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

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 t

op 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.

M.Sri Mahidar
Sunday 2nd May 2010, Time 17.27 IST
Trend is friend