time the market givens an indication we should not act in haste, once it gives direction whichever way just follow it without any question. I have been pointing out over the weeks that we have completed 13 months and we are in the end of the 14th month and till now market has not made any 52 week high, indicating that we have all the fair chances of moving down. The break out on the upper side should be on good volumes and it should be conclusive break out otherwise it might be a failed break out. I wish to point out here is that even though markets have been moving up( sideways) during the last one month oscillators has started to given very bearish indications, indicating that the market might break on the down side. It is the market still now has not given any probable direction. Generally oscillators which show the direction and market follows later. So we have to wait till the market moves down till that time the trend is up. Technically it appears that there is delima in that markets as to which direction which it should move till it decides we have to patiently wait for the same.
Positives for Nifty:
· Market is above 200 day EMA.
· Market is above 50 day and 100 and 15 day EMA.
· Weekly MACD is in buy mode (about to give a sell again).
Negatives for nifty:
· Daily MACD has given a sell signal.
· Weekly MACD is about to give a sell signal.
· Weekly TRIX are still in sell mode.
· RSI is giving a huge –ve divergence
Nifty opened on a strong note and thereafter for the next two days became weak and recovered on the last two weeks and closed at 5268. On weekly charts nifty has closed on a negative note i.e black candle thus showing that the weekly close in below the weekly open. This is giving an indication that the bears were active on the week even though the market was moving up. On weekly charts nifty has formed a star indicating there is indecisiveness in the market. During the last two weeks nifty has formed virtually formed a star i.e. the candle was very very small indicating that for the last two weeks there is tough fight going on between the bulls and bears and which wins the battle there would be huge movement in that direction. The technical indicators are pointing towards the down ward break out of the market but till now the market is not confirming the same. Till the time the market givens an indication we should not act in haste, once it gives direction whichever way just follow it without any question. I have been pointing out over the weeks that we have completed 13 months and we are in the end of the 14th month and till now market has not made any 52 week high, indicating that we have all the fair chances of moving down. The break out on the upper side should be on good volumes and it should be conclusive break out otherwise it might be a failed break out. I wish to point out here is that even though markets have been moving up( sideways) during the last one month oscillators has started to given very bearish indications, indicating that the market might break on the down side. It is the market still now has not given any probable direction. Generally oscillators which show the direction and market follows later. So we have to wait till the market moves down till that time the trend is up. Technically it appears that there is delima in that markets as to which direction which it should move till it decides we have to patiently wait for the same.
Positives for Nifty:
· Market is above 200 day EMA.
· Market is above 50 day and 100 and 15 day EMA.
· Weekly MACD is in buy mode (about to give a sell again).
Negatives for nifty:
· Daily MACD has given a sell signal.
· Weekly MACD is about to give a sell signal.
· Weekly TRIX are still in sell mode.
· RSI is giving a huge –ve divergence
it can be seen from the chart below that there is huge –ve divergence between RSI and nifty which recently everybody is neglecting. This type of –ve divergence generally happens at the market tops and as is the case everybody neglects and everybody is carried away by momentum that they generally forget or over look the divergence which generally proves to be disaster for bulls. What would happen this time we have to see. As per me it appears that market might now move up to make an new or near high and then might tank but we may not what is in store for us so wait and watch.
As the nifty chart is showing weakness we would see whether the constituents are also showing the same or not.The banks constitute nearly 20% weight age in the nifty.
The above chart is that of bank nifty, the bank nifty is moving up but the Relative Strength Index(RSI) is showing –ve divergence indicating that the under tone is weak for the time being and we might see the BN moving down in coming future.
CNX-IT – which is also one of the biggest contributor.
CNX –IT is showing weakness on charts. Technically it appears that CNX-IT seems to have formed triple top. This clearly signifies that CNX-IT seems to have made a medium term top and we might see it moving up further in coming months. CNX-IT has also moved below the 15 day and also 34 Day EMA which is pointing towards probable shift in the sentiments of the IT stocks which in turn might pull down the index.
Energy index as energy index is not available in NSE I would be seen the BSE- oil and gas.
It appears that the BSE-Oil index is showing weakness, it appears that oil index have formed triple top followed by a lower high which indicates weakness now any break of the trend line would confirm the weakness and it would also strengthen once lower low is formed.
As it appears that everybody is saying that there is broad based participation in the rise. so we would see the NSE-500 index which shows the strength of the broad based market.
It appears from the chart above that the NSE-500 might have made a intermediate top and we might see it moving further down. This I am saying because that it has made lower lows over a period of nearly five months signifying weakness. This has also indicating weakness but it has to make lower low to confirm the same. as this is index of that of top 500 stocks it gives the broad based market indication, this is pointing towards that there broad based market appears to be weak.
Elliotte wave:- Till now nifty has not be able to move above 5420 thus giving an indication that the market is weak. My targets for the 5th wave are still to be met any failure to move above 5420 would indicate tremendous weakness for the market and it would easily take market to January lows.
Directional Momentum index – (DMI)
DMI is moving down and +D1 is about to move above–D1 indicating strength of bulls. As DMI is moving down it is indicating that bulls are not as strong as they appear to be.
Elliotte wave:- Till now nifty has not be able to move above 5420 thus giving an indication that the market is weak. My targets for the 5th wave are still to be met any failure to move above 5420 would indicate tremendous weakness for the market and it would easily take market to January lows.
Directional Momentum index – (DMI)
DMI is moving down and +D1 is about to move above–D1 indicating strength of bulls. As DMI is moving down it is indicating that bulls are not as strong as they appear to be.
M.Sri Mahidar
Sunday 2nd May 2010, Time 17.27 IST
Trend is friend
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